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Airlines

Name: LATAM AIRLINES
7JetSet7 Code: LAN
Status: Operational
Region: LATIN AMERICA
City: SANTIAGO
Country: CHILE
Employees 51000
Web: lan.com
Email:
Telephone: +56 (2) 565 2525
Fax: +56 (2) 565 3054
Sita: SCLPZLA
Background
(definitions)

Click below for data links:
LAN-2004-03 NEWS
LAN-2004-06 NEWS
LAN-2004-07 1ST6MTH STATS
LAN-2004-09
LAN-2004-09 LATAM-A
LAN-2004-09 LATAM-B
LAN-2004-09 LATAM-C
LAN-2004-11
LAN-2004-11-A
LAN-2005-02-A
LAN-2005-04-A
LAN-2005-05-A
LAN-2005-05-B
LAN-2005-05-C
LAN-2008-01 2007-STATS
LAN-2008-11 737PUB
LAN-2009-03 80TH ANNIVERSARY
LAN-2010-08-TPR MERGER
LAN-2010-09-TPR MERGER
LAN-2010-10-LATAM
LAN-2011-08-TPR-MERGER PROGRESS
LAN-2012-06 - LATAM BOARD
LAN-2012-08 - 1ST 787
LAN-2012-08 - 787 DELIVERY
LAN-2012-09 - 1ST 787
LAN-2013-03 - TOP 10 DOMESTIC AIRPORTS
LAN-2013-07 - WASTE FROM EASTER ISLAND
LAN-2013-08-THALES TOPSERIES HEAD END SERVER
LAN-2014-01-TOP 2013 WORLD AIRLINES-A
LAN-2014-01-TOP 2013 WORLD AIRLINES-B
LAN-2014-11 - UPDATE-A
LAN-2014-11 - UPDATE-B
LAN-2014-11 - UPDATE-C
LAN-2014-11 - UPDATE-D
LAN-2014-11 - UPDATE-E
LAN-2014-11 - UPDATE-F
LAN-2014-11 - UPDATE-G
LAN-2014-11 - UPDATE-H
LAN-2014-11 - UPDATE-I
LAN-2016-04 - New LATAM Livery 787-9.jpg
LAN-2016-08 - 1st A320neo Delivery.jpg
LAN-Cabin Attendants - 2015-09.jpg
LAN-LOGO
LAN-LOGO TAIL
LAN-MAINTENANCE-MRO
LAN-MAINTENANCE-MRO-AFA-KLM
LAN-VISIT PATAGONIA
LAN-VISIT PATAGONIA-A
LAN-VISIT PATAGONIA-F

FORMED IN 1929. SCHEDULED, DOMESTIC, REGIONAL, & INTERNATIONAL, PASSENGER & CARGO, JET AIRPLANE SERVICES.

ADDRESS:
PO BOX 147D
SANTIAGO, CHILE

ADDRESS:
ESTADO 10, PISO 21
CASILLA 147-D
SANTIAGO, CHILE

Chile (Republic of Chile) was established in 1818, covers an area of 756,945 sq km, its population is 15 million, its capital city is Santiago de Chile, and its official language is Spanish.

JANUARY 1993: SCANDINAVIAN AIRLINES (SAS) OWNS 42% ($40 MILLION).

1992 = +$1.6 MILLION (+$3.5 MILLION) (NET PROFIT): +19% (RPK) TRAFFIC, +33% PASSENGERS (PAX), +12% (FTK) FREIGHT TRAFFIC.

JULY 1993: NEW, $18 MILLION HANGAR (60% TO 3RD PARTY WORK @ $25/HOUR).

JANUARY 1994: 767 EXTENDED TWIN-ENGINE OPERATIONS (ETOPS) = 11 FLIGHTS/MONTH OVER MID-ATLANTIC & 14 OVER PACIFIC.

(SAS) SOLD ITS 42% TO CHILEAN INVESTORS, WHO ALREADY OWN FAST AIR (FAC).

2,227 EMPLOYEES (INCLUDING 199 FLIGHT CREW (FC), 320 CABIN ATTENDANTS (CA), 581 MAINTENANCE TECHNICIANS (MT).

MAY 1995: 1 767-300ER, (ILF) LEASED, EX-(AMX) (PEMCO CONVERSION).

AUGUST 1995: GOVERNMENT APPROVAL FOR MERGER OF LANCHILE (LAN) WITH LADECO (LDE), AND FAST AIR CARGO (FAC). MAKES IT 4TH LARGEST AIRLINE IN SOUTH AMERICA BEHIND (VAR), (VSP), & (ARG). COMBINED FLEET OF 29 AIRPLANES: 2 727'S, 14 737'S, 2 757'S, 5 767'S, 4 DC-8-71F'S, 2 B AE 146'S, & 4 BAC 111'S.

OCTOBER 1995: 1 737-200 CARGO, DELIVERY (7TH 737). LOOKING FOR +2.

JANUARY 1996: 1995 = +$25 MILLION (+$6 MILLION).

MARCH 1996: 3 ORDERS (DECEMBER 1996 & 1997) 767-300ER'S (CF6-80C2), (ILF) LEASED.

(LAN), UNHAPPY WITH "-VE VALUE OF LADECO (LDE)" THIS MONTH, TORE UP EXISTING MERGER PLAN. NEW PLAN "B" HAS SIGNIFICANT CHANGES: IN (LDE) MANAGEMENT, DOWNSIZING OF EMPLOYEES, ACCELERATED MERGING OF DUPLICATE FUNCTIONS BY CONSOLIDATING/CLOSURE, & IN (LDE) DOMESTIC ROUTE STRUCTURE.

FLEET CHANGES: +3 737-200'S & +2 757'S, EX-(LDE), +1 767-300ER, EX-(BIR) LEASED, +2 767-300ER'S VS 2 767-200ER'S SWAPPED, WITH (AMX), +2 767-300'S, LONG-TERM LEASED.

(LAN) TO DO ALL INTERNATIONAL FLIGHTS, INCLUDING (LDE)'S, AND SHORT REGIONAL FLIGHTS WITH 11 737-200'S.

JUNE 1996: CATEGORY III APPROVAL FOR 757 AND 767.

767-200 (VF401) (JT9D-7R4E4), 6 MONTH (BIR) LEASED, EX-(KUW) (SURVIVED IRAQ INVASION) IS A "TECHNICAL HEADACHE." ACQUIRED 3 737-200'S & 1 757 EX-(LDE). 1 767-284ER (24762) TO (AMX). 1 767-3YOER, (GUI) LEASED.

JULY 1996: 1ST 6 MONTHS = +$17 MILLION (+100%).

HOSTED BOEING SAFETY GROUP'S "737 AIRPLANE UPSETS" ATTENDED BY (LAN), REGULATORY AUTHORITY, (FCT), (LAP), (ARG) & (AAL) 767 FLIGHT CREW (FC).

SEPTEMBER 1996: NEW ROUTE TO ASUNCION, VIA ANTOFAGASTA, IQUIQUE (737-200), CODE SHARED WITH (LAZ).

OCTOBER 1996: 2 ORDERS 767-300ER'S (CF6-80C2B7F) (NOVEMBER 1996 & JANUARY 1997), 1ST TO REPLACE 767-200 LEASED, (GUI) LEASED. 4 ORDERS 737-230'S (22114; 22134; 22135; 22139), EX-(DLH), JETZ VENTURES LEASED, TO REPLACE 2 B AE 146'S BY JANUARY 1997.

NOVEMBER 1996: FORMS SEPARATE COMPANY (LAN) COURIER, A SMALL PACKAGE/COURIER SERVICE WITH OVERNIGHT DELIVERY, 1 737-200C.

(http://www.lanchile.com).

JANUARY 1997: 1997 FLEET INCREASES ARE 1 737-230 (JANUARY 1997), 1 767-300 (JANUARY 1997), (GUI) LEASED, 2 767-300'S, (ILF) LEASED, (MARCH & NOVEMBER 1997). LOOKING FOR +2 767-300'S, & 5 737-200'S, WITH 2 OF THESE FOR (LDE).

INCREASES SERVICE TO MADRID.

1996 = 953,000 PASSENGERS.

APRIL 1997: (FAA) REPAIR STATION INSPECTION RESULTS IN "PROBATIONARY" STATUS.

1 767-300ER (CF6-80C2) DELIVERY.

MAY 1997: FISCAL YEAR (FY) 1996: +37% (RPM) TRAFFIC, 1.9 MILLION PASSENGERS (PAX), EXPECT 3 MILLION (PAX) IN 1997.

$300 MILLION, 3/2 ORDERS (APRIL 1998) 767-300ER'S (GE). 1 737-200, EX-(LDE).

JUNE 1997: CARLOS PRADO ADVISOR TO EXECUTIVE VP.

1 737-200 ADV (21131), EX-(ARK). 737-236 (22031), EX-(BAB), (GEH) LEASED.

JULY 1997: 1996 = +$38.31 MILLION (+$25.37 MILLION). 1ST 6 MONTHS = +$24 MILLION (+54.8%) (+$15.5 MILLION).

OFFICIALLY ABSORBED (LDE) AFTER PURCHASING SHARES, IT SOLD TO ITS PARENT CORPORATION IN 1996, PLUS (IBE)'S 38% STAKE, FOR $8 MILLION.

SEPTEMBER 1997: CODE SHARE WITH (AAL), ONCE USA/CHILE "OPEN SKIES" AVIATION ACCORD REACHED IN OCTOBER 1997 (1ST IN SOUTH AMERICA).

TO LEASE +2 737-200'S IN 1997, & +4 IN 1998.

OCTOBER 1997: 3,546 EMPLOYEES.

NOVEMBER 1997: NONSTOP TO ORLANDO (767-300ER). CODE SHARE WITH (CDI) VANCOUVER - LOS ANGELES (LAX) - SANTIAGO, TORONTO - BUENOS AIRES - SANTIAGO.

2 +4 ORDERS 737-236'S, EX-(BAB) (21804; 21808; 22027; 22029; 22030; 22031), (GUI) LEASED.

DECEMBER 1997: CARLOS MULLER TECHNICAL CONTROLLER/SPECIAL ASSISTANT TO THE PRESIDENT, WAS DIRECTOR MAINTENANCE BASE.

JOINS PART OF 3 LATIN AMERICAN, AIRLINE GROUPS, INCLUDING (TPR), & (TAC), TO BUY 200 AIRBUS (EDS) AIRPLANES FOR $8 BILLION.

FEBRUARY 1998: RENEWS 2 YEAR, ATLAS AIR (TLS) 747F WET-LEASE.

1997 = +$64.1 MILLION (+68%) (+$38 MILLION): +49% (RPK) TRAFFIC, +40% (ASK) CAPACITY.

CARLOS PRADO VP CONTRACTS/LEASES.

MARCH 1998: $840 MILLION, 20/40 ORDERS (OCTOBER 2000) A320'S, PART OF $4 BILLION COMBINED ORDER WITH TACA (TAC), & TAM BRAZIL (TPR).

CHRIS NASSENSTEIN VP GROUND OPERATIONS, EX-VP TECHNICAL OPERATIONS, AIR CANADA (ACN), AS DESIGNATED REPLACEMENT OF CARLOS PRADO.

APRIL 1998: 2,700 EMPLOYEES.

CHRIS NASSENSTEIN SENIOR VP MAINTENANCE & ENGINEERING.

1 737-236, LEASED (21808) (JT8D-15A). 2 767-316ER'S (29227, 29228) DELIVERIES.

MAY 1998: 1ST QUARTER = +$21.8 MILLION: +12.3% (RPK) TRAFFIC, +16.6% (ASK) CAPACITY, 66.2% LF LOAD FACTOR, +54.3% (FTK) FREIGHT TRAFFIC.

2 767-316ER'S DELIVERIES.

JUNE 1998: UNVEILS NEW CORPORATE IMAGE AND LIVERY, WITH SLOGAN "THE SPIRIT OF THE SOUTH OF THE WORLD."

JULY 1998: SOUTHERN HEMISPHERE CODE SHARE WITH QANTAS (QAN) TO EASTER ISLAND, & PAPEETE LINK, WITH (QAN) TO AUCKLAND, & SYDNEY.

1 ORDER (SEPTEMBER 1998) 767-300F.

AUGUST 1998: 2ND QUARTER = -$3.9 MILLION. 6 MONTHS = $17.8 MILLION (-26%): -9% (RPK) TRAFFIC, -2% (FTK) FREIGHT TRAFFIC.

TO CORDOBA, ARGENTINA (737-200).

MERGES ITS SUBSIDIARIES, FAST AIR CARGO (FAC) INTO LADECO (LDE).

SIGNED A COMMERCIAL COOPERATION AGREEMENT WITH (AECA) AIRLINES (AED) TO CARRY CARGO TO AND FROM ECUADOR.

SEPTEMBER 1998: 40TH ANNIVERSARY!

CHRIS NASSENSTEIN VP MAINTENANCE & ENGINEERING STATES RESTRUCTURE OF ORGANIZATION, INCLUDING DIRECTOR FLEET MANAGEMENT: 3 FLEET MANAGERS, MANAGER MAINTENANCE PLANNING, MANAGER RELIABILITY; CARLOS MULLER DIRECTOR ENGINEERING & QUALITY: MANAGER QUALITY AUDITS, MANAGER AIRWORTHINESS, MANAGER CENTRAL ENGINEERING, MANAGER PRODUCTION ENGINEERING, MANAGER MAINTENANCE QUALITY; IGNACIO VERGARA DIRECTOR HEAVY MAINTENANCE: COST CONTROL MANAGER, MANAGER PRODUCTION PLANNING, MANAGER MAINTENANCE QUALITY, MANAGER PRODUCTION HANGAR, MANAGER PRODUCTION SHOPS, MANAGER PRODUCTION ENGINEERING; DIRECTOR LINE MAINTENANCE: ALEJANDRO ECHEVERRIA DIRECT0R CABIN MAINTENANCE. CARLOS DURAN, DIRECTOR FLEET MANAGEMENT; & LUIS SANDOVAL DIRECTOR LINE MAINTENANCE.

SANTIAGO - MENDOZA - CORDOBA.

1ST 6 MONTHS = +$17.8 MILLION (-26%) (DUE TO INCREASED COMPETITION FROM USA CARRIERS, & IMPACT OF ASIAN CRISIS ON CHILE ECONOMY).

(LAN) CARGO TAKES 1ST 767-316F (25756) DELIVERY, 127,130 LB PAYLOAD.

OCTOBER 1998: TO JOIN "ONEWORLD (ONW)" ALLIANCE OF AMERICAN (AAL), BRITISH (BAB), CANADIAN (CDI), QANTAS (QAN), AND CATHAY PACIFIC (CAT) - (http://www.oneworldalliance.com) TO COMPETE WITH "STAR" ALLIANCE (SAL).

1ST 6 MONTHS = 3.65 MILLION (RPK) TRAFFIC (+13.3%), 60.9% LF LOAD FACTOR (+1), 581 MILLION (FTK) FREIGHT TRAFFIC (+41.8%), 1.44 MILLION PASSENGERS (PAX) (+13.1%).

NOVEMBER 1998: 3RD QUARTER = +$2.1 MILLION. 9 MONTHS = +$19.9 MILLION (+$41 MILLION) (REFLECTED POOR ASIAN ECONOMY, AND INCREASED COMPETITION): +13% (RPK) TRAFFIC, +15.6% (ASK) CAPACITY, 61.3% LF LOAD FACTOR (-2.5).

PLANS TO FORM (LAN) PERU (LPU) AS JOINT VENTURE WITH PERUVIAN CORPORATION (HOTEL CONGLOMERATE), FOR DOMESTIC & INTERNATIONAL SERVICES, WITH 3 737-200'S. (LPU) HAS LORENZO SOUZA, CEO, WHO HEADS GROUP OF PERUVIAN INVESTORS, WHO OWN THE MAJORITY OF THE NEW AIRLINE'S STOCK.

DC-8-71F (46040), AEROUSA LEASED.

DECEMBER 1998: MIAMI - IQUIQUE.

TO START LAN PERU (LPU), WITH 3 737-200'S IN MARCH 1999. PLANS TO FLY TO CUSCO, AND OTHER TOURISM DESTINATIONS. LANCHILE (LAN) OWNS 49%, WITH REST BY PERUVAL, HOTEL GROUP.

767-316ER (29229) DELIVERY.

JANUARY 1999: JORGE TSUMBOYAMA, VP MAINTENANCE & ENGINEERING, LAN PERU (LPU), EX-MAINTENANCE MANAGER, AT AEROCONTINENTE (COH).

1998 = +13.3% (RPK) TRAFFIC, +16.1% (ASK) CAPACITY, 61.5% LF LOAD FACTOR (-1.1), 3 MILLION PASSENGERS (PAX) (+13.3%).

FEBRUARY 1999: 4TH QUARTER = +$11.1 MILLION (+$23.1 MILLION). 1998 = +$31 MILLION (-52%).

SELLS 30% STAKE FOR $14.5 MILLION, IN INTERNATIONAL DATA NETWORK PROVIDER, EQUANT NV (WAS SITA TELECOMMUNICATIONS HOLDINGS NV, THE NETHERLANDS), WHO PROVIDE MANAGED DATA NETWORK SERVICES, NETWORK DESIGN & SOFTWARE DEVELOPMENT.

INTERNATIONAL MARKET SHARE = 38% (37%), DOMESTIC 73%.

NOW HAS 47 AIRPLANES, WITH 4 767-300'S, IN LAST YEAR. ITS NEWEST 767-300ERF SURPASSED EXPECTATIONS, OPERATING 500 HOURS/MONTH, WITH 80% LF.

MARCH 1999: 2 737-200H'S (21960; 22632), RETURNED TO GECAS (GEH), LEASED TO AIR CARIBBEAN (XXC).

APRIL 1999: 1ST Q = +$31.8 MILLION (+45.9%) (+$21.8 MILLION): +14.8% RPK, +9.1% ASK, 68.3% LF (+3.4); INTERNATIONAL PAX = 531,000 (+24.3%); DOMESTIC = 626,000 (-8.8%).

4,884 EMPLOYEES. SITA: SCLPZLA.

2ND ATLAS AIR (TLS) 747-200F WET-LEASED. CHANGED 1 ORDER 767-300ER (10/99), TO 767-300F.

MAY 1999: TO JOIN "ONEWORLD" ALLIANCE NEXT YEAR, TO LINK WITH AMERICAN AIRLINES (AAL), BRITISH AIRWAYS (BAB), CATHAY PACIFIC (CAT), CANADIAN INTERNATIONAL (CDI), QANTAS (QAN), FINNAIR (FIN), & IBERIA (IBE).

5,900 EMPLOYEES.

JUNE 1999: PLANS FOR ALLIANCE WITH AEROLINEAS ARGENTINAS (ARG), BOTH ARE AMERICAN AIRLINES (AAL) CODE-SHARE PARTNERS, THREE WOULD FORM A MARKETING PACT, TO COVER ALL OF SOUTH AMERICA.

INCDT: DURING REFUELING AFTER TROUBLESHOOTING, EXTENSIVE DAMAGE TO WING AND TANK STRUCTURE OF 737-200 (PL802, CC-CYR, 37 34) = CURRENTLY NO PLAN TO REPAIR AIRPLANE.

JULY 1999: TO FLY TO FALKLAND ISLANDS, VIA BUENOS AIRES.

7/7 ORDERS (8/00) A340-300'S, WITH OPTIONS CONVERTIBLE TO LARGER, LONGER-RANGE, A340-600'S.

AUGUST 1999: 2ND Q = -$6.2 MILLION ($3.9 MILLION) (AS CHILE'S ECONOMY REACHED ITS LOWEST LEVEL IN 10 YEARS).

HAS ACQUIRED 44 ACRES OF LAND AT MIAMI INTERNATIONAL AIRPORT TO BUILD A $55 MILLION, COMPLEX, INCLUDING 2 CARGO BUILDINGS, AN OFFICE BUILDING, & TARMAC SPACE FOR 12 AIRPLANES.

$800M, 7/7 ORDERS (11/00) A340-300'S.

SEPTEMBER 1999: 1ST 6 MONTHS = +$25.5 MILLION (+43%): 4.80 BILLION RPK (+14.6%), +6.5% ASK, 431 MILLION FTK (+14.6%), 64.4% LF (+4.6).

OCTOBER 1999: 565 OVERHAUL MAINTENANCE WORKERS (MT) (61% OF MAINTENANCE WORKFORCE) WENT ON STRIKE.

CONSIDERING 68% STAKE IN AEROLINEAS ARGENTINAS (ARG).

1ST 9 MONTHS = 6.59 BILLION RPK (+16.5%), 773.59 MILLION FTK (-8.9%), 2.39 MILLION PAX (+7.7%).

NOVEMBER 1999: CODE SHARE WITH AMERICAN AIRLINES (AAL), TO MIAMI (MIA).

3RD Q = +$3.5 MILLION (+40.6%): 65.9% LF (+4.6). +36.9% FUEL COSTS. STRONGEST AREA, CAME FROM ITS CARGO UNIT, WHERE REVENUES ROSE +45.3% TO $115 MILLION, DUE TO NEW ROUTES FROM MIAMI (MIA), TO BRAZIL, COLOMBIA, AND ECUADOR, & EXPANSION OF ITS "BELLY-SPACE OPERATIONS." INCREASED DEMAND FOR SOUTHBOUND CARGO, RELATES TO IMPROVED ECONOMIC CONDITIONS IN LATIN AMERICAN REGION.

DC-8-71F (398-45997), RETURNED TO AEROUSA.

DECEMBER 1999: USA DEPARTMENT OF TRANSPORT (DOT) GRANTS LANCHILE (LAN) "OPEN-SKIES" RIGHTS TO USA.

GINO BRAGHETTO, QUALITY ASSURANCE MANAGER.

LANCHILE (LAN) MAKES OFFER TO ACQUIRE 64% OF AEROLINEAS ARGENTINAS (ARG), BY PURCHASING REMAINING BALANCE OF INTERINVEST, HELD BY SPAIN'S SEPI, MERRILL LYNCH & BANKERS TRUST.

767-316F (778-29881, CC-CZX) DELIVERY.

JANUARY 2000: 1999 = 6.05 BILLION RPM (+11.7%), +4.6% ASM, 64.9% LF (+4.2).

LAUNCHES 4TH USA GATEWAY WITH HOUSTON (HOU), FOR (LAN)CHILE CARGO (767-300F), (HOU) - BUENOS AIRES, & ONTO SANTIAGO. HAS 55-TON CARGO CAPACITY. OTHER GATEWAYS: LOS ANGELES (LAX), NEW YORK, & MIAMI (MIA). TO PARIS (CDG).

CARLOS DURAN, INTERIM DIRECTOR HEAVY MAINTENANCE, REPLACES IGNACIO VERGARA, NOW ON-SITE RESIDENT REPRESENTATIVE AT AIRBUS (FOR 3 YEARS).

MARCH 2000: 4TH Q = +$18.6 MILLION (+67.7%): $47.6 MILLION FUEL COSTS (+47%), INCLUDING +12.9 MILLION (1-TIME GAIN OF SELLING EQUANT SHARES); +25.8% FTK, INTERNATIONAL +11.4% RPK, DOMESTIC -1.5% RPK. 1999 = +$48 MILLION (+54.6%).

OSCAR CESPEDES, DIRECTOR ENGINEERING & QUALITY ASSURANCE, REPLACES CARLOS MULLER, NOW DIRECTOR FLEET MANAGEMENT. CARLOS DURAN, DIRECTOR HEAVY MAINTENANCE.

LANCHILE (LAN) IS LATIN AMERICA'S LEADING CARGO AIRLINE, WITH 38% OF REVENUE FROM CARGO. THIS WILL IMPROVE FURTHER, WITH ITS NEW CARGO FACILITY IN MIAMI.

TOP CARGO OPERATORS IN MIAMI 1999 TONS K:
1 TLS 260 (+13.7%); 2 AAL 171 (-7%); 3 CHA 141 (-1.9%); 4 ARW 119 (+9.4%); 5 TMP 118 (+8%); 6 FNE 112 (-29.7%); 7 CFK 92 (-34.1%); 8 UPS 70 (+20%); 9 UAL 58 (-6.4%); 10 AMJ 44 (-46.5%); 11. LAN 41 (+32%)
12 TAC 36 (+100%); 13 DHL 36 (-9.55); 14 FED 32 (-47%).

IN NEXT FEW MONTHS, WILL BECOME MEMBER OF "ONEWORLD" ALLIANCE.

+3 ORDERS A320'S, & CONVERTS 1 ORDER A321 TO A320, FOR TOTAL 25 ORDERS. 737-2M6 (399-20913, CC-CYW), & 737-219 (428-21131, CC-CYC), TRANSFERRED FROM LADECO (LDE).

APRIL 2000: $332,500 FINE FROM (FAA) FOR TRANSPORTING AN UNDECLARED SHIPMENT OF OXYGEN GENERATORS ON A PASSENGER FLIGHT. THEY ARE ONLY ALLOWED TO BE SHIPPED ON CARGO AIRPLANES.

DENNIS DREGER, DIRECTOR LINE MAINTENANCE, REPLACES LUIS SANDOVAL, WHO RETIRED.

1ST Q = +$25.4 MILLION (+34.7%) (INCLUDING +92% FUEL COSTS, EXCLUDING $12.9 MILLION SALE OF EQUANT STAKE): +3.7% RPK, -2% ASK, 72.3% LF (+4); INTERNATIONAL: +4.9% RPK, -1.5% ASK, 74.3% LF (+4.5); DOMESTIC: .2% RPK, -3.5% ASK, 66.1% LF (+2.2); +27.1% FTK; 5,492 EMPLOYEES.

JUNE 2000: ALONG WITH AER LINGUS (ARL), JOINS "ONEWORLD" ALLIANCE TO MAKE UP 8 MEMBERS: 215M PASSENGERS (PAX)/YEAR, 557 DESTINATIONS 266,000 EMPLOYEES, AND 1,817 AIRPLANES: (AAL), (BAB), (CAT), (FIN), (IBE), (QAN), (ARL), AND (LAN).

IN 10/00, NONSTOPS TO NEW YORK (JFK) (767-300), INCLUDED IN CODE SHARE WITH AMERICAN AIRLINES (AAL), & TO MADRID (A340).

JULY 2000: 767-3YOER (PW4060) (351-24947) RETURNED TO BABCOCK (BBB), LEASED CANADIAN (CDI). DC-8-71F (45996), EX-(FAC) OPERATIONS, RETURNED TO (GECAS) (GEH), LEASED TO EMERY (EAF).

1999 TOP WORLD AIRLINES:
FTK (B): 15 NWA 3.02; 16 AAL 2.51; 17 NCA 2.22; 18 MTH 2.06; 19 DAL 1.98; 20 SWS 1.95; 21 LAN 1.74; 22 TII 1.67; 23 BEJ 1.64; 24 ALI 1.61; 25 EAF 1.58.

1999 = +$47.58 MILLION (+$30.99 MILLION): 9.74 BILLION RPK (+11.7%); 64.9% LF; 1.74 BILLION FTK (+39.5%); 4.29 MILLION PAX (+2.6%); 5,492 EMPLOYEES (+12.4%).

AUGUST 2000: 2ND Q = -$2.1 MILLION (-$6.2 MILLION).

JORGE HANSON, 737 FLEET CHIEF, REPLACED PATRICIO SOTO, NOW MANAGER AIRCRAFT DELIVERIES.

1 767-316F (806-30780, CC-CZY) DELIVERY.

SEPTEMBER 2000: 1ST 6 MONTHS = 4.85B RPK (+.1%); 987 MILLION FTK (+23%); 2.03 MILLION PAX (-3.9%).

1ST A340-313X DELIVERY (CFM56-5C4).

OCTOBER 2000: 1 767-300ER, WET-LEASED TO LANPERU (LPU), FOR LIMA - MIAMI (MIA) - NEW YORK (JFK) OPERATIONS (DAILY). 1ST A320-233 DELIVERY (1304). 1 A340-313X (363) DELIVERY. 767-300ER "C" CHECK, FOR LAPSA (LAZ).

NOVEMBER 2000: SIGNS COMMERCIAL AGREEMENT WITH ECUATORIANA (ECU), FOR CODE SHARE AND WET-LEASE, FOR GUAYAQUIL - NEW YORK (JFK), & BETWEEN GUAYAQUIL, QUITO, AND MIAMI. AS PART OF (ECU) AGREEMENT, WET-LEASES 2 767-300ER'S TO (ECU), IN (ECU) LIVERY.

3RD Q = +$5.9M (+$3.5M).

SEBASTIAN PINERA, PRESIDENT, REPLACES JORGE AWAD.

INVESTS $9M INTO ITS SANTIAGO AIRPORT, CARGO CENTER, WHICH HANDLES 300K PACKAGES/MONTH, FOR CHILEAN MARKET.

DUE TO CONFLICTS WITH PERUVAL, WHO OWNS 51% OF LANPERU (LPU), (LAN) IS CANCELLING WET-LEASE OF 767-300ER TO (LPU), FOR OPERATIONS TO USA.

LORENZO SOUSA, CHAIRMAN, LANPERU (LPU), RESIGNS.

1 A320-233 (1332, CC-COD) DELIVERY. 1 737-236 (628-21792), RETURNED TO ICON, LEASED TO SAFAIR (SFA).

DECEMBER 2000: TO BOOST ITS CARGO NETWORK, BUYS 25% STAKE IN MASAIR (MSR) (LARGEST FREIGHT OPERATOR IN MEXICO), AND A 25% STAKE IN FLORIDA WEST INTERNATIONAL AIRWAYS (PAI) FOR $900K.

3 ORDERS 767-300F'S. 2 A320-233'S (1351, CC-COE; 1355, CC-COF) DELIVERIES.

JANUARY 2001: CODE SHARE WITH IBERIA (IBE), TO MADRID (A340), WITH EXTENSIONS TO PARIS, ROME, LONDON, AMSTERDAM, BARCELONA, AND BILBAO, AS PART OF "ONEWORLD" ALLIANCE.

FEBRUARY 2001: 4TH Q = +$19.2M (+3.5%): +5.3% RPK INTERNATIONAL, +9.1% RPK DOMESTIC; +3.2% LF; +11.3% FTK, $23.4M FUEL COSTS (+50.7%). 2000 = $38.7M (+92.2%).

1 737-229 (617-21840, CC-CVD), EX-AVANT (LIC).

MARCH 2001: 1 737-204 (342-20808, /74 CC-CSP), & 1 737-229 (529-21596, /78 44 26 CC-CVC), BOUGHT FROM AVANT (LIC).

APRIL 2001: 7,407 EMPLOYEES.

MAY 2001: 1ST Q = +$23M (+$25.4M) (NET PROFIT).

3 737-236 (21808; 22029; 22031) RETURNED TO GECAS (GEF).

JUNE 2001: 1 A320-233 (1491, CC-COG) DELIVERY. 1 737-204 (318-20633, CC-CSI) BOUGHT FROM (LIC).

JULY 2001: SEBASTIAN PINERA, PRESIDENT, RESIGNS TO PURSUE A CAMPAIGN FOR A SEAT IN THE SENATE OF THE REPUBLIC OF CHILE.

LADECO'S (LDE) DOMESTIC OPERATIONS WILL BE TAKEN OVER BY (LAN) EXPRESS.

1 767-300F, & 1 A320-233 (1512) DELIVERIES (CC-COH).

AUGUST 2001: JORGE MEHECH, CHAIRMAN.

2ND Q = -$12M (-$7M).

(LAN) SUBSIDIARY, (LAN) LOGISTICS SIGNS PARTNERSHIP WITH USA POSTAL SERVICE (USPS) FOR NEW SHIPPING SERVICE TO THE AMERICAS, TO BE PICKED UP BY SKYNET WORLDWIDE EXPRESS, AND DELIVERED AS PRIORITY MAIL, BY (USPS).

2 A320-233'S (1526, CC-COI; 1548, CC-COK).

SEPTEMBER 2001: IN 12/01, TO NEW YORK (JFK).

1 737-204 (20632) DELIVERY. 1 767-2Q8ER (272-24448, N201LF) & 1 767-219ER (239-24150, N241LF), EX-AEROCONTINENTE (COH), (ILF) LEASED.

OCTOBER 2001: FOLLOWING AIRLINE INDUSTRY DOWNTURN, TO CUT 650 JOBS (-6%) AND REDUCE SERVICES BY -10%.

FACED WITH WORST CRISIS IN LATIN AMERICAN AVIATION HISTORY, THE HEADS OF 11 MAJOR AIRLINE MEMBERS OF THE LATIN AMERICAN AIR TRANSPORT ASSOCIATION INCLUDING: (ACE); (AVI); (AMX)/(CMA); (LAV); (AVN); (SEZ); (COP); (LAN); (TAC); (VAR); & (VSP), MET IN MIAMI TO SEEK SOLUTIONS AND POSSIBLE HELP FROM GOVTS.

IN 12/01, GUAYAQUIL TO NEW YORK (JFK). LANCHILE CARGO, MIAMI TO PORTO ALEGRE (767-300F, WEEKLY).

1 767-316F (848-32573, N314LA), WET-LEASED TO MASKARGO (MAS). 1 A320-233 (1568, CC-COL) AND 1 A340-313X (429, CC-CQE) DELIVERIES.

NOVEMBER 2001: LAUNCHES NEW DOMESTIC SUBSIDIARY "LANEXPRESS," WHICH REPLACES THE FORMER LADECO (LDE), WITH PEDRO PABLO ERRAZURIZ, CEO. THE TWO COMPANIES WILL OPERATE SEPARATELY, WHILE CARGO OPERATIONS WILL BE CONSOLIDATED UNDER A 3RD COMPANY, (LAN)CARGO.

OSCAR CESPEDES, DIRECTOR HEAVY MAINTENANCE, REPLACES CARLOS DURAN, WHO RESIGNED. CARLOS MULLER, DIRECTOR ENGINEERING & QUALITY ASSURANCE. LUIS VERGARA, DIRECTOR FLEET MANAGEMENT. MICHAEL WAGNER, DIRECTOR CABIN MAINTENANCE. VICTOR IDE, DIRECTOR STRATEGIC PLANNING. LUIS GOMEZ, QUALITY ASSURANCE MANAGER, REPLACES FERNANDO CIFUENTES, WHO LEFT THE COMPANY. JORGE HANSON, 767 FLEET MANAGER, REPLACES IVAN ORELLANA, NOW LINE MAINTENANCE MANAGER. JAIME GONZALEZ, 737 FLEET MANAGER, REPLACES JORGE HANSON. LUIS EBENSPERGER, RICARDO MENDEZ, & RODOLFO QUINTAS, HANGAR PRODUCTION MANAGERS.

LUFTHANSA TECHNIK (LTK) (DLH) 12-YEAR CONTRACT FOR TOTAL COMPONENT SUPPORT, FOR 27 A320'S, & A340'S.

CHILEAN PRESIDENT, RICARDO LAGOS OPENS (LAN)'S $55M, AIR CARGO, AND OTHER FACILITIES, THE LARGEST TO DATE IN MIAMI. INCLUDES 44 ACRES, SURROUNDING A 400,000 SQ FT, STRUCTURE, WITH STATE-OF-THE-ART, CARGO-HANDLING FACILITIES, INCLUDING CUSTOMS INSPECTION, CREATING 950 JOBS. HOUSES (LAN)'S NORTH AMERICAN HQ.

(LAN) GROUP 3RD Q = -$5M (+$6M).

PLANS TO WET-LEASE 1 MD-11F FROM GEMINI AIR CARGO (GMN) TO REPLACE 2 747F'S WET-LEASED FROM ATLAS (TLS). 767-316F (860-30842, N316LA) WET-LEASED TO FLORIDA WEST (PAI). A320-233 (1626, CC-COM) DELIVERY.

DECEMBER 2001: EXPANDS ITS CARGO SERVICE BY ACQUISITION OF 73.3% OF AEROLINEAS BRASILEIRAS (ABSA) (BSB), FOR $2.1M, AND 50% OF VIMALCOR, WHO HOLD THE CONCESSION OF THE AIR CARGO TERMINAL AT CARRASCO AIRPORT, MONTEVIDEO, URUGUAY.

TO PUCON - TEMUCO. TO ROSARIO (ARGENTINA).

DIEGO DE RISIO, PLANNING MANAGER, EX-LAPA (LAZ), REPLACES OSCAR DELGADO.

A340-313X (442, CC-CQF) DELIVERY.

JANUARY 2002: 4TH Q = -$4.8M (+$19.2M): 2.62B RPK (+.3%); +6.8% ASK, 67.2% LF (-5.2). 2001 = +$10.8M (+$48.4M): 11.03B RPK (+11.1%); 1.27B FTK (-2.6%); 4.97M PAX (+15.1%).

TO IQUIQUE - SALTA. (LAN) CARGO, SAN JOSE - GUATEMALA CITY - MIAMI (MIA).

(http://www.lanchile.cl) .

(TELEPHONE: (2) 565 25 25). (FAX: (2) 565 28 17).

MARCH 2002: MAINTENANCE DEPT TO CONCENTRATE ON 767 FLEET, AND 3RD PARTY WORK, WITH 737 MAINTENANCE "C" CHECKS BEING CONTRACTED TO AVANT (LIC), AND ENAER (ARG).

IN 4/02, TO VANCOUVER, VIA LOS ANGELES (LAX), CODE SHARE WITH ALASKA (ASA). IN 7/02, CODE SHARE WITH QANTAS (QAN) (ONEWORLD PARTNER), TO AUCKLAND, NEW ZEAND - SYDNEY, (A340, 3/WEEK).

APRIL 2002: 9,306 EMPLOYEES.

(TELEPHONE: +56 (2) 639 4411). (FAX: +56 (2) 638 3976).

767-352ER (PW4062) (575-26261, /95 27 06 CC-CDM), RETURNED TO (ILF).

MAY 2002: 1ST Q = -$4M (INCLUDING EXTRAORDINARY EVENTS: +$15.3M FROM JAPANESE OPERATING LEASE TRANSACTIONS, AND +$5.7M FROM ASSET SALES) = +$17.1M (-25.6%): -6.8% RPK; -2.5% ASK; 68.5% LF (-3.1).

June 2002: Code share with Qantas Airways (QAN), Santiago - Auckland - Sydney.

July 2002: 2001 = +$10.84M (+$48.39M): 11.03B RPK (+11.1%); 66.9% LF; 4.97M PAX (+15.1%); 1.27M FTK (-2.6%); 9,306 EMPLOYEES (+25.6%).

August 2002: Chris Nassenstein, VP Maintenance & Engineering, leaves the company to join Air Transat (AIJ), at Montreal, as Senior VP Technical.

(LAN) intends to start an airline 1Q/03 in Ecuador called "LanEcuador," with an investment of $350M, and 2 767-300's and 1 A320. The National Aviation Board of Ecuador, granted traffic rights for Quito, and/or Guayaquil, to Santiago, Miami, New York, Madrid, and Buenos Aires. (LAN) operations in Peru, and now Ecuador are expected to generate 20% of total sales.

In 10/02, (LAN) Cargo to form a strategic alliance with Lufthansa Cargo (LUB) to expand their routes between South America, and Europe.

Code share with Alaska (ASA), Los Angeles (LAX) - Calgary. With OneWorld partners (IBE) and (QAN), plans to add Madrid - Beirut - Denpasar - Sydney (LAN) A340-300 operations).

2nd Q = -$9.3M (-$2.58M): 2.38B RPK (-5.9%); 60.1% LF (-3.4). 1st 6 months = +$7.7M (-62.3%) (+$20.5M).

September 2002: 1 A320-233 (1854, CC-COO) delivery.

October 2002: 737-205 (460-21219) leased to Southern Winds (SOW). A320-233 (1858, CC-COP) delivery.

November 2002: In 1/03, (LAN) Express charter flights to Guayaquil (technical stop) - Punta Cana, and to Guayaquil (technical stop) - Cancun.

3rd Q = +$7.6M (-$4.9M). 1st 9 months = +$15.3M (-1.6%): 8.24B RPK (-4.8%); 3.94M PAX (+.9%); 1.31B FTK (-6.2%).

A320-233 (1877, CC-COQ) delivery.

December 2002: (LAN) Express, to Pucon, and (Santiago) - Temuco - Pucon.

In 1/03, (LAN), Santiago - Cancun.

A320-233 (1491, CC-COG) returned from LanPeru (LPU). A320-233 (1903, CC-COT) delivery.

January 2003: LanEcuador will join Oneworld as an affiliate, enabling its passengers to earn and redeem awards on all other Oneworld carriers and gain access to their airport lounges. In 3/03, LAN ECUADOR, New York and Miami to Quito, continuing to Guayaquil.

Plans to launch LAN DOMINICANA for flights from Dominican Republic to Miami.

Applies for service to Japan.

February 2003: 4th Q/02 = +$15.5M (-$4.8M). 2002 = +$30.8M (+$10.8M): 11.52B (+2.1%); 5.31M PAX (+2.9%); 65.7% LF; 1.44B FTK (+9.5%).

March 2003: Renegotiated its airplane leasing agreements to save $15M in 2003.

Plans to transfer 2 737-200's to LAN Dominicana for domestic services. Air Santo Domingo has suspended all domestic services due to increased costs associated with the rise in fuel costs.

April 2003: (Santiago) - Cordoba - Rosario.

10,173 employees. (http://www.lanchile.comm).

(Telephone: +56 2 565 2525).

Switched 2 orders A320's to A319's.

July 2003: 7,400 employees.

Oneworld partners American Airlines (AAL) and LanChile (LAN) introduced interline e-ticketing.

August 2003: 2nd Q = +$4.1M (-$9.3M).

LanEcuador plans to add service Guayaquil to Madrid (3/week) in 9/03.

737-291 (954-23024, CC-CYH) returned to lessor.

September 2003: 2002 = +$30.8M (+$10.8M): 11.14B RPK (-1.2%); +1% ASK; 65.3% LF (-1.5); 5.3M PAX (+1.5%); 1.83B FTK (-1%); 5,487 EMPLOYEES (-1.5%).

2002 TOP WORLD AIRLINES TRAFFIC RPK (B):
46 (THY) 16.59; 47 (ATZ) 16.30; 48 (LTU) 16.10; 49 (JAA) 15.90; 50 (HAP) 14.40; 51 (JMA) 13.97; 52 (PAL) 13.52; 53 (AMX) 13.31; 54 (AIN) 13.25; 55 (FIN) 12.79; 56 (BER) 12.73; 57 (ELA) 12.54; 58 (TPR) 12.08; 59 (MON) 11.86; 60 (GUL) 11.84; 61 (CMA) 11.74; 62 (COR) 11.47; 63 (TAP) 11.38; 64 (LAN) 11.14; 65 (JBL) 11.01; 66 (AIJ) 11.00; 67 (PIA) 10.78; 68 (RYR) 10.20; 69 (EGP) 9.65.

767-3Q8ER (570-26265, CC-CEN), ex-Asiana (AAR), (ILF) 3 year leased.

October 2003: Is considering taking a stake in Avianca (AVI). LanChile and its affiliates are expected to be renamed LAN AMERICA, and the historic Linea Aerea Nacional title may be changed to Latinamerican Airlines Network.

3rd Q = +$22.7M (+$7.6M): +17% RPK; +2.3% ASK. 1st 9 months = +$48.4M (+$15.3M).

December 2003: Indicates an interest in taking a majority stake in LAFSA (LAZ), for which it would provide +6 to +10 airplanes.

Santiago - Pucon - Temuco, (Santiago) - Temuco - Pucon (2/week). In 1/04, Santiago - Cancun (weekly). Santiago - Salvador (Bahia) (weekly).

1st A319, 136 PAX delivery. 3 orders (2/04) A319's (V2500) for total 5/9.

January 2004: 4th Q = +$35.2M (+$15.5M): +9.8% RPK; +10.2% ASK. 2003 = +$83.6M (record!) (+$30.8M): 9.52B RPK (+14.8%); 73% LF; 2.64M PAX (+7.7%); 938.93M FTK (-7.2%).

Plans to lease +5 767's in 2004 to support a planned 15% ASK capacity increase. LanChile (LAN)'s 1st A319 has been assigned to LAN Express (LDE) for flights from Santiago to Antofagasta, Calama, Coihaique, Puerto Montt, and Puerto Arenas.

767-3Q8ER (CF6-80C2B6F) (694-28206, /98 09 01 TF-ARA "CORDOBA"), ex-Southern Winds (SOW), (ILF) leased, 24F, 36C, 145Y.

April 2004: 1st Q = $48.1M (+$21.6M): 3.83B RPK (+21.4%); +11.7% ASK; 73.9% LF (+5.9). Ended the Q with $257M in cash.

Changed its name from "LanChile" to "LAN."

May 2004: Is in talks and may acquire American Falcon (FLK) and rename it "LAN Argentina."

OneWorld Alliance: Aer Lingus (ARL); American (AAL); British Airways (BAB); Cathay Pacific (CAT); Finnair (FIN); Iberia (IBE); LAN (LAN); & Qantas (QAN).

+2 767-300F's in 2004.

June 2004: 737-230 (22120, CC-CDB), Finova (GRB) leased.

July 2004: Last 6 months = +$79.6M (+$25.7M): 7.1B RPK (+21.6%); +13.9% ASK; 70.5% LF (+4.5); 2.93M (+14.5%); 1.05B FTK (+17.5%). 2nd Q = +$31.5M (+$4.1M): +21.8% RPK; +10% ASK; +3 LF.

Along with LANPeru (LPU) & LAN Ecuador, is now offering complimentary shuttle services from New Jersey to New York (JFK). Passengers flying to Lima, Santiago, or Buenos Aires are offered a shuttle from Union City (PATH) Station or Paterson Station, while Quito passengers can catch the shuttle at Union City Station or Newark Station.

August 2004: (LAN) Cargo appoints Frederico Germani, VP Planning.

+2 orders (6/05) 767-300F's.

September 2004: 737-230 (720-22121, CC-CDH), Finova (GRB) leased. A319-132 (2295, CC-COY) delivery.

October 2004: (LAN) Cargo appointed Paramount Hong Kong Express as its new general sales agent for Hong Kong, effective 10/04.

In 12/04, Santiago - Puerto Montt - Punta Arenas - Ushuala (weekly).

3rd Q = +$36.4M (+60.6%) (+$22.7M): +19.7% RPK; +20.7% ASM; +1.8 LF. 9 months = +$116M (+$48.4M).

A319-132 (2304, CC-COZ) delivery.

October 2004: 747-200F Tradewinds (TWX) wet-leased to LAN (LAN), for Miami - Sao Paulo - Santiago - Miami (Freighter service).

November 2004: In 12/04, Santiago - Ushuaia (3/week). (MOU) with Korean Airlines (KAL) for increased cooperation, including codesharing, and frequent flier tie-ins that will start in 3/05. Seoul - Los Angeles, and Los Angeles - Lima, Santiago. In 2006, plans service to Australia & New Zealand.

Signed a cargo handling agreement with Lufthansa Cargo (LUB) for North & South American airports for Chicago O'Hare (ORD) & New York (JFK). In 1/05, (LAN) will be the general handling agent for (LUB) at Lima, as well as Rio de Janeiro & Guarulhos, in Brazil. Both carriers have been working on standardizing their training programs and Information Technology (IT) systems, which will permit automatic transmissions.

737-230 (721-22122, CC-CDL), Finova (GRB) leased. 767-38EER (417-25132), AWAS (AWW) leased for its international network. A319-132 (2321, CC-CPE) delivery.

December 2004: Resumes Santiago - Pucon (2/week). In 1/05, resumes Santiago - Antofagasta - Iquique - Salta (weekly).

January 2005: 4th Q = +$47.6M (+35.4%) (+$35.2M). 2004 = +$163.6M (+$83.6M).

April 2005: 1st Q = +$46.3M (-3.7%) (+$48.1M): 4.56B RPK (+19.2%); +15.5% ASK; 76.3% LF (+2.4).

Forms LAN Argentina (LNR) by acquiring local Argentine charter airline Aero2000, a company which belonged to Argentine businessman Miguel Ciadi. It had been set up in 2001 and has rights to fly to Cordoba, Iguazu, Calafate, Bariloche, Montevideo, Santiago de Chile, Miami, and Madrid. The Argentine Government has given the go-ahead for LAN Argentina (LNR) to be set up on condition it takes on all the staff of Argentinian Government operator Lafsa (LAZ) and regional operator Aerovip, plus support Southern Winds (SOW) for three months. The plan is for LAN Argentina to eventually absorb (SOW) staff, should the airline be unsuccessful in its bankruptcy protection.

May 2005: 11,173 employees (including 717 Flight Crew (FC), 1,448 Cabin Attendants (CA), & 1,383 Maintenance Technicians (MT)).

June 2005: Launches LAN Argentina (LNR) with its inaugural flight from Buenos Aires to Mendoza (2/day). Paul Petrelli, General Manager LAN Argentina (LNR). Is part of the LAN Alliance including LAN Airlines, LAN Peru (LPU); & LAN Ecuador.

Implements interline e-ticketing with its OneWorld alliance member airlines and their 17 affiliates.

$750M, 25/15 orders (2/06) A318/A319's: including 15 orders A318-100's, 6 A319-100's, & 4 A320-200's.

July 2005: 1st 6 months = 8.42B RPK (+18.4%); +15.1% ASK; 72.5% LF (+2.1).

Luis Eduardo Riquelme, VP North//Central America & Asia for the Passenger division.

767-316F (34245, PR-ABD), delivery and leased to Absa.

August 2005: 13,414 employees (+20.1%).

$1.73B, 5 orders 767-300ER's and 1 767-300ERF. 2 737-230's (22121; 22122) leased to LAN Argentina (LNR).

September 2005: A319-132 (2572, CC-CPF), delivery.

October 2005: (LAN) Airlines finalized a previously announced order for 25 A318s and A319s with options on 15 A320 family airplanes. (LAN) is launch customer for the (PW6000) on the A318, while the A319s will be powered by IAE (V2500)s.

European Union (EU) and Chile last week signed an aviation agreement that removes nationality restrictions in the bilateral air services agreements between (EU) member states and Chile. It is the first so-called "horizontal" aviation agreement to be signed and allows any (EU) airline to operate flights between any (EU) member state where it is established and Chile. "The agreement recognizes that airlines in the (EU) are no longer national airlines but European airlines. This is an important step in our external aviation policy," said Jacques Barrot, VP in charge of transport policy. The European Commission now wants to negotiate a broader agreement with Chile to open up the respective aviation markets and ensure regulatory convergence.

(LAN) Airlines posted a profit of +$23.8 million in a busy third quarter marked by record fuel prices and startup costs related to the launch of LAN Argentina (LNR). The figure represents a -34.6% drop from +$36.4 million net income in the year-ago period. Operating income plunged -75.7% to $10.01 million from $41.1 million.

Total operating revenues rose +17.6% to $622 million including a +24.1% jump in passenger revenue to $369.2 million. Cargo revenue climbed +7.5% to $216 million. Passenger RPKs (traffic) were up +15.5% to 4.6 billion and ASKs (capacity) grew +12% to 6 billion, resulting in a 76.8% LF (load factor), up +2.3 points, and a yield of 8.03 cents, up +7.5%, thanks to average higher fares in response to rising fuel costs. RASK was ahead +10.8% to 6.16 cents. Traffic growth was driven largely by a +18% increase in international traffic. Cargo load factor dropped -4.3 points to 64.1% LF as RTKs held steady. RTK yield rose +7.5% to 38.43 cents and RATK was 24.65 cents, up +0.7%.

Operating expenses jumped +25.5% to $612 million owing to a +57.6% rise in fuel charges and a +35.1% increase in wages and benefits. Fuel hedging gains of $21.7 million helped offset some of those costs. Cost per ATK rose +15.1%, with high fuel prices responsible for nearly 70% of the unit cost increase.

(LAN) has taken several long-term measures to soften the impact of fuel prices, including implementation of fuel-burn reduction measures, an adjustment of its cargo fuel surcharge and a new passenger fuel surcharge.

LAN Argentina (LNR) increased frequencies on original routes, added three domestic destinations and now operates a fleet of five 737-200s. Daily service to Miami will begin Dec 1.

Through the first three quarters, (LAN)'s net income totaled +$96.7 million, down -16.6% from $116 million in 2004. Operating revenues rose +21.3% to $1.8 billion while expenses climbed +27.7% to $1.72 billion, leading to a -40.3% drop in operating income to $82.4 million. The company has earned some of that money back with a +897% surge in interest and miscellaneous income, which reached $32.5 million.

1st 9 months = 13.03B RPK (passenger traffic) (+32.3%); 1.73B FTK (freight traffic (+21%); 5.88M passengers (+41.5%).

2 A319-132's (2572, CC-CPF; 2585, CC-CPI), deliveries.

November 2005: 2 737-230's (22115, CC-CQQ; 22128, CC-), ex-Ryanair (RYR), AutoDirect Aviation leased & A320-232 (990, CC-CZB), SALE (SIL) leased. 767-352ER (26261, CC-), ex-Vietnam Airlines (VIE), (ILF) 42 month leased. 767-316F (34246, N418LA), delivery for LAN Cargo (LCO) operations.

December 2005: (LAN) Airlines will roll out in March a new premium business class service across its 767-300 fleet that combines its existing first (F) and business class (C) cabins. The product, to be offered on flights between North and South America, will feature lie-flat seats with a full 180-degree recline and 74-inch pitch. Inflight entertainment will be upgraded to include audio/video on demand with 15.4-inch personal monitors. (LAN) is spending $100 million on the cabin makeover.

ILFC (ILF) announced the lease of a used 767-300ER to Lan (LAN) for 3 years. The airplane was recently delivered and the airline now leases 8 767-300ERs from (ILF).

January 2006: (LAN) Airlines said December passenger traffic rose +12.6% (RPK)s over the year-ago month against a capacity increase of +8.5% (ASK)s, sending load factor up +2.7 points to 72.8% LF. Domestic passenger traffic dropped -5.3% alongside a -2.8% (ASK) decline in capacity and load factor fell -1.7 points to 66.6% LF. (LAN) was stronger internationally as passenger traffic rose +16.4% (RPK), capacity increased +11% and load factor climbed +3.4 points to 73.9% LF.

Full year 2005 = Passenger traffic 17.49B (RPK) (+15.6%); Freight traffic 2.39B (FTK) (+5.9%); 7.97M passengers (+21.1%).

Separately, (LAN) finalized a 10-year component support agreement with Air France Industries (AFA) and (KLM) Engineering & Maintenance (E&M) covering its 24 767-300ERs. It is planning to add 10 more 767-300ERs through 2008. The contract is based on support per flight hour and is backed by the (AFA) and (KLM) (E&M) Americas component pool in Miami. Repairs will be performed by either (KLM) (E&M), AMG or (AFA).

February 2006: (LAN) Airlines reported a +7.5% increase in January passenger traffic, which was "in line with capacity." Load factor remained at 76.1% LF.

Thales (THL) signed a deal with (LAN) Airlines for retrofit and line-fit installations of its TopSeries i-4000 video and audio on-demand system for 18 767s and four A340s, with options for three additional 767s. Delivery will begin next month.

737-230 (22127), ex-Ryanair (RYR), ADL leased.

March 2006: (LAN) Airlines reported a +5.8% (RPK) year-over-year rise in system passenger traffic in February compared to a +7.1% (ASK) increase in capacity, which dropped load factor -1 point to 75.5% LF.

Despite a record fourth quarter, (LAN) Airlines' consolidated full-year net income slipped -10.4% to +$146.6 million from +$163.6 million earned in 2004. While operating revenues surged +19.8% to $2.5 billion, driven by a +24.9% increase in passenger revenue, expenses rose +23.1% and operating income fell -17.7% to +$141.6 million from +$172.1 million.

Passenger traffic increased +15.6% (RPK) against a +12% hike in capacity (ASK), lifting load factor +2.3 points to 73.8%LF. Yields went up +8% owing to lower stage lengths, surcharges, improved segmentation and higher premium traffic, (LAN) said. Revenue per (ASK) climbed +11.5% but unit cost per (ATK) increased +12%, or +2.7% excluding fuel. Fuel costs jumped +55% last year.

The carrier's fourth-quarter profit of +$49.9 million, up +4.8% from the +$47.6 million earned in the three months ended December 31, 2004, was a record. (LAN) said it was able to "successfully mitigate" a +$52.2 million increase in fuel costs and a -$6.1 million operating loss related to the launch of LAN Argentina (LNR). Operating income grew +73.8% to +$59.2 million from +$34.1 million in the year-ago quarter. Revenues jumped +15.9% to $706.3 million against a +12.5% rise in operating expenses.

"Strong fundamentals enabled (LAN) to effectively implement measures designed to enhance revenue generation, rapidly adapt to a changing environment, increase efficiency and mitigate higher fuel costs," the airline said.

Chile is the first nation to make the (IATA) Operational Safety Audit (IOSA) a condition of its airline certification process, (IATA) said. At present, 150 airlines representing 70% of scheduled international traffic have completed or are scheduled to complete the (IOSA) process. All (IATA) carriers must be (IOSA)-certified by the end of 2007. "The decision of the government of Chile is a model for how industry can work with governments at the national level by using (IOSA) as a requirement for airline operators," (IATA) Director General and CEO, Giovanni Bisignani said.

767-316ER (34626, CC-CWF), delivery. The airline added seven airplanes in the quarter comprising two leased 737s, two purchased A319s, one leased A320, one leased 767-300ER and one purchased 767-300F.

April 2006: (LAN) Airlines reported a +1.3% rise in March passenger traffic and a +6.4% increase in capacity over the year-ago month. Load factor fell -3.7 points to 72.9% LF.

A one-time pre-tax gain of +$40.3 million related to an adjustment in its maintenance accounting policy, helped boost (LAN) Airlines' first-quarter bottom line, which showed a profit of +$79.7 million, a +71.9% increase over year-ago net earnings of +$46.3 million. Performance was flat excluding special gains. Higher yields and unit revenues helped lift turnover +19.8% to $728.2 million as a +34% hike in fuel costs sent operating expenses up at a similar +19.7% rate to $659.5 million. Operating income rose +21.4% to +$68.7 million.

"Growth in multiple markets, strong customer preference and careful cost management enabled (LAN) to overcome [rising fuel costs] and raise operating results while operating in a highly competitive environment," the carrier said in a statement. "Furthermore, the company is currently working on a number of programs aimed at improving profitability by expanding into new markets, increasing efficiency, streamlining operations, leveraging economies of scale and reducing commercial expenses."

First-quarter passenger traffic increased +4.9% to 4.79 billion (RPK)s as capacity rose +7% to 6.4 billion (ASK)s. (LAN) added a new 767-300ER last month and said it shifted some international capacity from USA and Caribbean routes onto European and South Pacific services. Load factor fell -1.5 points to 74.9% LF, which the carrier attributed to the shift in the Easter holiday from first-quarter 2005 to the second quarter of 2006.

Yields were up +12.6% to 9.11 cents, however, and passenger unit revenue climbed +10.4% to 6.82 cents. The airline said higher yields came from improved segmentation, fuel surcharges, appreciation of the Chilean peso and higher premium-class volumes. It did not provide passenger (CASK) but reported that operating cost per system (ATK) grew +10.9% to 40.79 cents while operating revenue per (ATK) increased +10.6% to 44.58 cents.

(LAN) will take delivery of eight A319s this year and plans to take 12 more 767-300s through 2008, comprising 11 passenger airplanes and one freighter.

May 2006: (LAN) Airlines reported a +7.1% year-on-year increase in April passenger traffic and a +5.7% rise in capacity. Load factor was up +0.9 point to 69.2% LF.

June 2006: 767-316ER (34629, CC-CWG) delivery.

July 2006: (LAN) Airlines flew 1.37 billion (RPK)s passenger traffic in June, a +6.4% increase over the year-ago month. Capacity climbed +8.2% to 2 billion (ASK)s, dropping load factor -1.2 points to 68.6% LF.

(LAN) posted a profit of +$16.5 million in the second quarter after a one-time charge of $6.4 million related to severance payments, reduced it by -38% from +$26.6 million in the second quarter of 2005. However, the airline group's operating performance was sound for a period that traditionally is the weakest in South America. Operating revenues climbed +21% to $690 million, driven by a +23.1% rise in passenger revenues. Expenses grew +19.8% - - (LAN) did not provide a figure - - and operating income surged +60.8% to $25.4 million. This was achieved despite a +$36.4 million jump in fuel costs, -$9.4 million in losses in (LAN)'s Argentine domestic market and a -37% decline in fuel hedge gains to $10.4 million.

The company said it also incurred significant costs related to the addition of 11 airplanes in the second half of this year. It took delivery of a 767-300ER last month and will take two more this fall. It will add eight A319s and a 767-300F by year end.

(LAN) said its operating performance highlighted its "ability to adapt to challenging conditions by rapidly adjusting its operations and deploying cost containment measures." Among those were layoffs that resulted in the severance payment. It said the cuts will result in annual savings of -$15 million.

Passenger traffic across the group rose +5.7% against a +6.8% increase in capacity, dropping load factor -0.7 point to 67.8% LF. Unit revenues climbed +15.3% and yield rose +16.4% on improved segmentation and fuel surcharges, the company said. Cost per (ATK) was up +14%, or +7.5% excluding fuel.

The airline said the quarter left it "in position to plan for capacity expansion in response to growth opportunities, while leveraging opportunities to improve its cost performance."

In the first six months, (LAN) earned +$96.1 million, up +31.8% compared to a +$72.9 million profit in the year-ago period. Operating income increased +30% to +$94.1 million from +$72.4 million.

(LAN) Airlines placed a $48 million order for (CFM56-5C/P) kits to upgrade 18 installed and spare engines powering its fleet of A340-300s. It is scheduled to begin taking delivery this month.

(LAN) Airlines is introducing a $100 million Premium Business product on 767-300 services between South and North America. Over the next two years, the carrier will install lie-flat seats, upgraded inflight entertainment, modified airplane interiors and other amenities. 767-300s also will see improvements in economy service (Y), including new seats and video monitors.

767-316ER (34628, CC-CWH), delivery.

August 2006: (LAN) Airlines reported a +4.7% (RPK) increase in July system traffic and a +6.9% rise in (ASK) capacity that dropped load factor -1.6 points to 77.5% LF.

4 A319-132's (2845, CC-CPJ; 2858, CC-CPL; 2864, CC-CPM; 2872, CC-CPO), deliveries.

September 2006: Pratt & Whitney (P&W) and (MTU) Aero Engines completed assembly of the first production (PW6000) at (MTU)'s Langenhagen facility. (LAN) Airlines is the launch customer for the (PW6000)-powered A318.

4 A319-132's (2886, CC-CPQ; 2887, CC-CPX; 2892, CC-CQK; 2894, CC-CQL), deliveries.

October 2006: (LAN) Airlines more than doubled its third-quarter net income to +$51.5 million from +$23.8 million in the year-ago period as revenues grew +22.6% to $762.3 million, boosting operating margin +7.6 points to 9.3%.

The carrier said that the "significant margin improvements [resulted] mainly from higher revenues per (ATK) in both the passenger and cargo business . . . The company's strong third-quarter operating performance provides a solid base for long-term growth and profitability." With 48 airplanes being added to its fleet in 2006 -2008, passenger capacity is expected to grow +10% - +12% for full-year 2006 and +23% - +25% in 2007.

Third-quarter operating expenses rose +13% to $691.8 million and operating income widened significantly to +$70.5 million from +$10 million in the year-ago quarter. Traffic increased +10.2% to 5.07 billion (RPK)s on a +11.9% lift in capacity to 6.7 billion (ASK)s, producing a load factor of 75.7% LF, down -1.1 points. Yield rose +17% to 9.4 cents.

(LAN) said it is moving forward with its domestic and regional business model overhaul, which aims to reduce overhead costs by -30% per (ASK) on short-haul routes by the end of 2008. It is targeting airplane utilization of 12 block hours per day for narrow body operations in Chile, Argentina and Peru. It will phase out 737-200s in favor of new A320s in 2007, and will operate more point-to-point flights. It plans for future "fare reductions" made possible by the cost savings.

Amadeus said that (LAN) Airlines announced the 1st phase of deployment of Altea Reservation Desktop for airlines, with full deployment planned for 1,500 (LAN) points-of-sale worldwide.

767-316F (34627, N420LA), delivery for MasAir Cargo (MSR) operations.

November 2006: 1st 9 months = 13.95 billion passenger traffic +7% (RPK), 1.86 billion freight traffic +8.1% (FTK), 6.33 million passengers +7.6%.

The airlines of Latin America and the Caribbean region are enjoying strong traffic demand and face a bright future, Merrill Lynch airline analyst, Michael Linenberg told attendees at the 3rd annual Latin American Airlines Leaders Forum sponsored by Associacion Latinoamericana de Transporte Aereo (ALTA) in Cancun.

"The [stock] market has recognized opportunities in Latin America," Linenberg said, pointing to the successful Initial Public Offerings (IPO)s of Copa Airlines (COP), Gol (GOT), (LAN) Airlines and (TAM) (TPR) over the past decade and the strong stock performance. He noted that Latin American traffic growth, at +6.9% per year, "is second only to China," while +4% (GDP) growth for the region is slightly ahead of the world average.

He compared the situation to the one USA airlines enjoyed in the 1960s, a period he described as "the golden era" of the USA airline industry, with strong growth matched by strong profitability. Airline equities "were the tech stocks" of the period, he said.

Also at the conference, (ALTA) Chairman & Copa Airlines (CEO) Pedro Heilbron noted that while the Latin America/Caribbean region generates just 4.9% of world airline passengers, its population is 9.2% of the world total, suggesting ample room for additional growth. Traffic growth has exceeded +12% in each of the past 2 years, and although it was down nearly -1% through the 1st 9 months of 2006, this was owing to Varig (VAR)'s downsizing. Excluding (VAR), growth would be around +9%. Domestic traffic represents 67% of the total, with intra-region traffic accounting for 16%.

Among the challenges facing the region's airlines is improving safety, which (ALTA) is addressing by mandating that members pass an (IATA) Operational Safety Audit. Fuel costs also are an issue. Carriers pay an average of +15% more for their fuel than those in North America and Europe, Heilbron said. Airport and air navigation charges also are a concern.

Nevertheless, air transport in the region "is a growing industry at a rate above other parts of the world," he concluded. (ALTA) has more than doubled its membership since 2003, growing from 15 airlines to 33, Executive Director Alex de Gunten said.

767-316ER (35229, CC-CWN), delivery.

December 2006: (LAN) Airlines took delivery of its 4th 767-300 passenger airplane this year and said it will be used on flights to and from the USA, Mexico, Tahiti and the Caribbean. It also operates 9 767-300Fs. The deliveries are part of (LAN)'s growth and fleet renewal. The company has also incorporated 8 new short haul Airbus A319s into its (LAN) alliance to replace 737-200s that are ceasing operation as of mid-2007.

Between 2006 and 2008, the (LAN) Airline Alliance is to receive a total of 13 767-300s. They are to join 32 Airbus A320s, A319s and A318s - a total of 45 airliners and about a $2 billion investment. The new 767-300s are to carry (LAN)'s new premium business class, which offers full-flat, 180-degree recline seats, as well as down comforters and soft pillows. Next year, the company said it plans to upgrade its in-flight entertainment in both premium business (C) and economy (Y) classes.

(LAN) said it is investing about half of its profit, or about $100 million, in its long-haul service operated by its 767-300 fleet. The (LAN) Alliance currently has 70 passenger and 10 cargo jets.

January 2007: (LAN) Airlines flew 1.93 billion (RPM)s passenger traffic in December, a +23.7% increase from the year-ago month. Capacity was up +18.7% to 2.55 billion (ASM)s and load factor rose +3.1 points to 75.8% LF.

The (LAN) Airlines board scheduled an extraordinary shareholders meeting for January 26 to approve a capital increase of 7.5 million common shares (equivalent to 1.5 million American Depository Shares). Part of the proceeds will be used for a stock option plan, (LAN) said.

February 2007: (LAN) Airlines finished 2006, +$241.3 million in the black, a +64.6% improvement over the +$146.6 million eaned in 2005, and said its performance "provides a solid base for long-term growth and profitability," that will include a 19% to 21% capacity increase in 2007. Full-year revenues rose +21.1% to $3.03 billion against a 15.5% lift in expenses to $2.73 billion, more than doubling operating profit to +$302.6 million from the +$141.6 million earned a year earlier. Traffic rose +11.5% to 19.5 billion (RPK)s, a rate level with the increase in capacity to 26.4 billion (ASK)s. Load factor remained 73.8% LF. Yields rose +11.4% to 9.3 cents, owing to fuel surcharges, "nominal" fare increases and improved segmentation, (LAN) said. Unit revenues climbed +11.4% to 6.9 cents. 4th-quarter profits jumped +87.7% year-over-year to +$93.6 million as revenue grew +20.8% to $853.5 million and costs rose just +10.6% to $715.5 million. Operating income of +$138 million compared to +$59.2 million in the year-ago quarter. (LAN) took delivery of 1 new 767-300ER and 1 new 767-300F during the quarter.

March 2007: (LAN) Airlines' board approved a capital increase of +22.1 million ordinary shares, replacing the increase of +7.5 million shares approved in January. Proceeds will help finance (LAN)'s fleet expansion, comprising 5 unidentified long-haul aircraft 4 freighters and 15 A320 family airplanes scheduled for delivery through 2011.

(LAN) Airlines' impending fleet upgrade, for which it approved a capital increase this week, reportedly will comprise 4 777-200Fs, 6 767-300s with an option to convert those to 787s, 6 A340-300s and 15 A320 family airplanes. The latter constitute option conversions. A formal announcement is expected shortly.

JetWorks Leasing announced the sale of a 767-300ER on lease to (LAN) Airlines by (BTMU) Capital and (HSH) Nordbank to a fund managed by Guggenheim Aviation Partners (GUG), and a 737-300 on lease to Pluna (PLU) by (PLM) Financial Services to Deutsche Bank Equipment Leasing.

April 2007: (LAN) Airlines flew 2.01 billion (RPK)s passenger traffic in March, up +30.7% on the year-ago month. Capacity rose +25.4% to 2.64 billion (ASK)s and load factor gained +3 points to 76.1% LF.

(LAN) Airlines expects 2007 turnover to increase +18.6% to $3.6 billion, Chairman Jorge Awad told a shareholders meeting, according to Reuters.

(LAN) Airlines posted net earnings of +$86.1 million in the 1st quarter, a +8.1% increase over a year-ago profit of +$79.7 million, a result that included a 1-time nonoperating gain of +$33.7 million. A +14.2% lift in operating revenues to $831.3 million, which included a +23% jump in passenger turnover to $537.4 million, thanks to expanded international services coupled with a +7.3% rise in expenses resulted in a +79.8% surge in operating income to +$123.5 million.

(LAN) said its revamped domestic business model featuring discounted fare structures, longer segments and reduced commissions to agents launched April 9 has resulted in a +60% increase in average demand on its Chilean network. Looking ahead, it announced it likely will lease up to four A340s next year and add four 777F freighters in 2009 to 2011. It did not provide specific figures, but said traffic was ahead +26.5% against a +21.2% boost in capacity, lifting load factor +3.3 points to 78.2% LF and passenger (RASK) +1.5%. Yield dropped -2.8% due to discounted domestic services and falling fuel surcharges. Cost per (ATK) fell -2.8%, or -2.4%, excluding fuel.

LAN (LAN), as the national flag carrier, operates to 54 destinations through its various codeshare agreements. Is a member of the OneWorld Alliance.

Employees = 15,099.

(IATA) Code: LA - 045. (ICAO) Code: LAN - LAN.

Parent organization/shareholders: Pinera Group (28.2%); Cueto family (27.8%); & Hirmas Eblen Group (17.2%).

Owns: LANChile Cargo (LCO) (99.4%); LANExpress (LDE) (99.4%); ABSA - Aerolinhas Brasileiras (BSB) (74%); LAN Argentina (LNR); LANPeru (LPU) (70%); LAN Dominicana (49%); LAN Ecuador (45%); MAS Air (MSR) (39.5%); & Florida West Airlines (PAI) (25%).

Alliances: OneWorld; Aeromexico (AMX); Aerosur (REO); Alaska Airlines (ASA); Japan Airlines International (JAL); LANExpress (LDE); & LANPeru (LPU).

Main Base: Santiago Arturo Merino Benitez International Airport (SCL).

Hubs: Lima Jorge Chavez International (LIM); & Miami International (MIA).

Domestic, Scheduled Destinations: Antofagasta; Arica; Balmaceda; Calama; Concepcion; Copiapo; Easter Island; El Salvador; Iquique; La Serena; Osorno; Puerto Montt; Punta Arenas; Santiago; Temuco; & Valdivia.

International, Scheduled Destinations: Acapulco; Amsterdam; Asuncion; Auckland; Barcelona; Bilbao; Bogota; Brussels; Buenos Aires; Calgary; Cancun; Caracas; Comodoro Rivadavia; Cordoba; Dallas; Frankfurt; Guadalajara; Gutaemnala City; Guayaquil; Havana; Iguazu; La Paz; Lima; London; Los Angeles; Madrid; Mendoza; Merida; Mexico City; Miami; Milan; Monterrey; Montreal; Montevideo; Mount Pleasant; New York; Papeete; Paris; Puerto Vallarta; Punta Cana; Quito; Rio de Janeiro; Rio Gallegos; Rome; Rosario; San Carlos de Bariloche; San Jose Cabo; Sao Paulo; Sydney; Toronto; Vancouver; Vera cruz; Villahermosa; & Zurich.

May 2007: (LAN) Airlines flew 1.8 billion (RPK)s passenger traffic in April, up +29.5% from the year-ago month. Capacity rose +26.1% to 2.53 billion (ASK)s and load factor increased +1.9 points to 71.1% LF.

TAM (TPR) and (LAN) announced agreement on a formalized business alliance for services in South America, to be implemented "within the next months," that apparently will include codesharing, linking loyalty programs and lounge sharing. "TAM (TPR)will expand its flight [offerings] in South America to include a more complete and diversified network for its passengers. In addition, clients of (LAN) Alliance companies will enjoy the ease of traveling routes operated by TAM (TPR) and TAM Mercosur (LAP), with multiple hours and frequency options," the companies said. Passengers will be able to travel "with a single ticket from the beginning to the end of the route." The alliance apparently will not cover flights to the USA and Europe. TAM (TPR) has a 50.7% market share in the Brazilian domestic market, where its network comprises 48 destinations. It also operates to Buenos Aires and Santiago, and plans to launch daily flights to Caracas in the next six months. TAM Mercosur (LAP) serves Asuncion and Ciudad del Este in Paraguay, Cordoba in Argentina, Montevideo in Uruguay, and Santa Cruz de la Sierra and Cochabamba in Bolivia. The (LAN) Alliance serves 15 destinations in Chile, 12 in Peru, 10 in Argentina, two in Ecuador, and 15 in other Latin American countries and the Caribbean.

767-316ER (35230, CC-CWV), and A318-122 (3001, CC-CVA), deliveries.

June 2007: (LAN) Airlines flew 1.73 billion (RPK)s passenger traffic in May, up +29.9% from the year-ago month. Capacity lifted +24.1% to 2.51 billion (ASK)s, and load factor rose +3 points to 68.7% LF.

(LAN) Airlines announced that its rights offering closed June 17 netted +$320 million on the Chilean and USA markets. The company placed 19.9 million shares, representing a +6.2% increase of its share count. An additional 2.2 million common shares have not been placed and are reserved for a stock option plan for employees, (LAN) said.

July 2007: (LAN) Airlines flew 1.78 billion (RPK)s passenger traffic in June, a +29.7% increase from the year-ago month. Capacity climbed +22.5% to 2.45 billion (ASK)s, and load factor rose +4 points to 72.6% LF.

Surging revenue and relatively successful efforts to mitigate the impact of rising fuel prices helped boost (LAN) Airlines to a +$47.2 million profit in the second quarter, up +10.7% from the +$42.6 million reported in the year-ago period. It said its "strong first-half performance provides a solid base for long-term growth and profitability. As a consequence, (LAN) is in a position to plan for capacity expansion in response to growth opportunities, while leveraging opportunities to improve its cost performance."

Revenue climbed +38.8% to $1.07 billion, owing largely to rising yields and fuel surcharges. Expenses were up +44.2% to $1.03 billion, as fuel soared +83.8% to $389.9 million. Operating profit fell -26.2% to +$43.8 million from the +$59.3 million reported in the year-ago period, but the bottom line benefited from a +$26.9 million hedging gain. The carrier is approximately 53% hedged for the current quarter and 55% for the fourth quarter.

(LAN) flew 5.85 billion (RPK)s traffic during the quarter, up +10.4%, against a +8.7% increase in capacity to 8.14 billion (ASK)s, lifting load factor +1.1 points to 71.9% LF. Yield rose +23.3% to 10.7 cents "mainly as a result of improved revenue management initiatives, higher fuel surcharges, as well as the impact of the appreciation of the Chilean peso on domestic fares," it said. Unit revenue was up +25.2% to 7.7 cents.

The company expects full-year capacity to grow +14% to +16% year-over-year, down from the originally forecast +16% to +18%, as it delays the launch of additional long-haul frequencies until winglets are installed on its 767s.

First-half profit of +$138.3 million was up +7.4% from the +$128.7 million earned in the year-ago semester. Operating income fell -8.1% to +$168 million.

Calling it "the largest investment in the company's history," (LAN) Airlines announced that the board of directors decided to purchase 26 787s and acquire an additional six on lease. The commitment, which also includes 10 options, will require an investment of $3.2 billion and would make the carrier Latin America's largest Dreamliner operator. (LAN) said it will take delivery between 2011 and 2016 and that the options will be available in 2017 and 2018. "These new airplanes are aimed to replace and grow the company's long-haul fleet and will allow (LAN) to operate new international routes that will be added to (LAN) Airlines' current network including LAN Peru (LPU), LAN Argentina (LNR), and LAN Ecuador (LNE)," the carrier said. CEO, Enrique Cueto said the "historic investment assures the future growth of the company."

(LAN) reported second-quarter net income of +$42.6 million, up +158.9% from +$16.5 million in the year-ago period. "This result reflects strong capacity expansion, with significant margin improvements resulting mainly from lower costs," (LAN) said. Revenue increased +11.5% to $769.6 million, as passenger revenue jumped +18.7% and cargo revenue rose +3.5%. "Revenue growth in the passenger business can be largely attributed to the expansion of (LAN)'s international operations, both regional and long-haul," the carrier said. It posted operating income of +$56 million, more than double the +$25.4 million in the year-ago quarter.

(LAN) did not report specific traffic figures in its English-language release, but it said traffic outpaced a +24.3% increase in capacity. Chilean domestic traffic grew +29.6% and international traffic lifted +29.7% (including domestic operations in Peru and Argentina). International traffic accounted for 88% of total passenger traffic during the quarter. Yields declined -8.5% "mainly due to fare decreases on regional routes." Load factor rose +3 points to 70.8% LF. "(LAN)'s strong traffic growth . . . is especially noteworthy, considering that the second quarter is seasonally the weakest quarter for passenger traffic in Latin America," it said. "During this quarter, the company managed its capacity in order to respond to demand growth and market opportunities. As a consequence, capacity increased on all of (LAN)'s routes . . . Capacity also increased in all of the company's domestic markets, namely Chile, Peru and Argentina."

1 A340-300 (167, CC-CQG), ex-Air Canada (ACN).

August 2007: Lufthansa (DLH) Technik (LTK) signed a 12-year Total Component Support (TCS) contract with (LAN) Airlines covering up to 129 A320s and up to eight A340s. The agreement expands a (TCS) agreement already in place, and has an added value of more than >$200 million, according to (LTK).

A318-122 (3030, CC-CVB), delivery.

October 2007: (LAN) reported third-quarter net income of +$78.8 million, up +52.9% over a net profit of +$51.5 million in the year-ago quarter, on a +15.2% increase in revenue to $878 million. "This result reflects significant margin improvements, resulting mainly from capacity expansion and strong traffic growth as well as effective control of operating costs," the company said. Expenses rose +12.2% to $775.9 million and operating income lifted +44.6% to $102 million. Traffic increased +22.8% to 6.23 billion (RPK)s on a +19.1% jump in capacity to 7.98 billion (ASK)s, producing a load factor of 78.1% LF, up +2.4 points. Passenger yield dropped -4.4% to 9 cents as (RASK) decreased -1.5% to 7 cents. Cargo traffic grew +5.8% to 640.6 million (RTK)s on a +9.7% rise in capacity to 868.9 million (ATK)s. Cargo yield improved +4.1% to 42.5 cents. "The company's strong third-quarter operating performance provides a solid base for long-term growth and profitability," (LAN) said. "As a consequence, (LAN) is in a position to plan for capacity expansion in response to growth opportunities, while leveraging opportunities to improve its cost performance." Capacity is projected to grow +19% to +21% for full-year 2007, and +20% to +22% in 2008. The carrier will take delivery of 22 new passenger airplanes in 2008, bringing its fleet to 84 comprising 53 A320 family airplanes, five A340-300s and 26 767-300ERs. It additionally will operate nine 767-300Fs by the end of 2008.

A318-122 (3062, CC-CVF), and A320-233 (3280, CC-CQM), deliveries.

November 2007: 1st 9 months = 17.6 billion (RPK)s (+26.1%); 1.95 billion (FTK)s (+4.4%) freight traffic; 8.04 million passengers (+27.1%).

Dragonair (DRG) officially joined Oneworld (ONW), becoming the alliance's 11th member carrier. Its affiliation will add 15 new destinations to the Oneworld (ONW) network, including 12 in mainland China. "Our strong market presence in the mainland will give passengers greater access to this fast-growing market, and at the same time, we can help people connect with our growing network of niche destinations around the region," CEO, Kenny Tang said. Dragonair (DRG), now part of the Cathay Pacific (CAT) Group, operates 31 passenger airplanes and seven freighters to 33 destinations, including 21 in mainland China.

Oneworld (ONW) members (CAT), British Airways (BAB), and Qantas (QAN) opened the first airport lounge developed as an "alliance project" in Los Angeles International Airport's international terminal. Passengers flying Japan Airlines (JAL) or (LAN) Airlines (which operate from that terminal), and elite members of other alliance carriers, will have access to the 1,360-sq-m facility. American Airlines (AAL) maintains its own lounge in Terminal 4.

Goodrich (BFG) signed a 12-year agreement with (LAN) Airlines to provide Maintenance Repair & Overhaul (MRO) and asset management solutions for its fleet of (V2500-A5)-powered A319s and A320s. Goodrich (BFG)'s Alabama Service Center will refurbish thrust reversers and provide as-needed services for inlets and fan cowls. Goodrich (BFG) also will supply on-site spares.

(LAN) Airlines finalized its July order for 32 787s, with 26 purchased directly from Boeing (TBC) and an additional six leased from (ILFC) (ILF). Boeing (TBC) said the Chilean company (LAN) also has committed to acquiring four 777F freighters, two from the manufacturer and two from GECAS (GEF). The purchased 787s are a mix of 787-8s and 787-9s, and are valued at around $4.5 billion at list prices, while those leased from (ILFC) (ILF) will be 787-9s. The 777Fs are valued at approximately $250 million apiece.

(LAN) Airlines placed a firm order with Rolls-Royce (RR) for (Trent 1000)s to power 26 787s, it has on order, to begin delivering in 2012. The order, which includes 15 options, is the first (LAN) has placed with Rolls (RR). The two parties also reached agreement on a long-term TotalCare service program. Total value of the deal, including the 15 options, is more than >$2.4 billion, Rolls (RR) said. (LAN) is slated to be Latin America's largest 787 operator. Rolls (RR) said orders have been placed by 24 customers for more than >600 (Trent 1000)s, comprising "approximately half the 787 customers, who have made an engine decision."

2 767-316ERs (35231, CC-CWY; 36710, CC-CXC), 2 A318-122s (3214, CC-CVH; 3216, CC-CVN), and A320-233 (3319, CC-CQN) deliveries.

December 2007: 767-316ER (36710, CC-CXC), and 2 A318-121s (3214, CC-CVH; 3216, CC-CVN), deliveries.

January 2008: (LAN) Airlines flew 2.2 billion (RPK)s passenger traffic in December, up +13.8% from the year-ago month, against a +13.6% climb in capacity to 2.89 billion (ASK)s. Load factor rose +0.2 point to 76% LF.

2007 statistics: 24 billion (RPK)s passenger traffic +23.1%; +21.4% capacity (ASK)s; +1.1 load factor for 76% LF. SEE ATTACHED COMPARISON CHART TO SELECTED OPERATORS - "LAN-2007-STATS."

(LAN) reported net income of +$308 million for 2007, a +27.8% increase over +$241 million earned in the prior year, as the airline company was rewarded for its ongoing rapid expansion. (LAN) this year plans to grow passenger capacity +20% to +22%, and cargo traffic (ATK)s +8% to +10%, accelerating its already fast rate of growth in recent years. Full-year 2007 revenue rose +16.2% to $3.53 billion, while expenses escalated +13.9% to $3.11 billion, producing operating income of +$413 million, up +36.6% from +$303 million in 2006.

Fourth-quarter net income was +$101 million, up +7.7% from a +$94 million profit in the year-ago period. Revenue jumped +24.9% to $642 million, as capacity grew +14.5% to 8.33 billion (ASK)s and passenger (RASK) for the period lifted +9.1% to 7.7 cents. (LAN) noted that fourth-quarter fuel costs soared +53.9% to $294 million, and overall expenses for the three months rose +27.8% to $914 million.

The company said it will grow Latin American capacity +8% in 2008, and plans to accelerate international service aggressively with a +34% gain in transatlantic capacity, a +20% boost in transpacific capacity and a +13% increase in capacity to North America.

TAM (TPR) and LAN Peru (LPU) launched a codeshare arrangement under which TAM (TPR) will place its code on LAN Peru (LPU) flights between Sao Paulo and Lima, and onward to Cuzco and Arequipa, while LAN Peru (LPU) will have access to "multiple flight options" operated by TAM (TPR), the Brazilian carrier said. It already codeshares with (LAN) Airlines.

Airlines throughout the world are contending with antitrust charges made at the end of 2007 by the European Commission (EC), which has accused at least 11 and as many as 25 carriers of "cartel" activity relating to airfreight transport. In addition to British Airways (BAB), Japan Airlines (JAL), Air France (AFA)/(KLM), (SAS) Group, and Cargolux (CLX) (all of which confirmed receipt of statements of objections from the (EC) before Christmas).(ANA), Air New Zealand (ANZ), Air Canada (ACN), Cathay Pacific Airways (CAT), (LAN) and Singapore Airlines (SIA) have admitted to being charged.

(LAN) said it received a statement of objections "for possible price fixing of cargo fuel surcharges and other fees in the European and United States air cargo markets." It added that LAN Cargo (LCO) was one of "25 cargo airlines" accused by the (EC) of "anticompetitive behavior in the airfreight business."

Carriers charged late last year, have two months from the receipt of statements of objections to respond in writing to the (EC) and also have the option of requesting a formal hearing.

When will it end? That's the question airlines throughout the world are asking regarding the multiple investigations into alleged antitrust violations relating to air cargo transport. The probes, conducted cooperatively by the USA Dept of Justice (DOJ), the European Commission (EC), and regulatory agencies in a number of countries, were launched in February 2006 with surprise raids of airline headquarters around the globe, and already have led to the imposition of significant fines against several leading international carriers. Since the alleged wrongdoing (mainly centered on airfreight rates and fuel and security surcharges) involves international carriage of cargo across numerous borders, airlines are not facing merely one, or even just two or three, investigations. British Airways (BAB), for example, already has been assessed fines by the (DOJ) and the UK Office of Fair Trading, and last month was one of at least 11 airlines officially charged by the (EC). Carriers are also targets of a multitude of lawsuits brought by customers claiming to be "victims" of "cartel" activity. In addition, the (DOJ)'s probe in some instances has moved beyond airfreight to uncover improprieties in passenger charges. Potential liability is stretched far and wide, making it impossible for airlines simply to pay a fine or settle a single lawsuit and move on. The good news is that they are not alone. Qantas (QAN) CEO, Geoff Dixon, whose carrier has agreed to pay a $61 million fine imposed by the (DOJ) relating to cargo rates, says the USA government is investigating as many as 30 airlines. (LAN), one of the companies to receive a formal statement of objections from the (EC) last month, says the Commission (EC) charged 25 carriers with violations.

On the flip side, the bad news for airlines also is that they are not alone. Indeed, the primary allegation made by authorities is that carriers throughout the world repeatedly colluded with each other.
Both (BAB) and Korean Air (KAL) pled guilty last year in a USA federal court to criminal conduct relating to airfreight rates and cargo, plus passenger surcharges, and each paid a $300 million fine. The (DOJ) charged (BAB) "with engaging in a conspiracy to suppress and eliminate competition by fixing the rates charged to customers for international air shipments of cargo" from March 2002 to February 2006. It said (KAL) had been "fixing the rates" on international cargo shipments in coordination with other airlines "from at least January 2000 to February 2006." (BAB), (KAL), and (QAF) all pled guilty to participating improperly in "meetings, conversations and communications" with other airlines to discuss and agree on cargo rates to be charged on key trade lanes and to "levying cargo rates . . . in accordance with agreements reached" during those communications and then engaging in further meetings and communications "to monitor and enforce the agreed-upon rates." The (DOJ) noted that during the nearly four-year period of its wrongdoing, (BAB)'s "fuel surcharge on shipments to and from the United States changed more than 20 times and increased from four cents per kg of cargo shipped to as high as 72 cents per kg."

The (DOJ) has said that Virgin Atlantic Airways (VAA) and Lufthansa (DLH) entered into its "Corporate Leniency Program" and avoided criminal charges and fines by detailing their participation in anticompetitive practices with (BAB) (in Virgin (VAA)'s case) and with both (BAB) and (KAL) (in (DLH)'s case). Virgin (VAA) and (DLH), though, still are liable for paying restitution "to the USA victims of their conspiracies," the (DOJ) said, and (DLH) has settled a string of lawsuits filed in the USA for a collective $85 million.
Given the wide-ranging nature of the charges against (BAB), (KAL), and (QAN), the (DOJ) likely is far from through with charging airlines. It says its investigation is "ongoing." The (EC), meanwhile, issued charges in late December against carriers "concerning their alleged participation in a cartel in the provision of airfreight services." At least 11 have confirmed receipt; formal replies to the charges are due next month. An airline found guilty or admitting to guilt can be fined up to 10% of its annual revenue. Additionally, the Australian Competition and Consumer Commission is considering issuing formal charges against airlines, and FedEx (FED) revealed last month that it was subpoenaed by the (DOJ) to produce documents and appear before a grand jury in relation to an investigation into potential airfreight forwarding antitrust violations that apparently is a separate probe from the one that nabbed (BAB), (KAL), and (QAN). "We do not believe that we have engaged in any anticompetitive activities," FedEx (FED) said. The widespread, global nature of the investigations raises the question of whether practices that were standard, common procedure in the industry just a few years ago, now are being declared illegal.
Authorities were moved to act in part by shipper complaints of repeated hikes of fuel and security surcharges, that were enacted by cargo-carrying airlines in recent years to mitigate rapidly rising energy prices and the costs of complying with post "9-11" regulations. When one or two airlines announced they were raising such fees, others quickly followed. But isn't that what routinely happens regarding passenger fares? And why would airlines issue press releases detailing the hikes within days of each other, if they were colluding secretly with one another? The (DOJ)'s description of repeated improper "meetings," however, does cast doubt on the argument that carriers merely were responding prudently to competitors and rising costs. Airlines generally have not commented on the issue beyond official legal statements and expressions of their commitment to follow all applicable competition laws.

Rolls-Royce (RR) announced that (LAN) Airlines ordered (Trent 1000) engines for six 787-9s leased from (ILFC) (ILF). It placed an order for the powerplant two months ago covering 26 787 Dreamliners ordered directly from Boeing (TBC). The new contract includes a TotalCare service agreement.

A318-121 (3371, CC-CVP), delivery.

March 2008: (LAN) Airlines flew 2.27 billion (RPK)s passenger traffic in February, up +15.8% from the year-ago month, against a +15.1% increase in capacity to 2.8 billion (ASK)s, that lifted load factor +0.5 point to 81% LF.

A318-121 (3390, CC-CVR), delivery.

April 2008: (LAN) Airlines flew 2.3 billion system (RPK)s passenger traffic in March, a +14.2% increase over the year-ago month. Capacity climbed +9.2% to 2.89 billion (ASK)s, and load factor rose +3.5 points to 79.5% LF.

(LAN) Airlines reported +$91.1 million in net earnings in the first quarter, up +5.8% from the +$86.1 million posted in the year-ago period, as revenue soared and its fuel hedges contributed to a positive +$6 million swing. Consolidated revenue rose +29.7% to $1.08 billion as passenger revenue climbed 29% to $693.2 million and cargo revenue jumped +32.4% to $338.1 million. (LAN) cited capacity increases on long-haul routes and a +12% hike in yields, resulting from "improved revenue management initiatives, a better cabin mix and higher fuel surcharges." Expenses grew +34.7% to $953.7 million, driven by a +71.3% increase in fuel costs to $328.2 million. Operating profit lifted by a slight +0.6% to +$124.2 million from the +$123.5 million earned in the first three months of 2007.

The company flew 6.98 billion (RPK)s passenger traffic during the quarter, up +15.1%, against a +12% increase in capacity to 8.7 billion (ASK)s. Load factor improved +2.1 points to 80.3% LF. Yield climbed to 9.9 cents and unit revenue rose +15.1% to 8 cents. Passenger numbers were up +19.4% to 3.2 million.

(LAN) operated 81 airplanes at quarter's end, comprising 72 passenger planes and nine 767-300Fs. It took delivery of two A318s during the period and reached agreement with Airbus (EDS) to swap five more A318s scheduled to arrive this year for five A319s, three of which will be delivered in the 2009 first quarter. It plans to take delivery of 19 airplanes this year, and phase out its remaining 737-200s. It expects to operate 90 airplanes by year end (50 A320 family, 26 767-300ERs, five A340-300s, nine 767-300Fs), but will reduce full-year capacity growth to -16% to -18% from the previously expected -20% to -22%, owing to the later A319 deliveries and a revised maintenance schedule.

"The company's strong first-quarter operating performance provides a solid base for long-term growth and profitability," it said. "As a consequence, (LAN) is in a position to plan for capacity expansion in response to growth opportunities, while leveraging opportunities to improve its cost performance."

The Indian government announced the signing of aviation services agreements with Mexico and Chile.

A318-121 (3438, CC-CVS), delivery.

May 2008: LAN Cargo (LCO) said that it has presented a formal proposal to Colombian aviation authorities to launch a new cargo airline in that country. The airline said that if it gains approval, the new carrier will begin operations within 12 months. "Colombia is currently the largest air cargo market in Latin America, in terms of exports to the United States, with an estimated volume of 200,000 tons annually," (LAN) said in a statement. "The establishment of a subsidiary in Colombia will allow LAN Cargo (LCO)to integrate the country [into] its broad network of routes within the region, also providing connectivity to the United States and Europe."

LAN Cargo (LCO) currently operates nine 767-300F freighters and also transports cargo in the bellies of its 72 (LAN) passenger airplanes. Its full-year 2007 cargo revenue jumped +32.4% to $338.1 million, comprising more than a third of total revenue. It currently owns and operates cargo affiliates in Brazil and Mexico. Its cargo network serves 75 destinations worldwide.

2 767-316ERs (34696, CC-CXE; 35697, CC-CXD), 2 A318-121s (3469, CC-CVU; 3509, CC-CVV), and A320-233 (3535, CC-CQO), deliveries.

July 2008: (LAN) Airlines will operate five-times-weekly, Santiago - Toronto beginning September 3 aboard a 767.

LAN Cargo (LCO) was approved by the Colombian government to launch an affiliate cargo airline there, with plans to initiate services in the first quarter of 2009. Noting that Colombia is "the largest air cargo market in Latin America in terms of exports to the USA," (LAN) earlier this year applied for the right to launch a new airline. It said that the carrier will provide airfreight services between Colombia and the USA using an undisclosed number of 767-300F freighters. It said it will add two new 777F freighters to the fleet next year. Flights to other Latin American destinations are possible. (LAN) estimated that Colombia exports 200,000 tons of air cargo annually to the USA. The Colombian affiliate will be managed by Colombian executives and staffed with technicians from that nation, (LAN) said. It has not been named.

INCDT: The USA National Transportation Safety Board said it is investigating a "near midair collision" between a Cayman Airways (CAY) 737-300 and a (LAN) Airlines 767-300 over New York (JFK) on July 5. It said the Cayman (CAY) airplane was executing a missed approach and "conflicted" with the departing (LAN) flight. It said the closest proximity was undetermined and the parties involved presented conflicting versions of the incident. Both airlines said the National Air Traffic Controllers Association report, which described the evening incident as "very scary," was incorrect. According to the "Associated Press," the USA (FAA) said the airplanes came no closer than 300 ft vertically and more than one-half mile horizontally.

August 2008: Surging revenue and relatively successful efforts to mitigate the impact of rising fuel prices helped boost (LAN) Airlines to a +$47.2 million profit in the second quarter, up +10.7% from the +$42.6 million reported in the year-ago period. It said its "strong first-half performance provides a solid base for long-term growth and profitability. As a consequence, (LAN) is in a position to plan for capacity expansion in response to growth opportunities, while leveraging opportunities to improve its cost performance." Revenue climbed +38.8% to $1.07 billion, owing largely to rising yields and fuel surcharges. Expenses were up +44.2% to $1.03 billion, as fuel soared +83.8% to $389.9 million. Operating profit fell -26.2% to +$43.8 million, from the +$59.3 million reported in the year-ago period, but the bottom line benefited from a $26.9 million hedging gain. The carrier is approximately 53% hedged for the current quarter and 55% for the fourth quarter. (LAN) flew 5.85 billion (RPK)s traffic during the quarter, up +10.4%, against a +8.7% increase in capacity to 8.14 billion (ASK)s, lifting load factor +1.1 points to 71.9% LF. Yield rose +23.3% to 10.7 cents "mainly as a result of improved revenue management initiatives, higher fuel surcharges, as well as the impact of the appreciation of the Chilean peso on domestic fares," it said. Unit revenue was up +25.2% to 7.7 cents.

(LAN) had a good if not great quarter in the off-peak season, which was helped by fuel hedges and strong yields.

The company expects full-year capacity to grow +14% to +16% year-over-year, down from the originally forecast +16% to +18%, as it delays the launch of additional long-haul frequencies until winglets are installed on its 767s.

First-half profit of +$138.3 million was up +7.4% from the +$128.7 million earned in the year-ago semester. Operating income fell -8.1% to +$168 million.

October 2008: (LAN) Airlines reported third-quarter net income of +$80.4 million, up +2% from +$78.8 million in the year-ago period, and said it is optimistic about 2009, despite economic uncertainty. The Santiago de Chile-based carrier plans to raise passenger capacity +10% and cargo capacity +8% next year. "We continue to see opportunities for expansion in the region," CFO, Alejandro de la Fuente told analysts. "We believe that our financial strength and diverse business strategy will give us the flexibility to adjust to changing market conditions . . . We are in a good position to continue growing revenue." He projected a "not more than 10%" decline in 2009 yield despite the recession. He said yield "significantly increased" in the third quarter, but did not provide a figure.

Third-quarter revenue increased +37.7% to $1.2 billion, while costs rose an identical +37.7% to $1.07 billion, producing operating income of +$135.8 million, up +37.6% from $98.7 million last year. (LAN) said net income was affected negatively by a $50 million provision taken in the quarter for potential settlements of USA and (EU) investigations into "possible price-fixing" on cargo fuel surcharges. Traffic lifted +13% to 7.04 billion (RPK)s on +12.9% growth in capacity to 9.01 billion (ASK)s, sending load factor up +0.1 point to 78.2% LF.

(LAN) Airlines said the required adoption of (IFRS) on January 1 will result in a -4.3% decline in shareholders' equity as of December 31, representing a -$42 million reduction to $946 million. (LAN) said the transition will not have a "significant material effect" on future financial results.

November 2008: LAN Airlines (LAN) signed a contract for four 767-300s for delivery in 2012 plus two options, according to a November 10 stock market filing cited by both "Reuters" and the "Associated Press." Neither Boeing (TBC), nor the carrier confirmed the order, which (LAN) said was worth approximately $636 million. It has 26 787s on order.

737-204 (20632) withdrawn from use (WFU) and opens as "AirPub Charlie Yankee" - - SEE ATTACHED ARTICLE & PHOTO - - "LAN-737PUB-NOV08" and check out http://www.pubcharlieyankee.cl

December 2008: (LAN) Airlines flew 2.32 billion system (RPK)s traffic in November, up +9.9% year-over-year. Capacity climbed +12.4% to 3.03 billion (ASK)s, and load factor was down -1.7 points to 76.4% LF.

January 2009: (LAN) Airlines flew 2.44 billion (RPK)s traffic in December, up +10.7% year-over-year. Capacity rose +12.6% to 3.26 billion (ASK)s and load factor dropped -1.3 points to 74.7% LF.

(LAN) managed to keep expense and revenue growth in line in 2008 and reported a full-year profit of +$335.7 million, up +8.9% from the +$308.3 million earned in 2007. The company credited its "solid and flexible business model and the leadership position it has established in the markets in which it operates" for its ability to produce positive results "despite the various elements that constantly affect the airline industry." (LAN) plans to continue its growth this year, increasing capacity (ASK)s +10%. (LAN) will take delivery of four passenger airplanes and two 777F freighters in 2009.

(LAN) reported revenue of $4.53 billion last year, up +28.6% year-over-year. Expenses climbed +28.5% to $4 billion on a +53.1% increase in fuel costs and operating income surged +29.7% to +$536.2 million. The airline group flew 26.95 billion (RPK)s, up +12.3%, against a +11.5% rise in (ASK)s to 35.18 billion. Load factor was up +0.6 point to 76.6% LF. Yield climbed +15.9% to 10.6 cents and unit revenue grew +16.7% to 8.1 cents. It ended 2008 with 50 A320 family airplanes, 26 767-300ERs, five A340-300s and nine 767-300Fs.

In the fourth quarter, (LAN) earned +$117.1 million, up +16.1% from a +$100.8 million profit in the final quarter of 2007. Operating income soared +76.2% to +$232.3 million. It lost -$24.5 million on its fuel hedges and an additional -$4.6 million on foreign exchange fluctuations.

3 A319-132s (3770, CC-CYI; 3772, CC-CYJ; 3779, CC-CYL), deliveries.

February 2009: (LAN) Airlines flew 2.67 billion system (RPK)s traffic in January, up +10.8% year-over-year. Capacity climbed +14.2% to 3.43 billion (ASK)s, dropping load factor -2.3 points to 77.9% LF.

(LAN) Airlines is working on an interim solution to fill the gap until the first of its 26 787s finally arrives, CEO, Enrique Cueto said, and now expects the first 787 Dreamliner to come two years late "by the end of 2013." Speaking at the Oneworld (ONW) anniversary event in Madrid (MAD), Cueto said there is no easy or obvious fix. (LAN) currently operates 26 767-300ERs and expects six more to join the fleet over the next three years, as part of the interim solution. It will outfit most of its 767s (excluding leased airplanes) with blended winglets, which he said "gives us better nonstop performance out of Lima and Quito for our flights to (MAD)."

Five A340-300s operate (LAN)'s main European route - - Santiago de Chile to (MAD). But without the 787, "we don't have the right airplane to fly beyond (MAD)," Cueto said, limiting opportunities to add new European destinations. The group also operates 50 A320 family airplanes.

(LAN) weathered the storm in 2008 and reported a +$335.7 million profit, and while Cueto said the 2009 first quarter looks "quite good," he expressed concern over the downturn in the cargo business. "(LAN) is one of the few passenger airlines worldwide which makes 40% of its business with cargo," he said. "But cargo is in a bad situation." Nevertheless, the carrier is increasing its presence in Miami and Colombia.

(LAN) will continue to split its operation between the international unit based in Chile and its subsidiaries in Ecuador, Argentina, and Peru. "It's maybe a more complex organization, but we get more flexibility for things like balancing financial incomes," Cueto said. LAN Peru (LPU) currently holds an 86% domestic market share, he revealed. Asked if subsidiaries in countries like Venezuela or Nicaragua are planned, he said competitors like Copa Airlines (COP) and Grupo TACA (TAC) are "very good airlines" and (LAN) is in no hurry to create a new company.

March 2009: (LAN) Airlines celebrated the 80th anniversary of its launch; its first Miami flight was 1958 - - SEE ATTACHED PHOTO - - "LAN-80TH ANNIVERSARY-MAR09."

(LAN) flew 2.46 billion (RPK)s traffic in February, a +8.2% increase from the year-ago month. Capacity climbed +9.7% to 3.08 billion (ASK)s and load factor dipped -1.2 points to 80% LF.

(LAN) expects to complete retrofit of all A340-300s by the end of this year’s first half.

April 2009: (LAN) Airlines flew 2.47 billion (RPK)s traffic in March, up +7.6% from the year-ago month. Capacity increased +12.5% to 3.25 billion (ASK)s, reducing load factor -3.4 points to 76.1% LF.

A -$57.9 million loss on its fuel hedges was the key driver in a -34.7% year-over-year drop in (LAN)'s first-quarter profit, a +$65 million surplus that compared to the +$99.6 million reported in the first three months of 2008.

First-quarter operating revenue dropped -14.5% year-over-year to $882.2 million against a -13.4% decline in costs to $764.1 million. Operating profit fell -21% to +$118.1 million from +$149.5 million in the year-ago quarter.

(LAN) credited its "flexible business model and the leadership position . . . in the markets in which it operates" for its ability to stay profitable despite the global downturn. It reported its results under (IFRS) for the first time, and restated its year-ago figures accordingly in order to provide meaningful comparisons. Its 2008 full-year profit was +$336.5 million under (IFRS) as opposed to +$335.7 million under Chilean (GAAP).

(LAN) flew 7.61 billion consolidated (RPK)s traffic during the quarter, up +8.9%, while capacity rose +12.2% to 9.76 billion (ASK)s. Load factor slipped -2.3 points to 78% LF and passenger yield fell along with fuel surcharges and fares on "certain routes" to 8.6 cents, a drop of -14.1%. Unit revenue declined -16.6% to 6.7 cents.

(LAN) took delivery of three new A319s during the quarter, increasing its fleet to 93 airplanes, and expects to be operating 53 Airbus (EDS) narrow bodies, five A340-300s and 26 767-300ERs, along with nine 767-300Fs and two 777-200Fs, by the year end. Full-year capacity is expected to climb +10%.

(LAN) said it "continues to maintain a solid financial position with ample liquidity and a sound financing structure" with no short-term debt and plans to raise $250 million this year through loans from Chilean banks.

(LAN) said it "recently" operated its first commercial flight with a blended winglet-equipped 767-300. It said it is investing nearly $70 million in equipping its entire 767-300 fleet, numbering 37 passenger and cargo airplanes, with winglets before year end.

777-26NFs (37708, N772LA; 37710, N774LA), deliveries.

June 2009: TAM (TPR) will perform "C" maintenance checks on three A319s and two A320s and a "D" Check on an additional A319 belonging to (LAN) Airlines at its center in Sao Carlos.

July 2009: (LAN) Airlines reported second-quarter net income of +$4.2 million, down -93% from a +$60.5 million profit in the year-ago period, but touted its continued growth even in a recession as traffic rose +13.5%.

Quarterly results included a -$52.6 million fuel hedging loss. (LAN) said it is "important to note that amidst the weakened global economic environment and despite the seasonally weak months, (LAN) continued to show significant growth in its passenger operations, demonstrating its solid market position in the routes in which it operates." Whereas many major airlines around the world are slashing capacity, (LAN) expects full-year passenger capacity to be up +10% over 2008. The growth, it said, is "mainly driven by the domestic markets in Chile, Peru, Argentina, and Ecuador."

It added that its financial position is "sound," pointing to $700 million in cash and cash equivalents at the end of the second quarter. It noted that it raised $250 million during the year's first half through loans from Chilean banks "to increase liquidity."

(LAN) took delivery of 2 777-200F freighters during the quarter, becoming the first Latin American airline to operate the type. Its fleet now totals 96 airplanes, comprising 53 A320 family airplanes, 27 767-300ERs, 5 A340-300s, 9 767-300Fs, and 2 777-200Fs. It plans to grow its fleet to 119 airplanes by 2012, including 13 freighters.

Second-quarter revenue decreased -21.7% to $785.1 million, while expenses lowered -18.2% to $750.2 million, producing an operating income of +$34.9 million, down -59.1% from +$85.3 million in the year-ago period. Traffic increased +13.5% to 6.64 billion (RPK)s on a +10.9% lift in capacity to 9.03 billion (ASK)s, producing a load factor of 73.6% LF, up +1.7 points. Passenger yield declined -21.5% to 8.2 cents, while (RASK) fell -19.7% to 6.1 cents.

Cargo revenue, which comprises 26% of (LAN)'s total revenue, plunged -43.4% in the quarter on a -12.7% drop in capacity to 904.5 million (ATK)s and a -19.9% dip in traffic to 596.4 million (RTK)s. Cargo load factor slid -5.9 points to 65.9% LF and yield fell -29.3% to 33.7 cents.

August 2009: (LAN) Airlines flew 2.55 billion (RPK)s traffic in July, up +6.7% from the year-ago month. Capacity rose +10.6% to 3.36 billion (ASK)s, lowering load factor -2.8 points to 76% LF.

September 2009: (LAN) Airlines flew 2.51 billion (RPK)s traffic in August, a +4.4% increase year-over-year. Capacity rose +7.4% to 3.28 billion (ASK)s and load factor slipped -2.2 points to 76.5% LF.

(LAN) is feeling the effects of the industry crisis but said it expects to report a profit this year thanks to its domestic strength in Chile, Argentina, Peru, and Ecuador and a robust cash position.

Company officials in Santiago said the company generated +$248 million in net income in the 12 months ended June 30, and they expect some $4 billion in revenue in 2009 on a +15% increase in passenger numbers to 15 million. (LAN) claimed its cash position is strong, with $700 million in cash and equivalents. It was +$69.2 million in the black through the first six months.

Nevertheless, it has suffered a -20% drop in yield in some markets, the effect of which has been mitigated by its ability to cut costs by the same margin in some areas, VP Business Planning & Control - Passenger Division Ernesto Solis Grau said. "Reduced fuel costs have also helped us. We are continuing to fine tune where we can increase prices," he said. He claimed (LAN)'s (EBITDAR) margin of 22.7% is one of the highest in the industry.

Cargo revenue, which comprises 34% of (LAN)'s total, plunged -43.4% in the first quarter on a -12.7% year-over-year drop in capacity and a -19.9% dip in traffic to 596.4 million (RTK)s. But it sees signs of recovery in the freight market and is working on new ideas to compensate for falling demand. It launched LAN Cargo Colombia this year, operating from its main cargo base in Miami to Medellin and Bogota. "This is a regional strategy. We also have a cargo subsidiary in Brazil operating flights from Sao Paolo to Manaus," Solis Grau said. It has not grounded any of its freighters.

Freight is key for (LAN). Belly cargo on passenger airplanes is allowing (LAN) to reach breakeven on those flights with a 65% LF load factor. "Without cargo, we must have a 79% LF load factor. The cargo business has a direct impact to the bottom line and that's why it is so important for us," he said. (LAN)/(LCO) took delivery of 2 777-200Fs in the 1st quarter. A 3rd airplane is scheduled for delivery in 2011.

(LAN) currently operates 13 A318s, 20 A319s, 18 A320s, 26 767-300ERs, 9 767-300Fs and the 2 777-200Fs. Next year it expects to operate 103 airplanes and is targeting 115 in 2011 and 147 by 2013 to 2014. It has 26 787s on order and is expecting the 1st in 2013. "We don't have more information [about the delivery schedule]," Solis Grau said. It will add 2 new 767-300s this year.

(LAN) will complete installation of Aviation Partners Boeing (APB) blended winglets on its 767-300ER fleet by August 2010. "We invested $70 million on winglets for 28 passenger and nine freighter airplanes. The winglets save about -5% in fuel burn on our airplanes and deliver 320 miles extra range," VP Business Planning & Control Passenger Division Ernesto Solis Grau said in Santiago. Installation will be handled during "C" maintenance checks, taking around 25 days each. (LAN) Maintenance also completed cabin renovation of its A320 family fleet this year and a $120 million installation of its new business class (C) product on its 767-300ERs and A340-300s. That work appears sufficient for now, as (LAN) officials said that the maintenance division has no plans to offer 3rd-party work in the future.

Delta (DAL) TechOps signed a 1-year contract with (LAN) Airlines to install blended winglets and provide airframe maintenance on a portion of its 767 fleet.

October 2009: (LAN) Airlines reported third-quarter net income of +$52.1 million, down -47.3% from a +$83 million profit in the year-ago period, as both passenger and cargo yield declined owing to the recession and the swine flu scare. (LAN) pointed out in a statement that "amidst the weakened global economic environment and despite the impact of the H1N1 flu on regional markets, (LAN) continued to report strong growth in passenger operations." It noted that the quarterly results were affected by a -$14.4 million fuel hedging loss that was reversed from a +$29.2 million hedging gain in the year-ago period.

(LAN) also said that during the quarter it finalized long-term financing from the USA Export-Import Bank for 3 767s to be delivered in the current quarter and next year.

Third-quarter revenue fell -19.1% to $917.5 million, while expenses decreased -14.3% to $825.1 million, producing operating income of +$92.4 million, down -46.1% from +$171.3 million in the year-ago period. Traffic grew +7.6% to 7.58 billion (RPK)s on a +9.1% rise in capacity to 9.83 billion (ASK)s, producing a load factor of 77.1% LF, down -1.1 points. Passenger yield lowered -16.3% to 8.8 cents.

Cargo traffic dropped -7.5% to 669.1 million (RTK)s on a -4.2% cut in capacity to 973.8 million (ATK)s, producing a load factor of 68.7% LF, down -2.4 points. Cargo yield decreased -34.8% to 32.3 cents.

Avianca (AVI) has confirmed it is merging with Grupo TACA (TAC). In a letter to employees, (AVI) CEO, Fabio Villegas said (AVI)'s board after months of study has decided to pursue a "strategic merger" with Grupo TACA (TAC). But Villegas stressed that each company intends to maintain its own identity and will continue to operate independently. He said "the project offers big opportunities given the multitude of synergies" the two carriers will be able to pursue. Their combined network will also provide (AVI) and (TAC) customers with improved connections throughout the Americas and the world. The two carriers already code share on some routes.

"I am sure with the commitment of all employees we will create with (TAC) the most important airline leader in Latin America," Villegas said. He called the deal with (TAC) "of great significance for our company and the Latin American aviation industry in general". Villegas said combined, the carriers have an "optimistic future" which is sure to be "recognized nationally and internationally".

(LAN) Airlines is now the biggest airline group in Latin America, with passenger airlines in Chile, Argentina, Ecuador, and Peru, plus cargo airlines in Brazil, Colombia, Mexico, and the USA. Publicly-traded (LAN) also has been looking at establishing new passenger airlines in Colombia and Brazil, perhaps through a merger or acquisition.

Grupo Taca (TAC) includes airlines in nearly every Central American country as well as in Peru. (TAC), which is privately owned, also has a stake in Mexican low-cost carrier Volaris (VLS).

(AVI) is predominately owned by Brazil's Synergy Group, which also owns Brazilian carrier OceanAir (ONE) and Ecuadorean regional carrier, VIP. It is unclear if the (AVI)-(TAC) tie-up will include these smaller carriers but (AVI) already last year took over the management of OceanAir (ONE). (AVI) last year also acquired Colombian cargo carrier Tampa (TMP).

Once the transaction is complete, (TAC) CEO & Chairman, Roberto Kriete will serve as Chairman of the new group’s board of directors and (AVI) CEO, Fabio Villegas plans to serve as CEO. Other members of the new company’s senior management team include current (TAC) COO, Estuardo Ortiz who will assume the same role upon the company’s formation, and (AVI) CFO, Gerardo Grajales, who also assumes the same role once the merger is complete.

(AVI) is roughly double the size of (TAC) on a revenue basis with the former generating about $2 billion in annual revenues and the latter about $1 billion. (LAN) as a group last year generated $4.5 billion in revenues.

(LAN) Ecuador (LNE) starts Quito - Cuenca with A318s.

November 2009: (LAN) Airlines flew 2.69 billion (RPK)s traffic in October, up +15.7% year-over-year, against a +10.1% lift in capacity to 3.35 billion (ASK)s. Load factor rose +3.9 points to 80.2% LF.

The Gate group announced an extended four-year contract between its Gate Gourmet subsidiary and (LAN) Airlines covering catering and provisioning at eight South American and four long-haul destinations. (LAN) also reached a four-year deal for asset management and galley planning services with Gate subsidiary Pourshins. The deals are worth a combined CHF200 million/$196.6 million.

767-316ER (37800, CC-CXI), delivery.

December 2009: (LAN) Airlines flew 2.62 billion (RPK)s traffic in November, up +13.3% from the year-ago month. Capacity rose +8.8% to 3.3 billion (ASK)s, lifting load factor +3.2 points to 79.5% LF.

(LAN) signed a contract for the purchase of 30 A320 family airplanes for delivery between 2011 and 2016. (LAN) said the airplanes are valued at $1.97 billion at list prices and "will be used for the renewal and growth of (LAN)'s short-haul fleet." (LAN) said it plans to sell five A318s in 2011 as part of the renewal effort.

The (LAN) mainline and its affiliates currently operate 85 passenger airplanes and 11 freighters. The passenger fleet comprises 767-300ERs, A340-300s and A320 family airplanes.

767-316ER (37801, CC-CXJ), delivery.

January 2010: (LAN) Airlines recorded a net profit of +$231.1 million in 2009, down -31.3% from the +$336.5 million earned in 2008, a result it claimed demonstrated "the strength of the company's business model and (LAN)'s resiliency to external shocks." Last year's result was impacted by a -$128.7 million fuel hedging loss that compared to a +$35.4 million gain in 2008. Revenue fell -14.7% to $3.66 billion, a drop driven by a -7% decline in passenger revenue resulting from lower fuel surcharges and pricing promotions designed to stimulate demand plus a -32.1% plunge in cargo revenue. Expenses were cut -12.1% to $3.22 billion. Operating profit slipped -29.7% to +$435.7 million.

(LAN) flew 29.83 billion (RPK)s traffic last year, up +10.7%, against a +10.2% lift in capacity to 38.78 billion (ASK)s. Load factor rose +0.3 point to 76.9% LF and passenger numbers climbed +16.3% to 15.4 million. Yield declined -16% to 8.8 cents and unit revenue was down -15.6% to 6.8 cents. (LAN) plans a +10% lift in capacity in 2010, plus a +16% to +18% rise in cargo capacity driven by increased utilization.

(LAN) ordered 30 A320 family airplanes last month for delivery in 2011 to 2016. Its fleet at the end of 2009 comprised 15 A318-100s, 20 A319-100s, 18 A320-200s, 27 767-300ERs, five A340-300s, nine 767-300Fs, and two 777-200Fs.

Fourth-quarter net profit of +$109.8 million was up +17.6% from the +$93.3 million in the year-ago quarter. Operating profit fell -10.9% to +$190.3 million on a -4% slip in revenue to $1.07 billion.

February 2010: (LAN) Airlines flew 3.15 billion (RPK)s traffic in January, up +17.6% year-over-year, against a +11.4% lift in capacity to 3.82 billion (ASK)s. Load factor rose +4.3 points to 82.3% LF.

Chile President-elect, Sebastian Pinera approved the sale of his 26% stake in (LAN) Airlines, the largest single shareholding in the carrier, clearing the way for the Cueto family, which owns the second-largest share at between 20% and 25%, to buy some or all of the wealthy politician's holding. Pinera takes office next month and has promised to sell his holdings in (LAN) and other Chilean companies to avoid conflicts of interest. His (LAN) stake is worth $1.5 billion, according to "Reuters." The Cueto family has the first option to buy as much of Pinera's stake as it wants and/or can afford, and has 20 days to make its decision.

Later, Chile President-elect, Sebastian Pinera agreed to sell an 8.6% stake in (LAN) Airlines to the Cueto family for around $500 million, according to multiple news reports. The purchase brings the Cuetos' holding in the airline to 31.75%, eclipsing Pinera as the largest single shareholder, according to a release issued by the family cited by "Reuters." Pinera, who at one point owned a 26% stake in (LAN) but is attempting to offload his entire holding before taking office next month to avoid a conflict of interest, reportedly will sell a 5% stake on the Bolsa de Comercio de Santiago, the country's main stock exchange. He continues to search for a buyer for the remaining 12.4%.

Sabre Travel Network signed a multiyear, full-content distribution agreement with (LAN) Airlines and a deal to provide its SabreSonic Customer Sales and Service reservations system and Sabre AirCentre Enterprise Operations solution.

767-316ER (37802, CC-CXK), delivery.

March 2010: (LAN) Airlines resumed limited domestic and international service from Santiago, where it has helped set up a temporary tent facility for passengers. "The situation is far from normal operations. We are working to be able to resume just 15% of our domestic and international operations," President & COO, Ignacio Cueto said. (LAN) will focus on transferring passengers affected by cancellations. Afterward, "operations are expected to begin getting back to normal," the airline said. This earthquake was centered some 200 miles to the southwest of the Chilean capital.

Chile President, Sebastian Pinera completed offloading his ownership stake in (LAN) Airlines by selling an 8% share to Chile's Solari and putting the remaining 3.3% up for sale on the Bolsa de Comercio de Santiago, the country's main stock exchange. Solari secured its holding by spending $426 million to purchase Axxion, the investment firm previously owned by Pinera through which he owned a controlling 26% interest in (LAN) just a few weeks ago. He agreed to sell his (LAN) holdings after winning the country's presidential election but took office this month before completely unwinding his interest in the airline. He blamed last month's massive earthquake for delaying the sale of all shares until after his March 11 inauguration. He last month sold 8.6% to the Cueto family for around $500 million, giving them a controlling 31.75% interest in (LAN). The 3.3% sold on the stock exchange reportedly raised just under $200 million. Temasek Holdings announced that it had purchased 1.18% of (LAN) from the shares Pinera put on the stock exchange. He earlier put about 5% on the stock exchange.

Separately, (LAN) said that it signed an agreement with Boeing (TBC) to push forward the delivery of the first of its 10 787s to the first half of next year from 2014 as previously planned, meaning that it will become the first carrier in the Western Hemisphere to receive the 787 Dreamliner.

April 2010: Despite an estimated -$25 million net negative impact from the massive earthquake that struck Chile in late February, (LAN) Airlines reported a first-quarter net profit of +$88.3 million, up +35.8% from net income of +$65 million in the year-ago period.

(LAN) said the improved profitability reflected "a strong recovery in both the cargo and passenger businesses." It noted, however, that the demand recovery "was partially offset by the negative impact" of the February 27 earthquake. "The earthquake caused damage to the terminal building at the Santiago International Airport, affecting all air travel in and out of the country," it said. Normal operations were re-launched March 2 from provisional facilities.

Neither cargo operations nor passenger operations in Peru, Ecuador and Argentina were "materially affected by the earthquake," (LAN) said. It is particularly bullish on rebounding cargo demand, saying that cargo traffic as measured in (RTK)s lifted +29% year-over-year during the first three months, while cargo revenue jumped +35.3%. Cargo yields improved +4.9%.

The company touted its "solid financial position," saying it holds "ample liquidity" with $657.2 million in cash and cash equivalents on hand as of March 31 "representing 17.3% of revenues for the last 12 months." It added that it "has no short-term debt, while its long-term debt is mainly related to airplane financing and has 12- to 15-year repayment profiles with competitive interest rates." With 80% of revenue USA dollar-denominated, exposure to foreign exchange rate fluctuations is "limited," it said.

First-quarter revenue grew +17.3% to $1.04 billion, while expenses heightened +16.7% to $892 million, producing operating income of $142.9 million, up +21% from $118.1 million last year. Traffic rose +6.7% to 8.12 billion (RPK)s on a +4.9% lift in capacity to 10.23 billion (ASK)s, producing a load factor of 79.3% LF, up +1.4 points. Passenger yield improved +6.6% to 9.1 cents, as (RASK) increased +8.4% to 7.2 cents. (LAN) projects that 2010 full-year capacity will rise +10% year-over-year.

May 2010: (LAN) Airlines announced an agreement with Aeroasis under which the start-up Colombian carrier will become part of the (LAN) group of airlines. Aeroasis is not yet operational and has to obtain an air operating certificate (AOC) from the Colombian government. (LAN) said it will provide the start-up "with technical support and service consultancy in the process of obtaining an operating permit from the Colombian civil aviation authority. This process includes the hiring of personnel and elaboration of technical materials, as well as the selection and acquisition of equipment, all according to the applicable legal and regulatory frameworks."

(LAN) has built up a comprehensive South American network by establishing subsidiaries in Peru, Ecuador, and Argentina. It did not say how long the process will take for Aeroasis to launch; it originally proposed to start operations in 2007 but has been unable to build up enough capital to acquire airplanes and gain an operating certificate.

June 2010: (LAN) Airlines flew 2.49 billion (RPK)s traffic in May, up +13.9% year-over-year, against a +10.7% lift in capacity to 3.35 billion (ASK)s. Load factor rose +2 points to 74.3% LF.

International traffic accounted for 70% LF of (LAN)’s total.
Domestic passenger traffic in Argentina, Chile, Ecuador, and Peru during the month rose +15.2% on +10.1% more supply. Loads in these markets increased +3.3 points to 75.3% LF. International demand at the same time grew +13.3% on a +11% rise in capacity; loads grew +1.5 points to 73.8% LF. (LAN) says this growth was attributed to increased operations to Europe, Mexico, and the Caribbean. (LAN)’s cargo traffic also increased in May, rising +39.3%, because of a recovery in imports to Latin America driven by Brazil and the increased operations to Europe. This improvement produced a +4.4-point rise in cargo loads to 70.4% LF.

July 2010: (LAN) Airlines operated 2.47 billion (RPK)s traffic in June, up +15.5% from the year-ago month. Capacity rose +15.4% to 3.43 billion (ASK)s and load factor increased +0.1 point to 72% LF.

(LAN) posted second-quarter net income of +$60.6 million, significantly widened from a +$4.2 million profit in the year-ago period, and credited "a strong recovery in both the cargo and passenger businesses" for the earnings growth. Quarterly revenue jumped +31.7% to $1.04 billion, as passenger revenue rose +24.5% and cargo revenue lifted +60.3%. Second quarter expenses increased +22.8% to $921 million and operating income was +$112.6 million, more than triple +$34.9 million in the prior-year quarter. (LAN) said operating margin reached 10.9%, up +6.4 points. Operating income included a +$1.3 million realized fuel hedging gain, reversed from a -$52.6 million realized fuel hedging loss in the 2009 second quarter.

(LAN) said full-year 2010 passenger capacity will be up around +10% with another +15% to +17% boost in (ASK)s projected in 2011. Cargo capacity is projected to lift +20% for full-year 2010.

Second quarter traffic heightened +9.7% to 7.28 billion (RPK)s on an +11.1% lift in capacity to 10.03 billion (ASK)s, producing a load factor of 68.1% LF, up +2.7 points. Passenger yield rose +13.5% to 9.3 cents as (RASK) increased +12.1% to 6.8 cents.

(LAN) Airlines launches four-times-weekly, Lima - San Francisco service aboard a 767-300.

At the Farnborough Air Show, (LAN) signed a Memo of Understanding (MOU) for 50 A320 family airplanes, including 10 A321s. If consummated, the order will represent the largest single airline order for Airbus (EDS) in Latin America and brings (LAN)’s total Airbus (EDS) orders to 152 airplanes.

Regarding (LAN)’s long haul fleet, it noted that it signed an agreement this month with Boeing (TBC) to bring forward the delivery of two of its 12 787s to 2012. (LAN) is slated to be the first airline in the western hemisphere to take delivery of the 787 Dreamliner. During the first half of 2010, (LAN) took delivery of one 767-300 airplane. It expects to receive eight A320 family airplanes before year-end. Additionally, it expects to receive 17 A320 family airplanes in 2011 to "operate domestic and regional routes." Next year it will also receive three more 767-300s.

August 2010: (LAN) Airlines operated 2.92 billion (RPK)s traffic in July, a +14.5% increase year-over-year on a +9.9% rise in capacity to 3.69 billion (ASK)s. Load factor jumped +3.2 points to 79.2% LF.

Two of Latin America’s most significant airline groups, Chile’s (LAN) Airlines and Brazil’s TAM Linhas Aéreas (TPR), have unveiled plans to form the region’s largest operator. Few details about the merger are being disclosed, but if approved, it will create a company with more than >40,000 employees and operations to 115 destinations in 23 countries.

To emphasize the potential size of the new company, the combined entity will be named LATAM Airlines Group, although the two companies will operate as separate brands. Under a memorandum of understanding (MOU) revealed late August 13, TAM (TPR) will be folded into (LAN), with shareholders in the Brazilian company gaining 0.90 (LAN) shares for every one they currently hold.

A management structure has already been agreed, with (LAN) CEO, Enrique Cueto retaining that role at the new parent company. Mauricio Rolim Amaro, head of TAM (TPR)’s board of directors, will serve as LATAM’s Chairman. Maria Claudia Amaro also remains as Chairman at TAM Airlines (TPR), while (TPR) President & CEO, Marco Bologna will retain his CEO responsibilities. Libano Barroso will also continue as President of (TPR), TAM Airlines (TPR)s’ parent company.

"Reuters" later reported that TAM (TPR)had filed a regulatory filing confirming a preliminary merger accord, though the company said the deal is nonbinding.

The prospective (LAN) Airlines/TAM (TPR) merger, if it is cleared by both companys' shareholders and relevant regulators, will create a new airline company that aims to be the dominant operator in Latin America and a formidable presence on the world stage, with a major battle over alliance membership likely on tap.

The all-stock transaction, which the airlines aim to complete in the first half of next year, is valued at $3.7 billion and would create a parent company, the LATAM Airlines Group, with combined annual revenue of $8.5 billion. Executives made clear that the intent of the merger is to build a platform for future growth.

"Together, (LAN) and TAM (TPR) will be able to offer new destinations that neither company could have supported on its own," (TPR) CEO, Marco Bologna said. "This will position us to compete with the many foreign carriers that continue to increase service to our region."

(LAN) already operates affiliate carriers in Peru, Argentina, and Ecuador, and in May announced that start-up Colombian carrier "Aeroasis" will become part of the (LAN) group of airlines, all of which will come under the LATAM umbrella. (LAN) CFO, Alejandro de la Fuente said the networks of (LAN) and (TPR) "are highly complementary with little overlap." He added that in addition to a passenger network spanning 115 destinations in 23 countries, LATAM will offer "the most comprehensive cargo network in Latin America."

The airlines said LATAM will provide "seamless passenger and cargo services across the continent and around the world," but executives did not say in which airline alliance (LAN)/(Tpr) would be a member. (LAN) is in the Oneworld (ONW) alliance, while TAM (TPR) joined the Star (SAL) Alliance in May. (LAN) CEO and designated LATAM CEO, Enrique Cueto said the airlines "don't have an answer to that question" presently.

"There are hundreds of millions of dollars at stake when measured in access to almost the entire South American market,"the Centre for Asia Pacific Aviation (CAPA) said in an analysis of the proposed merger and its global implications. It said (LAN) is the "driver" behind the merger and will ultimately make the call on which alliance the group will be a part of, possibly favoring the Oneworld (ONW) alliance.

"But merely dumping the Star (SAL) alliance is not a decision to be taken lightly," it stated. "TAM (TPR) has many valuable linkages throughout the Star (SAL) alliance grouping."

SEE ATTACHED "FLIGHT INTERNATIONAL" ARTICLE - - "LAN-2010-08-TPR MERGER."

A320-233 (4400, CC-BAB), ex-(D-AVVD), delivery.

September 2010: A +13.7% year-on-year rise in traffic on +11.7% more available seat miles in August improved (LAN) Airlines’ monthly load factor +1.3 percentage points to 77.8% LF. International traffic, which accounted for 70% of the monthly total, grew +13.1% (RPM), while capacity increased +12.5% (ASM), resulting in a +0.4-point rise in loads to 78.2% LF. This growth, says (LAN), was attributed to increased operations to the USA and some regional expansion.

Domestic traffic for (LAN)’s operations in Argentina, Chile, Ecuador, and Peru, meanwhile, rose +15.1% on +10% more (ASM)s. This produced loads of 76.8% LF, +3.4 points higher than in August 2009.

Cargo traffic grew +16% in August, due mainly to a recovery in imports to Latin America driven by Brazil and increased operations to Europe. LAN Cargo (LCO)’s Brazilian affiliate ABSA (BSB) at the same time recorded a 68.4% LF load factor.

SEE ATTACHED "LAN-2010-09-TPR MERGER" regarding new LATAM Airlines Group (described last month).

A318-121 (3469, CC-CVU), leased to (LAN) Ecuador (LNE). A320-233 (4439, CC-BAC), ex-(D-AVVX), and 767-346F (35818, N422LA), ex-(JAL), ex-(JA73J).

October 2010: (LAN) Airlines' third-quarter net income more than doubled to +$106.2 million compared to +$52.1 million in the prior-year period, "driven by a strong recovery in both cargo and passenger operations."

Quarterly revenue increased +25.6% to $1.15 billion, while expenses rose +20.7% to $995.7 million, producing operating income of +$156.6 million, up +69.5% over $92.4 million in the year-ago period. It stated that the positive results "are evidence of a global recovery as well as continued growth opportunities." (LAN)'s full-year 2010 passenger capacity is projected to rise +10% compared to 2009 with 2011 capacity increasing another +15% to +17%.

LAN Cargo (LCA) expects +20% capacity growth for the full year "mainly driven by higher utilization of the freighter fleet, especially the two 777-200F freighters received in the first half of 2009," (LAN) noted. Airfreight capacity is projected to lift another +13% to +15% in 2011 owing mostly to the expected delivery of three 767F freighters between December and February 2011.

Third-quarter passenger traffic heightened +14.2% to 8.65 billion (RPK)s on an +11.5% boost in capacity to 10.96 billion (ASK)s, producing a load factor of 78.9% LF, up +1.9 point. Passenger yield grew +4.8% to 9.2 cents. Cargo traffic jumped +19% to 796 million (RTK)s on a +19.1% increase in capacity to 1.16 billion (ATK)s, producing a flat load factor of 68.7% LF. Cargo yield rose +25.6% to 40.5 cents.

(LAN) Airlines has unveiled plans to acquire Colombian carrier Aires (AIR), only hours after it informed analysts of its plans to exercise its option to buy Colombian start-up AerOasis.

The (LAN) group says it has forged an agreement to acquire 99% of (AIR) for about $32.5 million. It says the deal is subject to regulatory approvals and due diligence, which it estimates will take 30 to 60 days.

(AIR) is currently the second largest carrier after Avianca (AVI) in Colombia's fast-growing domestic market, operating to 27 Colombian cities with a fleet of nine 737-700s, 11 Bombardier DHC-8-Q200s and four DHC-8-Q400s. (AIR) also has a fledgling international network consisting of three destinations which it has been intending to grow dramatically.

(LAN) says (AIR) will become a new (LAN) affiliate carrier, joining the passenger carrier affiliates it already has in Argentina, Ecuador and Peru. (LAN) says if its pending merger with (TAM) (TPR) is completed, (AIR) will also become part of the proposed LATAM Airlines Group.

(LAN) has been looking at entering the Colombian market for some time and in May unveiled plans to tie up with AerOasis, a proposed start-up which has been planning to launch services in Colombia since 2006. The two companies initially said the partnership only included (LAN) providing consulting services and helping AerOasis with the certification process. But in late July, (LAN) CFO, Alejandro de la Fuente told analysts (LAN) was aiming to bring AerOasis into its airline group once the carrier launched operations. De la Fuente, during an analysts call earlier on 27 October to discuss third quarter earnings, said (LAN) was still intending to have AerOasis become part of (LAN) and explained this would be achieved by exercising an option it has to acquire AerOasis.

Given (LAN) is now planning to acquire an established carrier in Aires (AIR), it would seems unlikely it will go forward and exercise its option to acquire AerOasis. In its statement announcing the (AIR) acquisition, (LAN) does not mention its option to buy AerOasis but says its agreement to buy (AIR) "has no impact on the technical support and service consultancy provided by (LAN) to Colombian airline AerOasis in the process of obtaining its operating permit issued by the Colombian Civil Aviation Authority".

During the 27 October analyst call, de la Fuente said AerOasis was expected to secure all the required regulatory approvals early next year and launch services in February with three A320s subleased from (LAN). He said (LAN)'s planned acquisition of AerOasis would occur just before its planned February launch and just after it is authorised to begin operations. "We have an option to purchase the company. Once the regulatory approvals are received, the idea is to acquire AerOasis" de la Fuente explained.

De la Fuente said while AerOasis was planning to launch operations with three of (LAN)'s A320s, the plan was to increase its fleet to five airplanes "fast". He added that "we have plans to increase the operation to 10 airplanes in a short period".

(LAN) executives said AerOasis would initially operate only domestically following "more or less" a low-cost model but international flights would be added later. (AIR) currently operates its 737s under a low-cost model, while its DHC-8-Q200s are operated under a more traditional regional model.

AerOasis is currently owned by Colombian investment firm Corso. (AIR) is privately owned by a group of Colombian families although it previously said it would look at some point for a public offering to help fund its ambitious expansion. (LAN) says it is acquiring 99% of (AIR) "through the purchase of its parent entities". As there are not any foreign airline ownership restrictions in Colombia, (LAN) should not have any problems securing approval to acquire (AIR) or AerOasis.

(LAN)'s foray into Colombia will increase competition between (LAN) and the recently established Avianca (AVI) - TACA (TAC) group. The two groups already compete head to head in Peru, where they both have affiliates.

Competition will also increase between (LAN) and Panama's Copa (COP), which has a subsidiary in Colombia that was recently rebranded from Aero Republica (REU) to Copa Airlines Colombia (REU). Aero Republica (REU) is the third largest carrier in Colombia, having recently been overtaken by fast-growing Aires (AIR).

Former Avianca (AVI) President, Juan Emilio Posada also is preparing to launch a new low-cost airline in Colombia in the third quarter of next year with backing from a major South American investment bank. EasyFly, a Colombian regional carrier which was launched in 2007 by former Aero Republica (REU) owner, Alfonso Avila, also has been looking at entering domestic trunk routes following its low-cost model.

In speaking to analysts earlier on 27 October, (LAN) executives acknowledged Colombia is a highly competitive market but pointed out it is also "very attractive" because it is growing so fast. In the first half of this year Colombia's domestic market grew +38% to 7.4 million passengers and its carriers expect growth to continue as low fares and fast economic growth generate new demand.

De la Fuente told analysts that while (LAN) has "very strong competitors" in Colombia its operation there will be very cost efficient. "The idea is to grow very fast in that market," he said.

Net income for the first nine months of 2010 amounted to +$255.1 million, more than double the +$121.3 million earned in the year-ago period. Operating revenues increased +24.6% to $3.22 billion and operating income was +$412.1 million compared to +$245.4 million in 2009.

(LAN) and (TAM) (TPR) recently said they have agreed to the final transaction structure of their proposed combination under a single holding company, called the LATAM Airlines Group.

SEE ATTACHED "AIRLINE BUSINESS" ARTICLE - - "LAN-2010-10-LATAM MERGER."

November 2010: (TAM) (TPR) President, Libano Miranda Barroso said in Panama City that the planned (TAM)/(LAN) Airlines merger will "have some similarity to the [British Airways (BAB)] and Iberia (IBE) merger" with both carriers' brands continuing to exist.

The all-stock transaction, which the airlines aim to complete in the first half of next year, is valued at $3.7 billion and would create a parent company, the (LATAM) Airlines Group, with combined annual revenue of $8.5 billion. Relevant papers recently were submitted to the Brazilian National Civil Aviation Agency, or (ANAC), the airlines have stated.

Observers around the world are wondering which alliance the combined airline company will choose. (LAN) is in the Oneworld (ONW) alliance while (TAM) (TPR) joined the Star (SAL) Alliance in May.

Barroso, in Panama City for the recent (ALTA) meeting, said no decision regarding alliance membership has been made. "We have to look at the big picture," he said of the ongoing deliberations on the issue. "It is important to have a strong alliance." (LATAM) would have a market-share of about 50% in South America, prompting the Centre for Asia Pacific Aviation to comment that "there are hundreds of millions of dollars at stake" in regards to which alliance (LATAM) joins.

Barroso said the alliance decision could take "up to two years" to make, adding that it is "possible" (LATAM) could remain a member of both alliances.

Star (SAL) Alliance CEO, Jaan Albrecht said dual membership can't be ruled out. "Everything is possible at this stage," he explained. "It depends especially on what makes sense for the customer and how deep the integration of [(LAN) and (TAM)] goes."

(LAN) Airlines said it signed a definitive agreement to purchase 98.94% of Aires (AIR) for $12 million in cash and the assumption of $100 million in net liabilities including $18 million of bank debt. In October, (LAN) announced that it would be taking over Colombia's second largest domestic airline, which has a 22% market share.

"This transaction will provide the opportunity for an affiliate of (LAN) to participate in the Colombian passenger market, one of the largest markets in South America, thus allowing for (LAN) and its affiliates to continue strengthening their regional presence," (LAN) said in a recent statement.

(LAN) already operates affiliates in Argentina, Ecuador and Peru and plans to merge with Brazil's TAM (TPR) under a single holding company next year. It also launched a Colombian cargo affiliate, (LANCO), last year. President & COO, Ignacio Cueto said (LAN) will be "elevating even further [Aires (AIR)'s] safety, quality and service standards" and predicted passengers would "benefit from the changes that will gradually be incorporated to the (AIR) operations."

(LAN) said that in "the medium term," Aires (AIR) "will evaluate the expansion of international passenger operations and the advantages of any synergies it may obtain from (LANCO)." It added that the (LAN)/Aires (AIR) integration process "may involve certain operational changes such as itinerary modifications and efficiency improvements" but "will not interfere with the continuity of current operations of (AIR)."

The European Commission (EC) fined 11 airlines a total of €799 million/$1.1 billion for "operating a worldwide cartel which affected cargo services within the European Economic Area." In a statement, the (EC) said the carriers "coordinated their action on surcharges for fuel and security without discounts over a six-year period." Air France (AFA) received the largest fine at €182.9 million, followed by its affiliate (KLM) at €127.2 million. Other fines include British Airways (BAB) (€104 million), Cargolux (CLX) (€79.9 million), Singapore Airlines (SIA) (€74.8 million), (SAS) (€70.2 million), Cathay Pacific Airways (CAT) (€57.1 million), Japan Airlines (JAL) (€35.7 million), Martinair (MTH) (€29.5 million), Air Canada (ACN) (€21 million), Qantas (QAN) (€8.9 million) and (LAN) Airlines (€8.2 million).

Lufthansa (DLH) and its subsidiary Swiss International Air Lines (CSR) "received full immunity from fines under the (EC)’s leniency program, as it was the first to provide information about the cartel," the (EC) stated.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said (EC) VP Competition, Joaquin Almunia. "With today’s decision, the (EC) is sending a clear message that it will not tolerate cartel behavior." The (EC) charged that the "cartel members" coordinated pricing from December 1999 to February 2006.

The (EC) in late 2007 sent out official statements of objections to as many as 25 carriers regarding cargo price fixing. It said that 11 carriers originally charged were not fined.

The (EU), USA Department of Justice, Australian Competition and Consumer Commission and other authorities worldwide have been investigating anti-competitive practices in air cargo since 2005. Cargolux (C LX) President & CEO, Ulrich Ogiermann and Senior VP Sales & Marketing, Robert Van de Weg were recently indicted in a USA court on charges of conspiring to fix and coordinate certain surcharge rates on air cargo shipments to and from the USA.

In a statement, Air France (AFA)/(KLM) said it considered the level of the fine to be "disproportionate given the fact that the economic analysis demonstrated that the actions in question had no detrimental effect on the freight shippers or the freight forwarders. Moreover, the level of the fines disregards the economic hardship that the air cargo industry has suffered, and will have a distortive effect on the level playing field." It added that it intends to appeal the decision to (EU) courts. Because the level of the fine exceeds the level of provisions already taken by the company for potential cargo antitrust payments, (AFA)/(KLM) will book a charge of €127 million for the first half of its current fiscal year.

(SAS) said in a statement it has not been involved in a global cartel and the fines are disproportionate. It also plans to appeal the decision, a process that could take several years. The fines will be accounted for in (SAS)'s third-quarter earnings.

Air Canada (ACN) said in a statement it may appeal the decision and said the penalty is “more than adequately” covered by a C$125 million provision it made in 2008.

"We are highly disappointed and strongly contest the considerable level of the fines, which we believe to be disproportionate to (SAS) Cargo's actions," said (SAS) Chief Legal Officer, Mats Loennkvist. "We have cooperated fully with the (EC) during the entire investigation and, for slightly more than four years, we have disputed the (EC)'s view that (SAS) Cargo has been involved in a global cartel."

(GE) reached a Performance-based Navigation (PBN) Services agreement with (LAN) Airlines to design and deploy an optimized navigation network at five airports in Peru, Chile, and Ecuador, including Lima-Jorge Chávez International airport. (GE)'s (PBN) Services business will design the optimized arrivals and departures using Required Navigation Performance technology.

December 2010: (LAN) Airlines in November added two percentage points to its load factor, which grew to 81.5% LF on a +11.2% year-on-year increase in traffic and +8.5% more capacity. Most of this growth is attributed to the operator’s international sector, which recorded a +12.9% rise in demand on +9.2% more supply. Loads as a result improved +2.7 points to 82.4% LF.

(LAN) says these gains were driven by its services to Europe and the USA, and “certain regional routes.” International flights account for 70% of (LAN)’s total passenger traffic. Domestic operations in Argentina, Chile, Ecuador and Peru, meanwhile, posted a +0.2-point gain in loads to 79.6% LF on a +7.4% rise in traffic and +7.1% increase in capacity. During November, cargo traffic also improved +9.6%, due mainly to the recovery and growth of the import markets to Latin America, notably Brazil, and increased operations to Europe. Excess freight capacity, however, depressed loads -1.6 points to 72.5% LF.

(BOC) Aviation (SIL) announced it signed an agreement for the lease of one new A320-200 airplane to (LAN) Airlines. The airplane, powered by (IAE) (V2527E-A5) SelectOne engines, is scheduled for delivery in the first quarter of 2011. This deal marks the second time that (BOC) (SIL) has worked with (LAN).

(LAN) CEO Passengers, Armando Valdivieso said, “(LAN) Airlines has been serving the Latin American air transportation market for 81 years. We are pleased to partner with (BOC) Aviation (SIL) as we strengthen our flight schedules with the new airplanes.” (SIL) Deputy Managing Director & CCO, Steven Townend noted that (LAN) is one of the strongest airlines in the Americas and is growing quickly.

(LAN) Airlines finalized a previously announced order for 50 new A320 family airplanes. The order was initially announced at the Farnborough International Airshow in July. It represents the largest single airline order for Airbus (EDS) in Latin America and brings (LAN)'s total Airbus (EDS) orders to 152 airplanes. Airbus (EDS) said the airplanes, to be equipped with Sharklets, will begin delivering in 2013. They will add capacity and in some cases be used to replace retiring airplanes. The order includes 10 A321s.

(LAN) COO, Ignacio Cueto said, "Since 2008, our short-haul fleet has been entirely composed by A320-family airplanes.

Separately, the "Associated Press" reported that a strike by LAN Argentina (LNR) flight attendants (CA) is expected to cause the delay or cancellation of about 30 flights daily.

January 2011: (LAN) Airlines in December posted a +3.4%-point year-on-year improvement in its monthly load factor, which rose to 80.1% LF. This increase was produced on +8.8% more capacity (ASM)s and a +13.7% (RPM) growth in traffic. (LAN)’s international operations, which accounted for about 71% of all traffic, recorded a +15% increase in traffic on a +10.7% rise in supply; loads as a result grew +3.1 points, compared with December 2009. “During December, international capacity expansion was mainly driven by an increase in operations on routes to the United States, as well as certain regional routes,” says (LAN).

Domestic loads in Argentina, Chile, Ecuador, and Peru, meanwhile rose four points to 78.8% LF on +5.1% more capacity and a +10.7% increase in demand.

(LAN)/(LCO)’s freight operations in December also posted a +9.9% year-on-year in traffic due to improved Latin American import markets, especially Brazil, but a +12.3% rise in capacity depressed cargo loads -1.6 points to 72% LF.

Copper, Chile’s largest export, reached record prices last month.

(LAN) posted 2010 net income of $419.7 million, up +81.6% over earnings of +$231.1 million in the year-ago period, crediting the improvement to "strong recovery and growth in both the cargo and passenger businesses."

The impressive results were recorded even with Chile suffering a massive earthquake in February 2010. (LAN) noted that fourth-quarter passenger revenue grew +17.3% year-over-year, while cargo revenue jumped +31.2%. Fourth-quarter net income lifted +49.9% compared to the 2009 December quarter to +$164.6 million on a +21.6% rise in revenue to $1.3 billion.

"(LAN)'s strong operating results during the quarter evidenced the ample growth opportunities in both cargo and passenger markets," (LAN) said in a statement, adding that its "diversified, solid and flexible business model and solid balance sheet" buttresses its "long-term strategic position."

It reiterated that the finalization of its merger with Brazil's TAM (TPR) under LATAM Airlines Group parent will take six to nine months.

Full-year 2010 revenue heightened +23.7% over 2009 to $4.52 billion, while expenses grew +21.1% to $3.9 billion, including a +21.1% rise in fuel costs to $1.16 billion. Operating income of +$622.9 million was up +43% from a +$435 million operating profit in the prior year.

System traffic in 2010 increased +11.1% to 33.15 billion (RPK)s on a +9.2% lift in capacity to 42.36 billion (ASK)s, producing a load factor of 78.3% LF, up +1.3 points. Yield was up +6.4% to 70.6 cents as (RATK) improved +8.6% to 48.9 cents, and (CATK) heightened +5.7% to 43.6 cents. Cargo (RTK)s grew +23.5% to 3.24 billion on a +20.5% rise in (ATK)s to 4.62 billion, leading to a load factor of 70.1% LF, up +1.7 points. Cargo yield increased +15.8% to 39.5 cents.

(LAN) is now flying from Lima to Easter Island in the South Pacific.

(LAN) Airlines reached a bilateral interline agreement with Jetstar Airways (IMU) giving (LAN) network customers increased connectivity both within Australia and New Zealand and on international routes between the countries of Oceania and Southeast Asia, it said.

(LAN) expects to resume expansion and place A320 family airplanes at its new Colombian subsidiary, Aires (AIR) by the end of this year or early next year.

(LAN) also expects (AIR), which was highly unprofitable when it was acquired by (LAN) in November, will be break even by early 2012. (LAN) executives told analysts it is now focusing on stabilizing (AIR) and once this phase is complete, fleet and network expansion will resume. (AIR) will also be re-branded "LAN Colombia" within the next year.

(AIR) currently operates a fleet of nine 737-700s and 15 Bombardier DHC-8 turboprops, primarily domestically as all but one of its international services was cut by (LAN) earlier this month. (LAN)'s narrow body fleet consists entirely of A320 family airplanes, with over 60 of the type in service and more than >80 additional airplanes on order.

(LAN) passenger division VP, Luis Eduardo Riquelme told analysts that (LAN) intends to have (AIR) also operate A320s, explaining the "idea" is for the entire group to have a common narrow body fleet. "The timing depends on the commitments the company already has," Riquelme says, referring to the leases (AIR) currently holds on its 737s and DHC-8s.

But he adds regardless of how long it takes to replace (AIR)'s current airplanes, (LAN) will use A320s to start growing (AIR)'s fleet later this year or early next year.

Riquelme says the first A320s to be operated by (AIR) will likely be the three A320s used by AerOasis on certification flights. (LAN) since the middle of last year has been helping AerOasis with the certification process, which is now in the final stages, and has an option to acquire the carrier once it is certified.

Riquelme says of one of AerOasis' A320s is now being operated within the (LAN) network in other South American countries and AerOasis' other two A320s "are in the process of moving to the rest of the group". But he says these three airplanes "will go back to Colombia once the conditions are there to start growing. Basically those planes will be used in other parts of the network until (AIR) is in good condition to receive new airplanes and have the crews and everything that is necessary to add those airplanest to the current fleet."

Riquelme calls (AIR)'s exit from the international market with the exception of the Bogota - Fort Lauderdale route temporary. "The idea with (AIR) is to first stabilize and then grow," he explains. "We expect we will be able to restart international operations - some of them or all of them - during this year and then grow by the end of this year or in 2012."

Riquelme says (LAN) is now working on several items which need to be resolved for (AIR) to have a profitable international operation. One of these issues is distribution and having (AIR) carry the (LAN) code and take on the (LAN) name. "We expect that will happen by the end of the year or 2012," Riquelme says.

(LAN) CFO, Alejandro de la Fuente told analysts the airline group does not expect a positive contribution from (AIR) this year. "We expect to reach break even numbers in 2012," de la Fuente says, adding eventually (AIR) will have similar margins as (LAN)'s other short-haul operations in Argentina, Chile, Ecuador and Peru.

While (AIR) is now unprofitable, de la Fuente says the acquisition was an "important milestone" for (LAN) as it furthers the company's goal of being established in all major South American markets. (AIR) is the second largest domestic carrier in Colombia, which is the second largest market in South America.

"The Colombian market is very relevant in South America with over >12 million domestic passengers and with a traffic growth opportunity," de la Fuente says. "(LAN)'s immediate focus is on restructuring the (AIR) operation with the objective of implementing (LAN)'s safety and service standards." He adds: "Once this process is completed, the Colombian operation will become known as "LAN Colombia" and we'll focus on implementing our low-cost model in the domestic passenger operation. We also see significant potential in the development of long-haul routes from Colombia and an integrated passenger and cargo operation."

(LAN) already has a cargo carrier in Colombia which it launched in 2009.

de la Fuente says (AIR) will be included in (LAN)'s income statements starting with the first quarter of 2011. As of the fourth quarter of 2010, (AIR) was already included in (LAN)'s balance sheet, accounting for $87 million in net liabilities and $94 million in goodwill.

(LAN) took delivery of five A320s and two 767-300Fs during the fourth quarter. In 2011, it expects to receive 20 A320 family airplanes, three 767-300s and one 767-300F. It plans to sell five A318s this year. (LAN) noted that it has assumed the operating leases of nine 737-700s, 11 Bombardier DHC-8-Q200s and four DHC-8-Q400s through its acquisition last November of Colombia's Aires (AIR). It said it will operate a total passenger fleet of 154 airplanes led by 84 A320 family airplanes by 2012.

February 2011: (LAN) Airlines operated 3.56 billion (RPK)s traffic in January, a +13.3% increase year-over-year on a +12.6% rise in capacity to 4.31 billion (ASK)s. Load factor rose +0.5 points to 82.7% LF.

Chile's anti-trust court (TDLC) has accepted a request by the consumer rights organization (CONADECUS) to investigate the competitive impact of the planned merger between (LAN) and TAM (TPR) and has ordered to "suspend the process" while it conducts an investigation. While the Chilean Public Prosecutor for Economic Matters opened immediately after the merger plans were first announced by (LAN) and (TPR) last August, a case to investigate, and eventually limit, the deal's impact on the Santiago - Sao Paulo trunk route, the (CONADECUS) request broadens the investigation to the overall market situation in Chile.

According to (CONADECUS), the merger may "generate a severe and negative impact to competition which goes much beyond the Santiago - Sao Paulo route", claiming that the court should take into account not only a single route, but also the general consequences for the travel market. A (CONADECUS) spokesman says that "(LAN) has a history of dominating the market where it operates" and that the (TLDC) should take into account "the principles of free competition and consumer rights" from a global perspective. He adds that "(LAN)'s historic relations with competitors have frequently been inadequate," suggesting that (LAN) tries to create de-facto monopolies to raise fares.

The (TLDC) has accepted the (CONADECUS) request for investigation and has therefore suspended the (LAN) - (TPR) merger process during the information collecting and internal decision period.

According to its official bulletin, it has invited the Chilean Public Prosecutor for Economic Matters, the Ministers of Transport and Economy, the Civil Aviation Authority, the National Tourism Agency, (IATA) Chile, travel agent associations as well as airlines operating within or to and from Chile to submit their opinions and requests regarding the planned merger within 30 days.

A (LAN) spokesman says the airline group is "aware of the matter" but declined to comment on it. (LAN) executives told analysts they hoped to complete the merger transaction in six to nine months. But they warned the deal was still contingent on approval from competition authorities in several countries including Chile, Argentina, Brazil, Germany, Italy and Spain.

(LAN) ordered three additional 767-300ER airplanes valued at $493 million at today’s list prices. This order brings the total number of 767s ordered from (LAN) to 33. (LAN)’s fleet currently consists of 28 767-300ERs and 11 767-300F freighters.

March 2011: (LAN) Airlines and affiliates Lan Peru (LPU), Lan Argentina (LNR) and Lan Ecuador (LNE) signed a bilateral interline agreement with JetBlue Airways (JBL), under which (LAN) passengers gain access to up to 55 cities in the USA, Latin America and the Caribbean through (JBL)'s hub at New York (JFK). (JBL) customers gain access to (LAN) destinations in South America. Under the terms of the deal, customers will be able to purchase a single ticket for travel on both airlines and take advantage of one-stop check-in for boarding passes and baggage.

"This agreement makes it possible to connect passengers with attractive new destinations and offers more convenient connections, including 150 new daily interline flights to and from New York, Boston, Chicago, and Washington DC, as well as others in the Midwest and Western United States," (LAN) Airlines CEO Passenger Division, Armando Valdivieso said.

(JBL) in January disclosed it would seek to add "another six partnerships or so" this year. (JBL) also interlines with American Airlines (AAL), Lufthansa (DLH), South African Airways (SAA), Aer Lingus (ARL), Emirates (EAD), El Al (ELA) and Cape Air.

The merger of (LAN) Airlines and TAM (TPR) under the (LATAM) Airlines Group, which had seemingly been headed for a smooth conclusion this year, hit a possible roadblock when Chilean antitrust (ATI) tribunal, (TDLC) announced it would investigate the proposed combination. A Chilean consumer group filed a petition against the merger with the (TDLC) that the carriers had pushed the panel to reject. But the (TDLC) said the group's complaint was worthy of hearing, necessitating an "investigation" into whether the new airline grouping would violate Chilean antitrust (ATI) regulations. The probe could last all of 2011, the (TDLC) noted. That timetable casts doubt on whether the merger can close this year as planned.

April 2011: (LAN) Airlines overcame a +32% rise in fuel prices to post a net profit of +$97.2 million in the first quarter ended March 31, up +10.1% compared to income of +$88.3 million in the year-ago period. (LAN) noted that current period results were net of a -$11 million loss at its Aires (ARE) subsidiary in Colombia acquired last year. Total revenues rose +31.9% to $1.36 billion, reflecting a +31% increase in passenger revenues to $977.8 million, a +30.2% rise in cargo revenues to $346.4 million, and a +45.1% increase in other revenues to $40.6 million.

Operating expenses increased +35.8% to $1.21 billion, as airplane fuel expense jumped +43.5% and wages and benefits climbed +34.6% "driven by higher headcount," it said.

Operating profit rose +7.3% to +$153.3 million from +$142.9 million but operating margin slipped to 11.2% from 13.8% a year ago. Passenger traffic climbed +20.5% to 9.79 billion (RPK)s on a +18.2% increase in capacity (ASK)s to 12.09 billion, pushing load factor up +1.6 points to 80.9% LF. Yield climbed +9.5% to 10 cents, while revenue per (ASK) rose +11.7% to 8.1 cents. Cargo (RTK)s climbed +16.6% to 852 million on a +18% increase in capacity to 1.25 billion, resulting in a load factor of 67.9% LF, down -0.8 point. Cargo yield rose +11.7% to 40.7 cents and revenue/(ATK) increased +10.4% to 27.6 cents.

Despite the strong results, (LAN) said it will slow its planned growth this year, with passenger capacity (ASKs) now expected to rise +16% to +18%, reduced from +20% to +22% previously forecast.

During the quarter, it took delivery of three A319s, six A320s and one 767-300F. It expects to receive +11 more A320 family airplanes this year as well three 767-300s for long-haul routes. Five A318s will be sold.

Mxi Technologies announced (LAN) Airlines completed enterprise-wide implementation of its Maintenix Software.

June 2011: (LAN) Airlines CEO, Enrique Cueto said he expects Chilean antitrust tribunal (TDLC) to complete its investigation into the merger between (LAN) and TAM (TPR) under the (LATAM) Airlines Group and approve the deal by the middle of July, enabling the transaction to close before the end of 2011.

Cueto said that if the anticipated ruling is appealed to the country’s high court, it could take another three months, pushing the closing into 2012. Cueto told media that (LAN) has offered significant concessions on the Santiago - Sao Paulo route, where the carriers have a combined 90% share. (LAN) has offered to raise capacity +10% per annum over the next five years, while lowering fares -10% each year as well. It is also offering airport slots to potential new entrants as well as interline and frequent flyer reciprocity.

LAN Cargo (LCO) agreed to pay $59.7 million to settle its portion of a civil class action suit brought in the USA related to cargo price fixing. The case was filed after parent, (LAN) Airlines reached a plea agreement with the USA Department of Justice over airfreight antitrust violations. Campinas-based, ABSA Cargo Airline (BSB), in which (LAN) Airlines holds a majority stake, will pay $6.3 million towards the class action settlement, bringing (LAN)'s total to $66 million. (LAN) said the payment of the full amount will be disbursed no later than June 14. The civil class action was initiated against 42 airlines.

(LAN) Airlines placed a firm order for 20 A320neo airplanes as part of its expansion strategy and fleet renewal program. (LAN) becomes the first in South America to sign a firm order for the re-engined narrow body.

August 2011: (LAN) Airlines launched twice-weekly, Guayaquil - Quito - San Cristobal (Galapagos Island) A320 service.

The (LAN) - TAM (TPR) Airlines merger has moved a step closer after the antitrust unit of Brazil's Finance Ministry gave its OK. This approval is the first of three hurdles to overcome in Brazil. A ruling from Chile is also awaited.

(LAN) Airlines has completed the installation of winglets on its entire 767 fleet, an $80 million investment. By year end, it projects a reduction of approximately 113,000 tons of carbon dioxide.

September 2011: Chilean antitrust tribunal (TDLC) approved the merger of Chile's (LAN) Airlines and Brazil's TAM (TPR), though it cautioned that the carriers must agree to a number of conditions before combining under the (LATAM) Airlines Group, the single holding company that will own them both.

(LATAM) will operate passenger and cargo flights to 115 destinations in 23 countries with more than >280 airplanes. It will employ more than >40,000 workers. The airlines plan to maintain independent brands following the combination. (LATAM) would become one of the largest airline companies in the world with annual revenue of around $8.5 billion.

The conditions set by (TDLC) include the disposing of four daily slot pairs at Sao Paulo Guarulhos (GRU), to be turned over to airlines seeking to start or increase (GRU) - Santiago de Chile service. They also would force (LATAM) to exit the Oneworld (ONW) or Star (SAL) Alliance. (LAN) is in Oneworld (ONW) while (TPR) joined the Star (SAL) Alliance in May 2010. The battle over which alliance the mega-airline will participate is likely to be intense, with considerable market penetration in Latin America at stake. Among other conditions set by (TDLC), (LAN) will have its access to the Lima market restricted.

The airlines were not ready to say whether they will agree to the conditions. "The antitrust court's resolution is complex and considers a series of mitigating measures," (LAN) and (TPR) said in a joint statement. "Therefore, both companies are currently analyzing in depth the implications and impact of the measures imposed by the court. (LAN) and (TPR) will publically communicate the companies' position regarding the antitrust court's resolution and its various mitigating measures as soon as possible."

Kale Consultants was selected by (LAN) Airlines for its Revera Interline service to process passenger interline billings.

October 2011: (LAN) Airlines announced an increase of +11.1% passenger boardings in September, with a +10.4% increase in (ASK)s and load factor going up +0.5 percentage points to 80.3% LF. International passenger traffic represented 68% of systemwide results.

International passenger boardings went up +5.5%, while (ASK)s grew +4.1% and load factor grew +1.1% point to 81.5% LF. Domestic passenger traffic grew +25.3%, while (ASK)s increased +25.9%, bringing load factor down -0.3 percentage points to 77.8% LF. (LAN)´s consolidated domestic results comprise the respective domestic results of (LAN) carriers in Argentina, Chile, Colombia, Ecuador and Peru. Cargo traffic went up +11.2% in (FTK)s and cargo load factor grew +0.8 percentage point to 70.6% LF.

(LAN) Airlines reported a third-quarter net income of +$94.5 million, down -11% compared to +$106.2 million in the year-ago quarter. (LAN) said the results were driven by “solid traffic growth, reflected in strong yields and load factors in both the passenger and cargo businesses.”

Total operating revenue rose +29% to $1.49 billion, while expenses increased +33% to $1.33 billion, producing an operating income of +$161.2 million, up +2.9% over +$156.6 million in the year-ago period.

During the quarter, passenger and cargo revenues climbed +32.6% and +22.5%, respectively, reflecting continued growth in both markets.

Higher fuel prices during the quarter, which increased +42.8% compared to the year-ago quarter, generated $133.8 million in increased fuel costs. (LAN) said its financial hedging strategy resulted in a -$3 million fuel hedge loss.

Third-quarter passenger traffic heightened +13.7% to 9.84 billion (RPK)s on a +11.4% boost in capacity to 12.2 billion (ASK)s, producing a load factor of 80.6% LF, up +1.6 points. Passenger yield grew +16.6% to 10.8 cents. Cargo traffic jumped +11.7% to 889 million (RTK)s on a +10.7% increase in capacity to 1.3 billion (ATK)s, producing a load factor of 69.3% LF, up +0.6 point. Cargo yield rose +9.7% to 44.5 cents.

Net income for the first nine months of 2011 amounted to +$207.7 million, down -18.6% compared to the year-ago period. Operating revenues increased +29.9% to $4.18 billion and operating income was +$370.3 million, down -10.2% from +$412.1 million in 2010.

(LAN) Airlines said it reached a settlement to pay Chilean airline PAL Principal Airlines (PCP) $5 million regarding the pending legal proceeding before the Chilean antitrust tribunal (TDLC) and their appeal before the Chilean Supreme Court in connection with the merger process between (LAN) and (TAM) (TPR). The companies believe the merger is still on track to conclude toward the end of the first quarter 2012.

767-316ER (40590, CC-BDB), A319-112 (36002, CC-BCD), ex-(D-AVYA), and A320-214 (4892, CC-BAR), ex-(D-AVVG) deliveries.

November 2011: 767-316ER (40591, CC-BDC), and 3 A320-214s (4896, CC-BAS, ex-(F-WWBO); 4921, CC-BAT, ex-(D-AXAA), 4943, CC-BAU, ex-(D-AXAQ), deliveries.

December 2011: Brazil’s Council for Economic Defense (CADE) has approved the merger between Chile’s (LAN) Airlines and Brazil’s TAM (TPR) in a unanimous vote.

The antitrust regulator imposed two conditions before allowing the carriers to combine under the (LATAM) Airlines Group, the single holding company that will own them both. The airlines must give up two slot pairs at Sao Paulo Guarulhos for the Sao Paulo - Santiago route and exit either the Oneworld (ONW) or the Star (SAL) Alliance. (LAN) is a (ONW) Alliance member and (TPR) is part of the Star (SAL) Alliance.

(LAN) and (TPR) said “both conditions are in line to what (LAN) offered to the Chilean Fiscalía Nacional Economica last January, through an out-of-court agreement and were afterward reiterated by Chile’s antitrust court.”

The carriers said the regulation approval process for the merger is now complete in Brazil and the merger will close in the first quarter of 2012.

(LAN) Airlines shareholders approved (LAN)'s planned merger with Brazil's TAM (TPR) under the (LATAM) Airlines Group, taking another step toward the expected completion of the combination early next year. (LATAM) will control more than >40% of the Latin American air passenger market.

The transaction will take the form of an all-stock exchange in which (TPR) shareholders will be offered 0.9 shares of common stock of (LATAM) for each share of TAM (TPR). (TPR) shareholders cleared the merger in a December 23 vote.

Antitrust regulators in Chile and Brazil have given conditional approval of the transaction, and (LAN) expects a ruling from the Chilean Supreme Court in January on its appeal of some of the requirements set by the Chilean antitrust tribunal (TDLC). That will allow for the merger to be finalized by the end of the 2012 first quarter, according to (LAN).

(LAN) Airlines and Amadeus have signed a full-content distribution agreement. The multi-year agreement guarantees Amadeus travel agents worldwide access to the entire range of fares, schedules and inventory relating to the more than >18 million seats sold annually by the (LAN) Group Airlines ((LAN) Airlines, LAN Ecuador (LNE), LAN Perú (LPU), LAN Argentina (LNR), Aires (AIR), and LAN Express (LDE)).

Amadeus has content agreements with key airlines in Latin America including AviancaTaca (AVI)/(TAC), Copa Airlines (COP) and (TAM) (TPR).

January 2012: (LAN) Airlines and TAM Airlines (TPR) said their planned merger under the (LATAM) Airlines Group, expected to be completed by the end of March, will produce even more synergies than previously expected. The carriers last week revised upward from $400 million per year to $600 to $700 million annually the value of the synergies expected to result from a merger that will create a mega-airline group controlling more than >40% of Latin America's air passenger market.

The $600 to $700 million annual figure won't be realized until four years after the completion of the merger transaction, but the airlines believe $170 to $200 million will be achieved within a year of the combination's finalization.

The higher synergy estimate "reflects further revisions and updates of the expected combined cost savings and revenue generating opportunities arising from the proposed combination and includes best practice sharing benefits that have been identified in certain areas," the carriers said in a statement.

Breaking down the numbers further, (LAN)/(TPR) said approximately 40% of the potential synergies will come from increased passenger revenue ($225 - $260 million), +20% from higher cargo revenue ($120 to $125 million) and 40% from cost savings. According to (LAN)/TPR), expense savings will come from consolidating frequent flyer programs ($15 to $25 million), coordinating airport and procurement activities ($100 to $135 million), improved maintenance efficiency ($20 to 25 million) and information technology system convergence ($120 to $130 million).

The synergy estimates do not count one-time merger costs of $170 to $200 million expected to be incurred by (LAN)/(Tpr). But those costs will be somewhat offset longer-term by reduced investments of around $150 million for engine and spare part purchases that will be avoided because of the merger.

A319-112 (5005, CC-BCE), ex-(D-AVYH) delivery.

February 2012: (LAN) Airlines posted 2011 net income of +$320.2 million, down -23.7% from a net profit of +$419.7 million in 2010. Operating income decreased by -13.4% to $539.7 million, while operating margin slid -4.3 points to 9.4%.

Higher fuel prices, the impact of starting up (LAN) Colombia (AIR) and the volcanic ash cloud that disrupted air traffic in Argentina and Chile were cited as the main causes of the net income dip.

Fourth-quarter net income declined -31.6% compared to the 2010 December quarter to +$112.5 million. Quarterly operating revenue rose +17.9% to $1.54 billion.

For the full year, overall (ASK)s were up +13.7%. Domestic passenger traffic grew +23.7% and international passenger traffic increased +12.6%. Cargo revenue rose +23.1% as airfreight traffic increased by +11.5%.

The (LAN) Group boarded 17.2 million passengers last year and transported 780,000 tonnes of cargo. For 2012, (LAN) expects (ASK)s to grow between +12% and +14%, driven mainly by 13 new airplanes joining the fleet. Cargo (ATK)s may grow between +7% and +9%, as two 777Fs enter operations in the second half of the year.

Starting in August, (LAN) and its sister airline, LAN Peru (LPU) will increase frequencies out of their respective hubs of Santiago and Lima to major destinations in the USA, Mexico and the Caribbean. New York, Los Angeles, San Francisco, Cancún and Mexico City are among the destinations to be considered.

(LAN)’s International General Manager, Damian Scokin said in some cases frequencies may double and approximately +20 new frequencies may be added overall. About 40% of (LAN)’s passengers are leisure travelers; the new frequencies aim to improve connectivity between South and North America and the Caribbean, Scokin said.

(LAN) continues to move forward with its planned merger with Brazil's (TAM) (TPR) under the (LATAM) Airlines Group. The combination is expected to be finalized by the end of March. Within the first year after completion of the transaction, pre-tax synergies may reach $170 million to $200 million.

AirFrance Industries (AFI)/(KLM) (E&M) signed an eight-year (APU) support contract with (LAN) Airlines covering its fleet of 777Fs. The services will be provided by (EPCOR), while pool access will be provided by (AFI)/(KLM) (E&M).

The board of (TAM) (TPR) has approved previously announced plans that entail (CEO) Libano Barroso becoming (CFO) of the holding company being created as a result of the (LAN) - (TAM) (TPR) merger. Other changes include Marco Antonio Bolonga, (CEO) of TAM (TPR)'s holding company, assuming the CEO role at TAM Airlines.

Once the merger is complete, current (LAN) (CEO), Enrique Cueto will become (LATAM)'s (CEO), while (LAN)'s (COO), Ignacio Cueto will become (LAN)'s (CEO).

(LAN) recently said it expects to close the merger in April. (LATAM) will be the holding company for the merged entity.

Twelve A320 family airplanes, nine 767-300ERs and two 787-8s are scheduled to join fleet this year, while three 737-700s on lease are scheduled to be returned.

March 2012: Chilean airlines saw a +16% increase in international passenger traffic and a +15.8% growth in domestic traffic in January, logging a record figure of 1.4 million boarding passengers, its all-time best single month on record.

Data released by the Junta de Aeronáutica Civil shows (LAN) Airlines was the market leader in international traffic, with a 49.5% market share. (LAN) Peru (LPU) was second, with a 5.7% market share. Sky Airline (SSV) was third with a market share of 4.9%. In the domestic market, (LAN) Express (LDE) was first with a 50.3% market share. (LAN) Airlines had a 28.1% market share and Sky Airline (SSV) had a 17.3% market share. PAL Airlines (PCP) secured a 3.8% market share. International cargo traffic decreased -4.7%, while domestic cargo grew +5%.

According to reports in the local newspaper "El Mercúrio," the traffic increases are the result of a competitive market, improved financial situations among Chileans, and the introduction of credit options to purchase airline tickets and travel packages. A decline of the USA dollar against the Chilean peso also helped boost international traffic.

(LAN) Airlines has named Santiago, Buenos Aires, Lima, Los Angeles, Madrid, and Frankfurt as the first cities it will serve with 787 airplanes during the initial year of operations with (LAN). It expects to take delivery of its first Rolls-Royce (Trent 1000)-powered 787 in late 2012, configured with 217Y economy and 30 PC premium business seats.

A Boeing (TBC)-owned 787 landed in Chile for the first time at the International Air and Space Fair.

"The incorporation of the 787 to (LAN)’s fleet will further ensure the company's sustainable growth while preserving the environment and incorporating modern technology to deliver the best travel experience for (LAN)'s passengers,” (LAN) (COO), Ignacio Cueto said.

(LAN) will be the first airline in Latin America to take delivery of the 787, and is scheduled to receive 32 over 10 years. (LAN) and its affiliates operate 136 passenger airplanes.

(LAN) Airlines and Air BP Copec on March 7 made the first commercial flight in South America using second generation bio-fuels. The flight, between the Chilean cities of Santiago and Concepcion, was conducted using an A320 with (CFM) International (CFM56-5B) engines.

The fuel came from used vegetable oil refining. Chilean Minister of the Environment, Maria Ignacia Benitez attended an event in Concepcion to mark the flight.

(LAN) (COO) Ignacio Cueto said: "This flight represents a key step towards the future of the industry. At (LAN), we aim to develop sustainable bio-fuels for commercial airplanes with a high production potential in South America. Currently, these renewable energy sources play a significant role in global aviation and will affect increasingly, decision-making in the industry and our company. We want to be pioneers in the use of renewable fuels in South America.

Copec General Manager, Lorenzo Gazmuri said, "This is the result of intense work for over a year, a materialization of the ongoing commitment of Copec to developing and promoting new and innovative energy solutions. We hope that in Chile and the region, the desire to promote this alternative will continue to increase and place it competitively in the market of aviation fuels in order to meet the requirements of an increasingly more demanding society in terms of sustainability". Using second generation biofuel in flight significantly decreases emissions of greenhouse gases, as no additional CO2 is emitted into the atmosphere, (LAN) said. The (LAN)-COPEC alliance seeks to encourage the development of alternative energies, and thereby generate a contribution to the economic, environmental and social development in the region.

Air BP Copec, a joint venture between Copec and Air BP, was formed in January, 2001. The company main objective is to supply fuel for the commercial and general aviation businesses in Chile aligned with the best health, safety and environment principles. Air BP Copec is the major fuel supplier in the Chilean aviation market. The company operates nine airports sites in the country selling Jet A1 and Avgas.

April 2012: (LAN) Airlines said that Chile’s Supreme Court has confirmed Chilean antitrust tribunal (TDLC)’s approval of (LAN)’s proposed merger with Brazil’s TAM (TPR) under the (LATAM) Airlines Group, though the court rejected (LAN)’s appeal of three of the 14 conditions imposed on the merger by (TDLC).

The Supreme Court ruling is believed to be one of the final steps toward closing the transaction.

(TDLC) tied its approval of the merger, issued last October, to a number of “mitigation measures.” The measures appealed to the Supreme Court by (LAN) included restrictions to (LAN)’s access to Lima, a requirement pertaining to code share agreements and a mandate for (LAN) to give “unrestricted” access to much of its internal data to an outside consultant.

The court rejected the appeals, none of which involved issues considered critical to the combination’s completion, but cleared the merger. (LAN) said it would “continue to move forward with the merger,” but did not provide a specific closing date.

(LAN) and (TAM) (TPR) are currently expected to have their merger completed in early June from when both carriers and their subsidiaries would start operating under the jointly managed holding (LATAM) Airlines Group, based in Santiago de Chile and owned by (LAN) and (TPR) shareholders.

(LAN) Airlines has announced Buenos Aires Ezeiza Ministro Pistarini airport (EZE), Frankfurt International airport (FRA), Lima Jorge Chávez International airport (LIM), Los Angeles International airport (LAX) and Madrid Barajas airport (MAD) as the first destinations it plans to serve with its new 787-8s that are scheduled to arrive from October onwards. (LAN) currently has 20 787-8s on order.

A320-214 (5124, CC-BAW), ex-(D-AVVD), delivery.

May 2012: (LAN) Airlines’ system-wide passenger traffic for April increased +13.9%, while capacity rose +5.8%. Passenger load factor grew +5.9% points to 83% LF.

International traffic accounted for 68.6% of the total figures, with an increase of +12.9% against a capacity growth of +2.3%. Load factor in the international market grew +8.1% points to 86% LF.

Reduced capacity on European routes was compensated by increases in operations in routes to Mexico and the Caribbean, as well as regional routes in South America. Consolidated domestic traffic in the markets of Argentina, Chile, Colombia, Ecuador and Peru grew +16.1%, while capacity increased +13.5%, and load factor grew +1.7% point to 77.1% LF.

Cargo capacity decreased -5.8%, while traffic fell -4.7%; load factor slightly increased -0.9 points to 70.3% LF.

The company cited decreased availability in passenger airplane bellies and no incorporation of new freighters since January 2011 as reasons for the capacity downturn.

(LAN) Airlines reported a first-quarter net income of +$76.1 million, down -21.8% from a +$97.2 million profit in the year-ago period. (LAN) said the results were “impacted by a +14.7% increase in fuel prices and a more challenging environment in the cargo business, as well as by the ongoing development of LAN Colombia (AIR)’s operations.”

Total revenues rose +12.6% to $1.5 billion, while operating expenses increased +17.7% to $1.42 billion, producing an operating profit of +$111.2 million, down -27.4% from +$153.2 million in the prior-year quarter.

Traffic rose +14% to 11.1 billion (RPK)s on a +11.3% increase in capacity to 13.4 billion (ASK)s, producing a load factor of 82.9% LF, up +1.9% points.

Yield rose +2.2% to 10.2 cents as (RASK) increased +4.6%.

Chile-based (LAN) and Brazilian carrier (TAM) (TPR) obtained authorizations in Brazil and the USA to commence and complete an offer to exchange (TAM) shares for Holdco II shares and ultimately (LAN) shares. (LAN) and this newly formed entity, Holdco II, commenced the exchange offer May 10 and will keep it open until June 11, both in New York and São Paulo. Auction will be held at Bovespa (the São Paulo Stock Exchange) on June 12.

The company said (LAN) will start operating with (TAM) (TPR) as a single company June 15, nearly two years after both carriers announced their merger plans. The newly created company, to be named (LATAM) Airlines Group SA, will be the “largest in Latin America and one of the 10 biggest in the world in terms of revenue,” (LAN) said.

June 2012: (LAN) Airlines and (TAM) (TPR) have extended to June 21 the share exchange offer, part of the merger process between the two carriers under the (LATAM) Airlines Group. The extension will give more time for shareholders to sign up for the exchange.

To complete the process, (TPR)’s controlling shareholders have to reach 95% of the outstanding (TPR) shares. However, the carriers fell short at the first exchange attempt, reaching only 94.4%.

The move comprises a new entity, Holdco II, which will be merged into (LAN).

(LAN) Airlines and (TAM) (TPR) officially completed their merger under the (LATAM) Airlines Group on June 22nd, creating a mega-airline company that is expected to control more than >40% of the Latin American air passenger market.

The transaction was carried out through an exchange offer in which (TPR)’s shareholders received 0.9 (LAN) shares for each (TAM) (TPR) share. “The creation of this group of airlines is an opportunity to take South America to the world and to allow us to position ourselves to operate in an increasingly competitive environment due to the continuing consolidation of the global airline industry,” (LATAM) (CEO), Enrique Cueto, who was formerly (LAN)’s (CEO), said.

(LATAM) will initially employ more than >51,000 workers and connect passengers to 150 destinations in 22 countries. The group’s cargo operation will reach 169 destinations in 27 countries.

Cueto said (LAN) will remain based in Santiago de Chile and (TAM) (TPR) in Sao Paulo. He added that the carriers will continue to operate under separate brands. “This is the beginning of a long journey and the benefits to our customers will be added gradually as the integration of our companies’ progresses,” he said.

(LAN)/(TAM) believes the merger will generate $600 - $700 million in annual synergies within four years.

Gol Linhas Aéreas Inteligentes (GOT) has announced plans to completely pull out of Santiago de Chile Arturo Merino Benítez International airport (SCL) by October 3. It will already terminate its daily service from Porto Alegre Salgado Filho International airport (POA) to the Chilean capital on August 16 and then give up its daily São Paulo Internacional Guarulhos (GRU) - Buenos Aires Ezeiza Ministro Pistarini (EZE) - Santiago de Chile Arturo Merino Benítez International (SCL) flight from October 3. This will leave (LATAM), the new parent of (LAN) Airlines and TAM Linhas Aéreas ((TPR) with a monopoly of direct flights between Brazil and Chile.

July 2012: (LAN) Airlines and (TAM) (TPR), which completed their merger under the (LATAM) Airlines Group last month, will decide which alliance to join “not before the first half of 2013,” (LATAM) General Manager Europe, Francisco Vidal told local media.

(LATAM)’s alliance choice has been a key issue throughout the transaction process, as the merged entity has created a mega-airline company that is expected to control more than >40% of the Latin American air passenger market.

(LAN) is a Oneworld (ONW) alliance member, while (TAM) (TPR) is a Star (SAL) Alliance member. An option would be to choose a third alliance.

Simultaneously, the two airlines will keep their own respective brand names for the next two years, after which (LATAM) will decide whether to create a new joint brand name.

Regarding fleet expansion, (LATAM) has 240 firm orders, including 32 787s, and plans to operate 500 airplanes by 2020. Five A340s will be phased out by 2014.

Within the next two years, (LATAM) will launch services to four new European destinations, taking advantage of its favorable market position in services between Latin America and destinations in Spain, France, Italy, Germany and the UK. (LAN) currently only serves Frankfurt International (FRA) and Madrid Barajas (MAD) airports, while (TAM) (TPR) also flies to London Heathrow (LHR), Milan Malpensa (MXP) and Paris Charles de Gaulle (CDG) airports, besides also serving Frankfurt and Madrid.

2 767-316ERs (40592, CC-BDE; 41746, CC-BDF), and A320-214 (5229, CC-BAZ), ex-(D-AUBO), deliveries.

August 2012: The (LATAM) Airlines Group, the created merger between (LAN) Airlines and (TAM) (TPR), reported a +7.9% growth in system wide (RPK)s for July against a +2.9% growth in (ASK)s. Passenger load factor increased +3.9% points to 83.6% LF.

Both (LAN) Airlines and its subsidiaries, and (TAM) (TPR) and its subsidiaries, began operating as (LATAM) on June 22. Respective brand names remain active.

Boarding passenger numbers grew +10.1% to six million.

Domestic passenger traffic data was split in two groups. The first group is made up of operations in Spanish-speaking markets, comprising Argentina, Chile Colombia, Ecuador and Peru, where (RPK)s increased +24.7% against a +22.4% growth in (ASK)s. The second group involved Brazil´s domestic traffic, which rose +10.1% in (RPK)s against a decrease of -1.4% in (ASK)s. International traffic data, jointly comprised of both (LAN) and (TAM) (TPR)’s regional and long-haul routes, rose +2.6% in (RPK)s, against a +1.6% increase in (ASK)s.

Cargo traffic, which was reported for (LAN)’s operations only, showed a -4.5% decline in (RTK)s against a -2.8% slip in (ATK)s. The disappointing cargo results were attributed to weaker imports into Latin America, while stronger demand for commodities from South America partially contributed to avoid a worse decline.

The (LATAM) Airlines Group reported a second-quarter net income of +$49.7 million and an operating income of +$23.2 million, its first consolidated results since (LAN) Airlines and (TAM) (TPR) merged June 22. Numbers comprise the eight days of consolidation in June, which produced a net income of +$46.3 million but an operating loss of -$13.9 million.

These non-operating results in the June 23 - 30 consolidated period are due to a +$57.4 million foreign exchange gain produced by an appreciation of the Brazilian real and “a positive mark-to-market of fuel hedging derivatives in the amount of $26.7 million,” the company said in its report.

Reduced cargo demand was a key factor in its first results, offset by sustained domestic market capacity in Brazil and solid passenger demand in most other Latin American markets.

In separate numbers and excluding the consolidation, (LAN) posted a second-quarter net income of +$5.2 million, a decrease of -67.5% compared to the year-ago period. Operating income decreased -33.5%, but reached +$37.1 million. The transaction costs related to the merger with (TAM) (TPR) reached $9.2 million. (TPR) reported a separated -BRL$928.1 million/-$459.4 million second-quarter net loss, against a +BRL$60.3 million net income last year. It reported an operating loss of -BRL$284.2 million, against a +BRL$8.8 million profit in the year-ago period. A 23.2% depreciation of the Brazilian real heavily impacted the results.

(LATAM) reported a +7.9% growth in system wide (RPK)s for July against a +2.9% growth in (ASK)s. Passenger load factor increased +3.9% points to 83.6% LF.

As part of its ongoing move toward the expected merger synergies, (LAN) and (TPR) have established joint fare combinability, cross selling of flights and code shares on several international routes. Pretax synergies are expected to reach between $170 million and $200 million for the first 12 months, and between $600 million and $700 million per year beginning four years after the merger. Total expected synergies are to be 40% derived from revenues increase in the international passenger segment, 20% from revenues increase in cargo business and 40% from cost savings.

The (LATAM) Airlines Group (LAN)/(TPR) announced that Libano Barroso has left his position as (CFO) of the Group. Barroso will remain as (VP) (TAM) (TPR), advising (TPR) (CEO), Marco Bologna. Alejandro de la Fuente will become interim (CFO). De la Fuente has been the (CFO) of (LAN) Airlines since 1995.

Following the merger of (LAN) Airlines with (TAM) Linhas Aereas (TPR) into the LATAM Airlines Group, former (LAN) subsidiary, ABSA Cargo Airline (Aerolinhas Brasileiras SA) (BSB) is now doing business as TAM Cargo (BSB). 2 767-300FERs freighters including (PR-ADY) have been transferred from (LAN) to increase the (BSB) fleet to five.

(LAN) Airlines took delivery of its first 787 (38464, CC-BBA) in a delivery ceremony at Boeing’s Everett, Washington State, USA facility - - SEE PHOTO - - "LAN-2012-09 - 1ST 787." (LAN) is only the fourth customer in the world to include the Boeing 787 in its fleet.

The 787, powered by Rolls-Royce (RRC) (Trent 1000) engines, is the first 787 Dreamliner to be received by an airline in the Americas. (LAN) is now a subsidiary of the (LATAM) Airlines Group. It has 32 787s on order, valued at $4.9 billion, to be delivered over the next decade. Two more will be delivered this year.

(LAN) said it expects to start Los Angeles - Lima 787 flights later this year. (LAN) (CEO), Ignacio Cueto said in a statement, “The 787 Dreamliner will make it possible for us to cover greater distances in a more environmentally conscious and highly efficient airplane.”

Other cities expected to be served by LAN 787s over the next year are Santiago, Buenos Aires, Madrid and Frankfurt. (LAN)’s 787s are configured with 217Y economy seats and 30C business-class seats.

SEE PHOTO - - "LAN-2012-08 - 787 DELIVERY."

September 2012: The (LATAM) Airlines Group, the merger between (LAN) Airlines and (TAM) (TPR), reported a +9.1% increase in system wide traffic (RPK)s for August against a +1.3% growth in capacity (ASK)s. Load factor was 79.3% LF, up +5.6 points.

International traffic grew +5.2%, while capacity increased +1.4%, achieving a load factor of 82.7% LF, up +3 points.

The (LAN) domestic markets of Argentina, Chile, Colombia and Ecuador reported traffic rose +16.4% against a +13.8% growth in capacity, reaching a load factor of 79.9% LF, up +1.8 point. In Brazil, traffic grew +12.6%, while capacity decreased -2.8%, resulting in a load factor of 74.4% LF, up +10.2 points.

(LAN) cargo (LCO) traffic fell -1.2%, as capacity decreased -1.9%. Load factor was 68.3% LF, up +0.5 point. (LATAM) cited “weaker imports into Latin America” for the decrease.

(LAN) Airlines will launch four times weekly A320-200 service from Santiago de Chile via Puerto Montt El Tepual International (PMC) to Castro Mocopulli (MHC) on November 7. The construction work for the new Castro airport on Chiloé island is about to be completed this winter and will then be introduced with (LAN) scheduled flights in spring. The island had so far only been accessible by ferry.

Mxi Technologies announced that (LAN) Airlines has deployed its maintenance management software, Maintenix, on its 787 airplane.

(LAN) Airlines has ordered an additional 10 Aviation Partners Boeing (APB) Blended Winglet systems for 767-300ER passenger and freighter airplanes. (LAN) has already ordered 47 of the systems. "The positive fuel savings performance achieved by the Blended Winglet program on the operating (LAN) 767 fleet convinced (LAN) to continue with this program on the newly purchased 767-300s,” (LATAM) VP Fleet Projects, Justin Siegel said.

(LAN) has selected Delta (DAL) Tech Ops and Mexicana (CMA) (MRO) to perform these modifications, he said.

(LAN) Argentina (LNR) is reportedly no longer allowed to increase its fleet of 12 A320-200s and 2 767-300ERs any further according to a news report by newspaper "La Nación Argentina" saying that the government would have taken this step to protect national carrier Aerolineas Argentinas (ARG). (LAN) VP Corporate Affairs, Pablo Querol has downplayed the news article saying that (LAN) would have excellent relationship with the Argentinian government and that the two parties would jointly agree on fleet increases in the future as and when (LAN) would choose to do so saying it would not have received any official notice of such a ban on new airplanes for subsidiary, (LAN) Argentina (LNR).

October 2012: The (LATAM) Airline Group, the merger of Chile’s (LAN) Airlines and Brazil’s TAM (TPR) Airlines, reported a +8.9% increase in system wide traffic (RPK)s for September against a +2% increase in capacity (ASK)s. Load factor was 80.4% LF, up +5.1 points, mainly due to a +13.7 point domestic increase in Brazil.

International traffic grew +5.6% in (RPK)s, while (ASK)s grew +6.1%, resulting in a slight -0.4 point decrease to 82.8% LF load factor.

The South American markets of Argentina, Chile, Colombia, Ecuador and Peru reported traffic rose +11% against a +11.5% growth in (ASK)s, with a slight load factor decrease of -0.3 point to 77.5% LF.

In Brazil, traffic grew +13.6%, while (ASK)s decreased -6.3%.

System wide cargo traffic decreased -2.7% and capacity dipped slightly -0.9%, producing a load factor of 69.3% LF, down -1.3 points year-over-year.

(LAN) Airlines and (TAM) (TPR) Airlines are moving to fill some of the gap left by Uruguay’s Pluna (PLU), which suspended operations July 3. The government-owned (PLU) operated an average 250 weekly flights linking Montevideo (MVD) to destinations in Argentina, Brazil and Chile.

(TPR) will introduce its third daily São Paulo - (MVD) frequency on October 26, while (LAN) will introduce its third Santiago - (MVD) daily service on December 1.

(PLU)’s seven Bombardier CRJ900s were sold to Spanish charter carrier, Cosmo Airlines (COS) at a government auction.

The air crew (FC)/(CA) and ground personnel (MT) unions of former (PLU) employees are hopeful they will be able to acquire partners and establish a replacement flag carrier to operate (PLU)’s six remaining leased CRJ900s. Details were not given, but a union spokesperson told local media there are five solid interested candidates.

(LAN) placed an order with Airbus (EDS) for its Space-Flex (PRM) lavatory to equip new A320 airplanes.

November 2012: The LATAM Airlines Group (LAN)/(TPR) reported a third-quarter net income of +$21.3 million, representing the first three months of integrated business between the two carriers. The figure excludes $19.5 million related to transaction expenses resulting from the merger and a one-time charge of $70.4 million related to a new corporate income tax rate increase in Chile from 17% to 20%.

Total revenues of $3.3 billion represent a -3.8% decrease compared to pro forma revenues in the year-ago period. Passenger revenue was down -2.4%, while cargo revenue decreased -14.4%.

The company said the main reasons for the decreased revenue included the depreciation of the Brazilian real, weak demand in the cargo business, the transition into the merged business operation and the turnaround of Brazilian domestic markets.

Passenger traffic grew +7.2% and load factor increased +3.8 points to 80% LF. Capacity (ASK)s were up +2.2%, while (RASK)s decreased -4.6%. Cargo capacity was down -3.2%, while traffic decreased -5.6%. The group received its first 787-800 in the period, as well as six A320s, four 767-300s, two 777-300ERs and one 777F freighter.

(LATAM) expects system wide (ASK)s to grow between +3% and +4% this year due to fleet expansion, while domestic (ASK)s in Brazil are expected to decrease around -2%. Cargo (ATK)s are expected to grow up to +2%.

The two carriers will decide which alliance to join “not before the first half of 2013,” (LATAM) General Manager Europe, Francisco Vidal told local media in July.

(LAN) Airlines launched services to the 16th domestic destination it serves from Santiago de Chile (SCL) on 6 November, and now offers flights to Castro airport (MHC) on Chiloé Island, which is located off the coast of Chile in the Pacific Ocean and is among the country’s most popular tourist destinations. Five weekly A320 frequencies are offered on the route that will be operated via Puerto Montt (PMC), the gateway to the Zona Austral region in Chile’s Northern Patagonia.

(LAN) has applied for traffic rights to be allowed to add a fourth daily service between its home base at Santiago de Chile and Miami International (MIA) airport operating on a daily basis via Rio de Janeiro Galeão Antônio Carlos Jobim International (GIG) with 767-300ERs. It currently already operates two daily non-stop services on the route and six additional weekly direct flights on different multi-stop routings including stops at Caracas Simón Bolívar International (CCS), Cancún International (CUN), Guayaquil José Joaquín de Olmdeo International (GYE) and Punta Cana International (PUJ) airports. Sister carrier TAM Linhas Aéreas (TPR) also operates a daily flight between Rio de Janeiro and Miami, currently also with 767-300ERs that will shortly be replaced by A330-200s from December 17.

December 2012: Star (SAL) Alliance member AviancaTaca Airlines (AVI)/(TAC) is ready to fill the gap in Brazil if (TAM) Airlines (TPR) leaves the (SAL) alliance, as expected. Brazilian-based, (TAM) (TPR) merged with Oneworld (ONW) Alliance member (LAN) Airlines earlier this year, creating the (LATAM) Group.

(AVI)/(TAC) (CEO), Fabio Villegas Ramirez said (AVI)/(TAC) is working to tap more into Brazil, which he considers an “important market. It is difficult to operate there, but it is a market you have to be in.”

A top Star (SAL) Alliance executive said that TAM Airlines (TPR) will have to pay a $25 million fee to leave the (SAL) alliance.

The (AVI)/(TAC) group of airlines, which was formed from the merger of Colombia’s Avianca (AVI) and El Salvador’s Grupo (TACA) (TAC) into AviancaTaca (AVI)/(TAC), said it will unify all members under the single "Avianca" brand “by the second part of this year.”

Ramirez said the (AVI)/(TAC), which is expecting a +15% passenger year-over-year growth, has “the opportunity to be in one of the top markets in Latin America.” He said (AVI)/(TAC) will “increase frequencies and add new destinations” to counter the effects of the economic weakness of Europe and the USA. “You always have issues here [in Latin America], like increasing fuel prices, but we will be conservative to maintain our profitability.”

The (AVI)/(TAC) group operates 150 airplanes. “We have 51 Airbus (EDS) airplanes and 15 Boeing (TBC) 787s on order and are planning to add new destinations in Europe, like London or Frankfurt,” Ramirez said.

(GA) Telesis (ACE-M) was selected by (LATAM) Airlines (LAT)/(TAC) to manage its (C&E) parts needs.

January 2013: The merger of (LAN) Airlines and Grupo (TAM) (TPR) in 2012 created Latam, one of the world's largest carriers by market capitalization, and furthered airline consolidation in Latin America. Latam expects demand to remain strong throughout South America and is adding capacity in the region. (Latam) is taking a page out of the low-cost-carrier (LCC) playbook and altering its product on short-haul regional routes to compete more effectively with start ups and (LCC)s. The one blight on the forecast is Brazil, where domestic demand has cooled. (TAM) (TPR) is shifting its focus to international routes and pulling capacity out of its domestic Brazil operations, but it is poised to grow, should demand recover.

(LAN) increased its presence in the Brazilian market on 22 January, as it launched daily services from Rio de Janeiro (GIG) to Miami, (MIA). The 6,700 km route, which is already operated on a daily basis by (LAN)’s partner, (TAM) (TPR), will bring the two airlines on a par with American Airlines (AAL), which offers twice-daily frequencies from its Miami hub. (LAN) deploys 767-300s on the route.

Important to (LATAM) is that the Brazilian "Carnival" runs February 8th through February 12th.

United Airlines (UAL) introduced daily nonstop 787-8 Dreamliner service between its hub at Los Angeles International Airport and its hub at Tokyo Narita International Airport. The service (previously operated with a 777 airplane) is the first regularly-scheduled international route operated using (UAL)’s new 787 Dreamliner.

The flight, UA 32, departs Los Angeles at 11:15 am (1115), arriving in Tokyo Narita at 4:10 pm (1610) the next day. The return flight, UA 33, departs Tokyo Narita daily at 5:55 pm (1755), arriving in Los Angeles at 10:35 am (1035) the same day.

(UAL)’s 787 Dreamliner is configured with 36CF seats in United BusinessFirst, 70PY seats in United Economy Plus and 113Y seats in United Economy. The 787 will revolutionize the flying experience for (UAL) customers and crews while delivering unprecedented operating efficiency, comfort and lower emissions. Customers on the flights will experience greater comfort with improved lighting, bigger windows, larger overhead bins, lower cabin altitude and enhanced ventilation systems, among other passenger-friendly features.

On January 2, (LAN) Airlines (Santiago) introduced the 787-8 on the Santiago - Los Angeles route.

Later, (LAN) Airlines has become the first non-USA carrier to announce it will comply with the (FAA) recommendation and temporarily suspend its 787 operations. (LAN) said the grounding was being done in coordination with the Chilean Aeronautical Authority (DGAC). (LAN) has three 787s.

The (FAA) earlier had ordered USA-registered 787s to be grounded citing concerns about the safety of the airplane’s lithium ion batteries after an All Nippon Airways (ANA) 787 was forced to make an emergency landing and a battery was found to have leaked. (ANA) and Japan Airlines (JAL) both voluntarily grounded their 787s after the incident, which is under investigation.

“Flights that were scheduled to be operated by the 787 will be temporarily replaced with other airplanes in our fleet to mitigate any potential impacts that this situation could cause to its passengers and cargo clients. The safety of the operation and its passengers is (LAN)’s top priority and the company regrets any inconvenience that this may cause,” (LAN) said.

Although the (FAA) grounding of the 787 applies to USA carriers (and United Airlines is currently the only USA 787 Dreamliner operator) it is expected that all international operators will follow suit. The other 787 operators are Air India (AIN), Ethiopian Airlines (ETH), (LOT) Polish Airlines, and Qatar Airways (QTA).

February 2013: (LAN) Airlines ((IATA) Code LA, based at Santiago de Chile Arturo Merino Benítez International (SCL)) and sister carrier, (TAM) Linhas Aéreas ((IATA) Code: JJ, based at São Paulo Congonhas International (CGH)) (TPR) have been banned effective February 15 from operating to Bolivia according to statements made by the Bolivian Transportation Ministry without giving reasons for the announcement. LAN Perú ((IATA) Code: LP, based at Lima Jorge Chávez International (LIM)) (LPU) currently offers two daily triangle flights from Lima Jorge Chávez International (LIM) to both La Paz El Alto (LPB) and Santa Cruz Viru Viru International (VVI) with A319-100s. (LAN) Airlines operates from Santiago de Chile Arturo Merino Benítez International (SCL) to La Paz four times weekly and to Santa Cruz three times weekly, both via Iquique Diego Aracena International (IQQ) using A320-200s. In addition, (TAM) Airlines ((IATA) Code: PZ, based at Asuncion Silvio Pettirossi International (ASU)) (LAP) offers four weekly flights between Asuncion Silvio Pettirossi International (ASU) and Santa Cruz, providing the only link between Paraguay and Bolivia. Despite the announcements, (LAN) and (TAM) (TPR) flights to Bolivia currently still seem to be operating as normal.

March 2013: The (LATAM) Airlines Group, parent of (TAM) (TPR) and (LAN) Airlines, reported 2012 fourth quarter net income of +$8.5 million, down -92.6% from +$114.9 million in the year-ago period.

The figures exclude $21.9 million in expenses related to the business combination of both carriers, plus $52.7 million in airplane sale and redelivery costs.

Total operating revenue dropped slightly -0.3% to $3.5 billion. Passenger revenue decreased -0.7% to $2.86 billion and cargo revenue dropped -3.1% to $537.9 million. Other revenues increased +61.5%, mainly due to airplane leases and duty-free sales.

(ASK)s grew +6.7%, while (RPK)s increased +10.7%, producing a load factor of 78.3% LF, up +2.8 points. Yield decreased -10.3% to 10.6 cents.

Cargo traffic decreased -1.5%, which caused load factor to drop from 63.2% LF to 60.4% LF, yields to decline -1.6% and revenues per (ATK) to decrease -6%.

Operating revenues were impacted by the depreciation of the Brazilian real, “a more challenging operating environment in the long-haul passenger business” plus a “weak market demand in the cargo business” and a “migration in (LAN)’s passenger service system to a new one provided by Sabre,” reported (LATAM). The Group also said it made progress in the turnaround of the domestic passenger operations in Brazil, reducing (ASK)s -4.2% and gaining a +11.9% traffic growth, producing a load factor increase of +11.5 points to 79.6% LF. (ASK)s grew +13.2% on international routes, but load factor declined -2 points. The Group acknowledged the impact produced by “increased capacity from international carriers flying to South America, especially from the USA.”

Full-year numbers show (LATAM) reached a +73.9% increase in total operating revenue in 2012, but expenses grew +85.9%, producing a -41.3% decline in operating income and a -96.6% drop in net income.

The Group remains confident in the “synergy target of between $600 and $700 million to be fully achieved” by June 2016, regarding the integration of (LAN) and (TAM) (TPR), and said it reached “an estimated $72 million in merger synergies” in 2012 and expects these to be “between $250 and $300 million” this year.

Nevertheless, it is adjusting its fleet plan to match capacity “to the expected competitive and macroeconomic environment on international and domestic Brazil passenger domestic routes,” which results in “a decrease of $1.2 billion in the expected capital expenditures for 2013 to 2015.”

In 2012, (LATAM)’s total fleet was 311 airplanes, which will fall to 308 airplanes this year and grow to 315 next year. During the fourth quarter of 2012, (LATAM) received six A320s, four 767-300s, two 777-300ERs, two 787-800s and one 777F freighter.

Looking forward, (LATAM) is expecting system wide (ASK)s to grow to +4%, on the low side of earlier predictions of between 4% and 6%. Domestic (ASK)s in Brazil are estimated to decline between -5% and -7% this year. Cargo capacity is expected to grow between +2% and +4%, due to the introduction into the fleet of two new 777F freighters and additional belly capacity.

The (LATAM) Airlines Group, parent of (TAM) (TPR) and (LAN) Airlines, has chosen membership in the Oneworld (ONW) Alliance over the Star (SAL) Alliance for both carriers.

Holding an estimated 40% share of the South American air passenger market, (LATAM) is making one of the more consequential alliance membership decisions of recent years. Chilean antitrust authorities required (LATAM) to leave one of the alliances when it approved the merger of Chile’s (LAN) and Brazil’s (TAM) (TPR) in 2011.

(LAN) is a Oneworld (ONW) Alliance member while (TAM) (TPR) belongeds to the Star (SAL) Alliance. (TAM) (TPR) will leave the (SAL) Alliance in the second quarter of 2014, (LATAM) said in a March 7th statement making the decision official. Signs have pointed to (LATAM) choosing the Oneworld (ONW) Alliance for some time.

(TAM) (TPR) “plans to officially join the (ONW) Alliance as soon as it leaves the (SAL) Alliance,” (LATAM) said. “From that date, (TAM) (TPR) passengers will be able to accumulate km/points by flying on any (ONW) Alliance member airline. Until then, they will continue to receive the benefits offered by the (SAL) Alliance.”

(LATAM) (CEO), Enrique Cueto said in a statement, “We evaluated all the existing possibilities and chose the alliance that offers the best benefits to our passengers, in addition to the best connectivity and products, as well as the greater synergies for the (LATAM) Airlines Group. With the incorporation of the (LATAM) Airlines Group to the (ONW) Alliance, passengers flying with us will be able to book trips through the (ONW) Alliance network of destinations and connect from any of the 950 destinations, including distant and exotic ones such as Hong Kong, Kuala Lumpur, Moscow or Melbourne, through (ONW) Alliance member airlines.”

(ONW) Alliance (CEO), Bruce Ashby added, “We are delighted that, after its comprehensive review of alliance options, (LATAM) not only decided to have (LAN) remain on board the (ONW) Alliance, but also to include (TAM) (TPR) and all the other passenger airline subsidiaries in the (LATAM) group as well. This solidifies the (ONW) Alliance’s long-standing position as the alliance leader in Latin America.”

(LATAM) carrier, (LAN) Colombia (AIR) will become a (ONW) Alliance affiliate member in the 2013 fourth quarter. (LAN) Argentina, (LAN) Ecuador and (LAN) Peru are already (ONW) Alliance affiliate carriers.

In addition to (LAN), current (ONW) Alliance members are Air Berlin (BER), American Airlines (AAL), British Airways (BAB), Cathay Pacific Airways (CAT), Finnair (FIN), Iberia (IBE), Japan Airlines (JAL)/(JAS), Malaysia Airlines (MAS), Qantas (QAN), Royal Jordanian (RJA) and S7 Airlines (SBR). In addition to (TAM) (TPR), SriLankan Airlines (LNK) and Qatar Airways (QTA) are slated to become new members.

US Airways (AMW)/(USA) has already said it will leave the Star (SAL) Alliance to join the (ONW) Alliance following the completion of its merger with American (AAL).

Comodoro Arturo Merino Benítez International Airport, perhaps better known as Santiago de Chile International Airport, serves the 5+ million inhabitants living in the Chilean capital. While the country’s geographical features and the concentration of economic activity in the Santiago area (which contributes around 50% of Chilean Gross Domestic Product (GDP)) encourage domestic traffic, Santiago Airport is also the country’s main international gateway – in 2012, international passenger movements accounted for 48% of the airport’s total traffic. Double-digit annual traffic growth in the recent years and the expansionist policy of the airport’s based carrier, (LAN) Airlines, has created the need for terminal capacity development. In fact, a new international terminal is now in the pipeline and, once it’s commissioned in 2019, it will increase the airport’s capacity by +60%.

In 2012, a total of 14.2 million passengers were handled in Santiago compared to 11.9 million in 2011 according to data facilitated by the airport, which translates into an annual increase of +19%. While the split between domestic and international traffic is fairly even, the former is currently showing a more dynamic character, as it grew by +21% versus the +17% noted for the international segment. In fact, domestic traffic grew +80% in the last five years (2012 vs. 2008), compared to +28% for international.

Seasonality at Santiago Airport is fairly limited, and in 2012, the weakest month (June) saw about a decrease of about a fifth in terms of passengers handled compared to the peak month of January.

Examination of "Innovata" weekly average data shows that in April 2013, international capacity will be up by +4.2%. (LAN) Airlines, Santiago’s based carrier, is the largest carrier in the market with 61% of frequencies and 59% of weekly seats. (TAM) (TPR), (LAN)’s partner airline, commands a further 8% of weekly seats at the airport, having increased its offering by +65% compared to the same period in 2012. In anticipation of a full merger later this year, (TAM) (TPR) has increased frequencies from Sao Paulo Guarulhos to thrice-daily and launched daily services to Rio de Janeiro.

Argentina is the largest country market and accounts for over a third of weekly frequencies. Both Buenos Aires airports (Aeroparque and Ezeiza), Cordoba and Mendoza are served from Santiago with a combined total of 162 weekly flights. (LAN) provides 67% of frequencies to all four destinations, more than three times as much as its closest competitor, Aerolineas Argentinas (ARG), which operates two routes (Buenos Aires Aeroparque and Mendoza). Notably, the region’s other network carrier, Taca (TAC), withdrew its nine weekly service from Lima, while Copa Airlines (COP) increased frequencies to its Panama City hub by a third compared to the same period in the previous year.

Of the two European markets in the top 10 from Santiago, capacity to France remains stable (daily flights to Paris (CDG) by AirFrance (AFA)), while a +13% increase was noted in the market to Spain, as (LAN) increased frequencies to Madrid from daily to nine-weekly. The market from Santiago to Mexico saw slight seat capacity decline (-14%), caused by AeroMéxico (AMX)’s frequency cuts to Mexico City (thrice-weekly down from five weekly in April 2012), as did Uruguay. The latter saw 55% of April 2012 capacity wiped out on the spot, when Pluna (PLU) folded last summer.

Measuring almost 4,500 km in length, Chile is well suited for the development of domestic flying. As the country’s leading carrier, (LAN) Airlines is also the largest player in the domestic market, offering 73% of weekly seats across its network of 13 destinations. While the airline withdrew the twice-daily service to Valdivia in the south of the country over the course of last year, its total capacity in April 2013 is +16% larger than a year before. Santiago’s second-largest domestic operator, Sky Airline (SSV), saw the most dramatic capacity growth in the last year, as it increased its weekly seat offering by +33%. Again, its growth came from capacity expansion in existing markets from Santiago with Calama and Puerto Montt noting two- and four-fold frequency growth in April 2013 compared to the previous year. Only one route was pulled by the airline from its Santiago network last year, as it discontinued thrice-weekly schedule to El Salvador, a declining mining centre in the Atacama Desert.

The northern Chilean port city and an important mining centre, Antofagasta, is the busiest domestic destination from Santiago, served with a total of 119 weekly flights. Two-thirds of the seat supply to this affluent region (annual (GDP) per capita is similar to that of the UK) are commanded by (LAN). The airline competes against Sky Airline (SSV) on nine of the top 10 domestic routes from Santiago, the only exception being Punta Arenas, to which it operates 18 weekly flights in monopoly conditions. (PAL) Airlines (PCP), the smallest domestic carrier from Santiago (4% seat capacity in April 2013), provides further competition on four of the top 10 routes. Antofagasta (6 weekly flights), Calama (4), Iquique (8) and Copiapo (3) are the only domestic routes offered by the airline from Santiago.

Quite similarl to another South American airport, Bogotá, Santiago de Chile is outgrowing its existing facilities, originally designed for nine million passengers. Expansion plans include the construction of a new international terminal, as well as remodelling of the existing building and its conversion into domestic terminal. Construction is scheduled to begin in 2015, and its completion four years later, is expected to increase the airport’s capacity to 30 million annual passengers.

SEE ATTACHED - - "LAN-2013-03 - TOP 10 DOMESTIC ROUTES."

April 2013: (LATAM) will debut Airbus (EDS)’ Space-Flex lavatory, launching the first narrow body restroom for passengers with reduced mobility.

May 2013: (LAN) Airlines has now officially phased out its last remaining A318-122 (3635, CC-CZR). The airplane had been used to ply Chilean domestic routes and will now be replaced by the larger A319-100. The A318 will later be operated by Avianca Brasil (ONE).

(LAN) serves 19 countries, 91 destinations, and 163 routes.

(LAN) has further revised its 787-8 service resumption schedule, with daily Santiago de Chile Arturo Merino Benítez International (SCL) - Lima Jorge Chávez International (LIM) - Los Angeles International (LAX) 787 Dreamliner flights set for June 1. Additionally, the 787 will also be deployed between Santiago and Lima between July 8 and August 8 with flights LA636/637 operating 5x weekly and flights LA540/541 operating twice weekly. However, some confusion still remains as to the status of (LAN)'s Santiago - Madrid Barajas (MAD) - Frankfurt International (FRA) route, previously announced as resuming on June 30. A 767-300 is scheduled on the outbound flight with the inbound reflecting a 787.

On the heels of (LATAM) Airlines Group’s first-quarter results, (LAN) Airlines announced it completed a test flight of its 787 after installing battery modifications, paving the way for the grounded airplane to resume operations. (LAN) (CEO), Ignacio Cueto said the nearly two-hour test flight over Santiago, Chile went smoothly and without incident. The (LATAM) Airlines Group posted a first-quarter net income of +$42.7 million, down -48.9%.

August 2013: The (LATAM) Airlines Group has posted a second-quarter net loss of -$329.8 million, narrowed from a net loss of -$448.8 million in the year-ago quarter. (LATAM) said the results were skewed due to a 10.5% depreciation of the Brazilian real during the second quarter.

(LAN) Colombia (AIR) performed the first second generation biofuel flight in its home country on August 21. An A320 with 174 passengers on a scheduled flight from Bogotá to Cali was fueled with a mixture of 67% Jet A1 and 33% camelina-derived biofuel produced by a Colombian firm.

(LAN) Airlines recently began testing a new in-flight connectivity system from Thales (THL) on an Airbus A320. The system, "TopSeries (AVA)," is being flight tested on an A320. According to Thales (THL), the system allows passengers to connect their own portable electronic devices to the Thales (THL) TopSeries head-end server through wireless access points within the airplane cabin.

(LAN) is currently flying the system on domestic and regional routes as part of a six month trial. (THL) obtained (FAA) certification for the TopSeries system in May, and is looking to use (LAN)'s flight trials as part of a large-scale movement of content from (Thales) (IFEC) California operation to (LAN)'s hub in Santiago, Chile.
"This enables for the first time to have a content load to be delivered end-to-end without the need for physical touch or intervention," said Dominique Giannoni, (CEO) of Thales (THL). Both companies are looking to use passenger surveys to gauge the popularity of the new system.

SEE ATTACHED - - "LAN-2013-07-THALES TOPSERIES HEAD END SERVER."

(LATAM) Airlines (LAN)/(TPR) chose Pratt & Whitney (PRW) PurePower (PW1100G-JM) engines to power its order of 42 firm A320neo family airplanes. The agreement includes a 12-year Fleet Management Plan. Engine deliveries are expected to begin in 2016.

The PurePower (PW1100G-JM) engines benefits include double-digit reductions in fuel burn, environmental emissions, engine noise and operating costs.

A320-214 (5764, CC-BFQ), ex-(D-AVVW), Tucuquere Leasing leased.

See video "LAN PATAGONIA TRAVEL GUIDE" - -

October 2013: 787-8 (38473, CC-BBE); 2 A320-214s (5801, CC-BFR; 5818, CC-BFS), ex-(D-AXAI & D-AXAM); and 1 A340-313X (167, CC-CQG), ex-(SAS).

November 2013: The (LATAM) Airlines Group (the merger created between Santiago de Chile-based (LAN) Airlines and Brazil’s (TAM) Airlines (TPR)) reported a third-quarter net profit of +$52.1 million, reversed from a -$49 loss in the same period last year.

Latin America’s powerhouse the (LATAM) Airlines Group believes it has turned a corner in its Brazilian operations after enduring weak margin conditions within Brazil’s domestic environment since the merger of (LAN) Airlines and (TAM) (TPR) officially closed a little over a year ago.

The company’s overall 3rd quarter 2013 results were somewhat buoyed by a +19% improvement in Brazilian domestic unit revenues year-on-year as (LATAM) slashed its supply within Brazil by -6% during the quarter. For the 9 month 2013 time period, (LATAM)’s capacity (ASK)s within Brazil contracted by -9%.

While the rebound within Brazil is commendable, (LATAM) still faces challenges with respect to the devaluing of the BRL, which fell -13% during 3rd quarter 2013 against the USD. (LATAM) is attempting to blunt the effects of currency fluctuations through hedging schemes and transitioning (TPR)’s debt to the (LATAM) balance sheet, which is denominated in the USD.

December 2013: (LAN) Airlines, the flag carrier of Chile, launched a new service between the capital of Colombia, Bogotá (BOG) and Aruba (AUA), in the Lesser Antilles on December 1st. The 974 km sector will be served twice-weekly (Monday and Thursday), utilizing (LAN)’s 174-seat A320s, which will fly in direct competition with Avianca (AVI)’s daily service.

January 2014: SEE ATTACHED - - "LAN-2014-01-TOP 2013 WORLD AIRLINES-A/B."

(LAN) Airlines increased its presence in the Brazilian market on January 22nd, as it launched daily services from Rio de Janeiro (GIG) to Miami, Florida (MIA). The 6,700 km route, which is already operated on a daily basis by (LAN)’s partner, (TAM) (TPR), will bring the two airlines on par with American Airlines (AAL), which offers twice-daily frequencies from its Miami hub. (LAN) deploys 767-300s on the route.

February 2014: (LAN) Airlines has gone live with Maintenix "version 8" across the Group’s affiliate passenger and cargo carriers with over >4,000 end users.

March 2014: Santiago-based, the (LATAM) Airlines Group has reported a 2013 net loss of -$281.1 million, a +$242 million improvement over 2012’s net loss of -$523.1 million. (LATAM)’s 2013 revenue rose +0.3% to $13.3 billion as expenses fell -3.9% to $12.6 billion, producing an operating profit for the year of +$643.9 million, more than seven times the operating profit of +$91.4 million (LATAM) reported for 2012.

Full-year system yield was down -1.8% to 8.4 cents as (RASK) stayed steady year-over-year at 6.1 cents and (CASK) dropped -3.7% to 6.2 cents. (LATAM)’s fuel expenses for 2013 were $4.4 billion, down -7.7% from 2012; 1.27 billion fuel gallons were consumed by the company in 2013, down -2.2% from 2012.

(LATAM)’s 2013 passenger traffic increased +2.5% to 106.5 billion (RPK)s on a -0.4% decrease in capacity to 131.7 billion (ASK)s, generating a load factor of 80.8% LF, down -2.3 points from 2012. Total passengers transported in 2013 came to 66.7 million, up +3.1% from 2012.

In the 2013 fourth-quarter, (LATAM) posted a net loss of $46.2 million, a $23.7 million improvement on the $69.8 million loss posted in 2012’s December quarter. Fourth-quarter revenue dropped -2.1% year-over-year to $3.4 billion; expenses fell -6.5% year-over-year to $3.2 billion, leaving an operating profit of +$234.9 million, nearly tripling the company’s operating profit from the 2012 fourth-quarter.

(LATAM) explained the net results as “mainly due to a foreign exchange loss of -$142.6 million mostly recognized at (TAM) (TPR) as a result of the -6.5% devaluation of the Brazilian real during the quarter.”

(LATAM) was formed in June 2012 as a merger of Chile’s (LAN) Airlines and Brazil’s (TAM) Airlines (TPR). Each airline continues to operate under its own brand and identity.

Earlier in 2013, after reviewing its post-merger plan, (LATAM) began a restructuring aimed at reducing its total operating fleet. The company started phasing out all of its Airbus A330s, A340s, Boeing 737s, and Bombardier DHC-8-200s and DHC-8-Q400s during the 2013 fourth quarter, a process that will continue through early 2016.

“During the fourth quarter of 2013, this process has generated non-recurring costs of $17.5 million resulting from penalties related to anticipated redeliveries and other delivery expenses. For the full year, these costs reached $29 million.”

(LATAM) took delivery of four Airbus A320s and one Boeing 787-8 Dreamliner during the fourth quarter and returned one each of its A319s, A320s, A340s and 737s. Additionally, the company sold an A318 during the quarter. During 2014, the company expects “to phase out all of our remaining 737s, DHC-8-Q400s and A340-500s, and will also redeliver one of four remaining A340-300s and seven of our 20 A330s,” (LATAM) said.

Following this fleet restructuring, (LATAM) will no longer operate turboprop airplanes in Colombia. By the end of 2015, the company’s long-haul business is expected to be centered on a fleet of 38 767-300s, 10 777-300ERs, 17 787s and an Airbus A350-900 (due for delivery to (LATAM) in the 2015 fourth quarter).

As of December 31, (LATAM)’s fleet consisted of 323 passenger airplanes and 16 cargo airplanes.

US Airways (AMW)/(USA) and Brazil’s (TAM) (TPR) have both officially joined the Oneworld (ONW) alliance, greatly expanding the global airline grouping’s network in the Americas.

The two carriers exited the Star (SAL) Alliance at the end of the day on March 30 and officially began services as Oneworld (ONW) Alliance members on the morning of March 31. The alliance switch was driven by mergers: (TAM) (TPR)’s with (ONW) member (LAN) Airlines in June 2012 to form the (LATAM) Airlines Group, and US Airways (AMW)/(USA) with (ONW)’s American Airlines in December 2013.

“The addition of (TAM) (TPR) and US Airways (AMW)/(USA) represents the biggest single day of growth since the (ONW) alliance started 15 years ago,” International Airlines Group (IAG) (CEO) and new Oneworld (ONW) Alliance Chairman, Willie Walsh said. “We believe it is the single biggest day of growth for any of the alliances. Brazil is one of the most important markets for all airlines. We know in Brazil, we now have a partner with an excellent network.”

(TAM) (TPR) and US Airways (AMW)/(USA) add nearly 100 destinations to the (ONW) Alliance’s network; 45 operated to by (TAM) (TPR) and more than >50 operated to by US Airways (AMW)/(USA). Walsh noted the (ONW) alliance’s worldwide network now reaches 1,000 destinations.

American Airlines (AAL) (CEO), Doug Parker called the entrance of US Airways (AMW)/(USA) into the (ONW) Alliance “another crucial step towards our progress to integrating (AAL) and US Airways (AMW)/(USA) into a single carrier.” He added that having the entire (LATAM) Airlines Group in the (ONW) Alliance was significant for the new (AAL), noting that (AAL) and (LATAM) code share across 150 destinations. Brazil is one the “most important” international markets served by (AAL), Parker said.

(TAM) (TPR) (CEO), Marco Bologna said the Brazilian carrier’s entrance into the (ONW) Alliance means it has become “aligned with the best airlines in terms of reach worldwide,” highlighting connectivity at (AAL)’s USA hubs, especially Miami International Airport. With (TAM) (TPR)’s entrance, (ONW) becomes “the leading alliance in Latin America,” he said.

(ONW) (CEO), Bruce Ashby noted, “As the leading airline in Latin America’s biggest economy, (TAM) (TPR)’s addition represents a significant landmark.”

Bologna added, “(TAM) (TPR) is one of the fastest growing airlines in the Americas. [By joining Oneworld (ONW)], we are taking a very important step for the future of (TAM) (TPR) and (LATAM).”

May 2014: Santiago-based, the (LATAM) Airlines Group (TAM) (TPR)/(LAN) Air has reported a first-quarter net loss of -$41.3 million, reversed from a net income of +$42.7 million in the year-ago quarter. The company said the results were due to non-recurring costs related to fleet restructuring. Excluding the one-off costs, it made a net profit of +$80.7 million, up +88.7% over a net profit of +$42.7 million in the year-ago quarter.

The Oneworld (ONW) Alliance member is the merger created between Santiago de Chile-based (LAN) Airlines and Brazil’s (TAM) Airlines (TPR) in 2012.

First-quarter revenue was $3.2 billion, down -6.8% year-over-year, which the company attributed to a -6.4% decrease in passenger revenues and a -12.5% decrease in cargo revenues, partially offset by a +11.6% increase in other revenues. Expenses for the quarter were down -7% to $3.1 billion, producing an operating income of +$112.6 million, down -1.4% year-over-year.

The Group said that first-quarter operating income (excluding non-recurring costs) was $146.7 million, up +28.5%, “which was driven by strong improvements in the results of (LATAM)’s passenger operations in most markets, especially in the Brazilian domestic operations, offset by the -18.5% depreciation of the Brazilian real over this year, as well as by weaker results in the cargo business.”

First-quarter systemwide passenger traffic was down -0.9% to 38.5 billion (RPK)s, on a -5.2% reduction in capacity to 52.2 billion (ASK)s, producing a load factor of 73.8% LF, down -3.2 points year-over-year. Yield was down -6.4%.

The company said it is undertaking a broad fleet restructuring plan “with the aim of reducing the number of models operated, phasing out less efficient models and allocating airplanes best suited to each one of its markets.” As a result, the company said it “expects to redeliver a significant number of airplanes between 2013 and 2016, and to fully phase out its Airbus A330s, A340s, Boeing 737s and Bombardier DHC-8-Q400s.”

(LAN) Airlines will retire its fleet of A340-300s, while sister carrier, (TAM) Linhas Aéreas (TPR) will dispose of its A330-200s as part of (LATAM) Airlines Group's fleet restructuring objectives.

Announcing a consolidated operating income of +USD147million for the First Quarter of 2014, (LATAM) said its post-merger fleet plan and fleet requirements include plans to reduce the variety of airplanes operated by phasing out less efficient models and allocating airplanes best suited to each one of its markets.

Among the types to be retired are the Airbus A330, A340, Boeing 737s and DHC-8-Q400s. With LAN Colombia ((IATA) Code: 4C, based at Bogotá) having recently retired its last 737-700 from its fleet and the DHC-8-400 having now left the Group completely, the only jets left for disposal on (LATAM)'s list are sixteen A330-200s, currently with (TAM) (TPR) and three A340-300s currently with (LAN).

(LAN) currently operates the quadjet on flights to Auckland International, Madrid Barajas, Sydney Kingford Smith, and Frankfurt International while (TPR) uses its A330s on regional flights to Buenos Aires Ezeiza, Manaus, and Porto Alegre, as well as long-haul flights to México City, Miami International, Madrid, Milan Malpensa, New York (JFK) and Orlando International.

At present, (LAN) has twenty-five 787s on order from Boeing (TBC), while (TPR) has thirty A350-900s on order from Airbus Industrie (EDS).

June 2014: 787-8 (38476, CC-BBF) delivery, and A320-214 (6135, CC-BFW), (SMBC) Aviation Capital leased and A320-233 (4476, CC-BAD), ex-(HC-CLD), returned from LAN Ecuador.

August 2014: The (LATAM) Airlines Group reported a second-quarter net loss of -$58.9 million, narrowed from a net loss of -$329.8 million in the year-ago quarter.

The company said the results were “negatively affected by reduced passenger and cargo demand during the (FIFA) World Cup soccer tournament held in Brazil, as well as by very weak seed exports in the cargo business.”

The (LATAM) Airlines Group is a consolidation of Chile’s (LAN) Airlines, (LAN) Cargo (lne), Brazil’s (TAM) Airlines (TPR) and each of the companies’ affiliates and subsidiaries.

Revenue decreased -1.7% year-over-year to $3.05 billion, as expenses fell -0.9% to $3.03 billion. Operating income during the quarter was $15.4 million, a -61% drop from the 2013 second quarter’s +$39.4 million operating profit. (LATAM) explained the revenue lapse as a result of a -12.7% decrease in cargo revenues, partially offset by a +0.3% increase in passenger revenue and a +2.8% increase in other revenues. (LATAM) noted a -70% year-over-year decline in seed exports during April 2014, resulting in a loss of -$18 million in revenue.

(LATAM)’s second-quarter consolidated passenger traffic was down -2.6% to 25.5 billion (RPK)s, on a -1.5% reduction in capacity to 31 billion (ASK)s, producing a load factor of 82.4% LF, up +3.3 points year-over-year. Yield was down -2.3% to 9.9 cents. The consolidated (LATAM) group carried 15.8 million passengers in the second-quarter, up +1.5% year-over-year.

(LATAM)’s cargo traffic in the second-quarter decreased -6.2% year-over-year, to 1.05 million (RTK)s; cargo capacity was reduced -7.5%, to 1.76 million (ATK)s, leading to a cargo load factor of 59.5% LF. Cargo yield was down -5.5% to 40.5 cents.

In June (the month in which the majority of World Cup soccer matches were held) Brazil’s (TAM) Airlines (TPR) reduced capacity by -5.1%, allowing (TPR) to operate with high load factors despite the month’s year-over-year -5.2% drop in traffic.

“We estimate the impact of the (FIFA) World Football Cup on (LATAM)’s operating margin (in both domestic and international operations) to be approximately between $140 million and $160 million during June and July,” (LATAM) said.

(LATAM) said it transported nearly 3 million domestic passengers with more than >1,100 extra domestic and international flights, resulting in an on-time performance of 95%.

“The significant infrastructure investments in Brazil prior to the World Cup, especially in airports, will have a lasting and very positive impact on the continued development of the airline industry in Brazil,” (LATAM) Airlines Group (CEO), Enrique Cueto said.

(LAN) Airlines ((IATA) Code: LA, based at Santiago de Chile International) and (TAM) Linhas Aéreas ((iata) Code: JJ, based at São Paulo Congonhas) (TPR) will begin the transition into a singular brand before the end of the year (LAN)'s (CEO), Ignacio Cueto, has said. Speaking to Colombia's "El Tiempo" newspaper, Cueto said (LATAM) Group management is working hard to find a suitable name that will unify the (LATAM) brand, but which "will not necessarily be that of (TAM), (LAN), or even (LATAM)."

The (CEO) went on to add that the creation of a single brand would also better facilitate promotion of the group companies. It will also allow passengers to better identify the group's network of destinations, particularly in places where they are less well known, he said.

(LAN) and (TAM) (TPR) merged in 2012 to create the world's second largest airline by market value.

(LATAM) Airlines Group includes (LAN) Airlines and affiliates LAN Perú ((IATA) LP, based at Lima) (LPU), LAN Argentina ((IATA) Code: 4M, based at Buenos Aires Aeroparque) (LNR), (LAN) Colombia ((IATA) Code: 4C, based at Bogotá) (AIR), (LAN) Ecuador ((IATA) Code: XL, based at Quito International) (LNE), (LAN) Cargo ((IATA) Code: UC, based at Santiago de Chile International) (LCO), Linea Aérea Carguera de Colombia ((IATA) Code: L7, Bogotá), MAS Air ((IATA) Code: M7, based at México City) (MSR) and (ABSA) Cargo ((IATA) Code: M3, based at Campinas Viracopos) (BSB), alongside (TAM) (TPR) and its subsidiaries, Pantanal Linhas Aéreas ((IATA) Code: GP, based at São Paulo Congonhas), (TAM) Airlines ((IATA) Code: PZ, based at Asuncion) (LAP), and (TAM) Cargo - Táxi Aéreo Marília (based at São Paulo Congonhas).

(LAN) Airlines inaugurated its daily Boeing 787 Santiago - Miami service on August 9. The 787s will replace some Boeing 767s on this route. (LAN) was the first airline in the Americas to receive the 787 in August 2012, and is the first to fly the type to Miami.

“Being the first to bring the 787 Dreamliner to Miami is a testament to our commitment to ensuring the comfort of our passengers, minimizing our environmental footprint and doing what we do best, connecting and transporting passengers to our unparalleled network of destinations in South America,” LATAM Airlines Group Senior VP USA, Canada & the Caribbean, Pablo Chiozza said.

(LAN)’s 247-seat 787 Dreamliner is configured with 217Y seats in economy and 30PC seats in premium business class.

(LAN) Airlines ordered 32 787s in 2012 in a $4.9 billion order.

(LAN) Airlines of the (LATAM) Airlines Group and Qantas (QAN), who are both Oneworld (ONW) Alliance members, begin code sharing flights from Santiago on (LAN) to cities in Australia: Melbourne, Brisbane, Adelaide, Canberra, Perth, Darwin, Hobart, and Alice Springs on August 9. Also from Auckland, New Zealand, roundtrip service to Melbourne, Brisbane, and Perth are available on Qantas (QAN) airplanes. For (QAN) passengers traveling to Chile, they can fly with (LAN) from Santiago to Antofagasta, La Serena, and Punta Arenas from August 5. They can also fly from Santiago to Lima, Peru beginning August 20 and to São Paulo and Rio de Janeiro, Brazil on round trip flights starting October 8.

(LAN) Airlines will deploy its first A321-200sls into service on December 29. According to data at hand, the twinjets will be deployed on the following Chilean domestic routes from Santiago de Chile International: Copiapó Desierto de Atacama, Iquique, Arica, Punta Arenas via Puerto Montt International, Concepción, Calama, Antofagasta, and Temuco La Araucanía.

(LAN), the (LATAM) Group subsidiary has ten of the type on order from Airbus Industrie (EDS) with deliveries scheduled to run from now until 2016.

787-816 (38477, CC-BBG - - SEE PHOTO - - "LAN-787-8 - 2014-08), delivery.

October 2014: News Item A-1: (LATAM) begins new international services. (LAN) Airlines will begin daily, Santiago - Milan Boeing 787 service at the end of 2015, with a layover in São Paulo. (TAM) (TPR) begins São Paulo - Cancun service before the end of 2014, and São Paulo - Barcelona and – Toronto, via New York mid-2015. Brasilia - Orlando will begin in third-quarter 2015 and frequencies on Brasilia - Miami and São Paulo - Miami will be added. (LAN) will increase Santiago - Miami from 10x- to 14x-weekly in the third-quarter 2015.

News Item A-2: (LAN) Airlines and (TAM) Airlines (TPR), both members of the (LATAM) Airlines Group, announced that passengers can keep their mobile devices turned on in “airplane mode” throughout the flight, including takeoff and landing. This new option was introduced on airplanes that operate flights within Ecuador and will gradually be implemented throughout the group’s fleet.

November 2014: SEE ATTACHED - - "LAN-2014-11 - UPDATE-A/B/C/D/E/F/G/H/I/."

News Item A-1: (LAN) begins 7x-weekly, Santiago - Auckland - Sydney Boeing 787 service, pending approval, in April.

December 2014: (LAN) Airlines, a member of the (LATAM) Airlines Group, received its first of 48 Airbus A321 airplanes, which it will operate on routes in Chile. Three of the type will be incorporated into (LAN)’s fleet by year-end.

The A321 can carry up to 46 passengers more than the A320, with total capacity of 220 passengers. This modern airplane also features the new (LATAM) Airlines Group cabin layouts, which unify the interior image of (LAN)'s airplanes.

(LAN) (CEO), Gonzalo Undurrago said, “With the arrival of the first A321, we are not just taking a major step forward in improving the quality of the product we offer to our passengers. This measure also reflects the (LATAM) Airlines Group's permanent commitment to operating one of the world’s most modern and efficient fleets. It also means that more and more people will be able to travel to the 15 destinations served by (LAN) in the country.”

January 2015: (LAN) Airlines plans to put its new Boeing 787-9 Dreamliners on its routes between New York (JFK) and Santiago, Chile, beginning July 20. (LAN) already uses its 787-8s (the smaller, original version of the Dreamliner) for some of its flights between New York (JFK) and Santiago. But (LAN) says its introduction of the 787-9 on the routes will make it "the first carrier to offer international service to South America on the Boeing 787-9 Dreamliner" from (JFK) airport.

(LAN)'s 787-9s are laid out with 313 seats, including 30PC "Premium Business" seats and 283Y in coach.

(LAN) currently has 10 787 Dreamliners in its fleet, with plans to take a total of 32 787's this decade.

(LAN) is now part of the (LATAM) Airlines Group that includes Brazil's (TAM) Airlines (TPR). (LAN)/(TPR) merged in 2012, though each continues to fly under its own brand.

"With its state of the art technology and fresh design, we are proud to be the first to offer service to South America from (JFK) on the 787-9 Dreamliner," Pablo Chiozza, (LATAM)'s Senior VP USA, Canada & the Caribbean, said. "The 787-9 Dreamliner is a testament to our dedication to minimizing our environmental footprint and providing the best experience for all our passengers."

Boeing's 787-9 is about 20 feet longer and will carry +40 more passengers and fly an additional +450 nautical miles as compared to the original 787-8 model of the Dreamliner. In typical configurations, the 787-8 carries 210 to 250 passengers, while the 787-9 will average anywhere from 250 to about 300 passengers.

The 787-9 will eventually be out-sized by Boeing's 787-10 variant of the jet, though that model is not expected to enter final assembly and flight testing until 2017. Delivery to airline customers is targeted to come in 2018.

Until then, the 787-9 is Boeing's biggest version of the 787 Dreamliner. Launch customer, Air New Zealand (ANZ)'s is configured to hold 302 passengers.

February 2015: The (LATAM) Airlines Group, parent of (TAM) (TPR) and (LAN) Airlines, has become the first airline company in Latin America to take delivery the Boeing 787-9.

The 787-9 is being leased by (LATAM) from Amsterdam-based lessor AerCap (DEA). The 787-9, which debuted last summer, is 20 feet longer than the 787-8. (LATAM) plans to start operating the 787-9 within South America in April and will become the first Latin American airline company to operate both the 787-8 and 787-9 variants of the Dreamliner.

(LATAM) already has 10 787-8s in its fleet. It has 21 more 787s on order, including nine more 787-9s.

(LAN) has said it will operate the 787-9 on daily, Santiago - New York (JFK) flights starting July 20, 2015.

March 2015: (LAN) Airlines could be planning to end its A340-300 commercial services next month. Analysis shows (359, CC-CQA & (363, CC-CQC) will have operated their last Santiago de Chile International - Auckland International - Sydney Kingford Smith - Auckland - Santiago de Chile International rotations by April 17 following which, the route will switch to the 787-9.

As (LAN) has yet to issue any official confirmation on the move, the date remains tentative at this time.

Other operators that have embarked on their own A340-300 retirement programs include SriLankan Airlines (LNK) which parked two out of its six remaining jets at Colombo International recently; Cathay Pacific (CAT) which stored one of its eleven A340-300s on February 28; and China Airlines (BEJ), which parked one of its six of the type.

April 2015: News Item A-1: The International Transport Workers’ Federation (ITF) has warned that various Latin American airports may see possible strike action over the upcoming Easter holiday period and beyond, due to labor conflicts in Argentina, Chile, Colombia, and Ecuador. “These are important connection points for flights throughout Latin America,” the (ITF) said. “The industrial conflicts have already affected and may continue affecting flights where (LAN) and (TAM) Airlines (tpr) fly in the upcoming days.”

(ITF) Civil Aviation Secretary, Gabriel Mocho Rodriguez has sent a warning letter to tourism ministers of South American governments, alerting them to possible effects of labor disruptions on travelers to the region. “We are concerned that tourism in [these countries] could be affected from the Easter holidays until the (Copa) America football tournament,” Rodriguez wrote. The (Copa) America (“America’s Cup”) 2015 will be held in Chile June 11 - July 4, 2015. The (LATAM) Airlines Group (owners of (LAN) and (TAM) Airlines (TPR)) is the “official sponsor” of the tournament.

Grievances in Chile center on (LATAM)’s conflict with the Union of (LAN) Express Workers (Sindilanex); (LATAM) has threatened to cut benefits, and the unionized ground workers, maintenance and passenger services employees have voted overwhelmingly in favor of striking. On March 31, a nationwide strike by Argentina’s transport unions paralyzed movement in the country, and (LATAM) was forced to halt all domestic and regional operations in and out of the country. In Ecuador, protests continue following the October 2014 firing of Jimena Lopez, Founder & General Secretary of Ecuador’s aviation union. In Colombia, “[LATAM] is firing mechanics and cargo workers with the most experience, [but] the union is fighting back,” the (ITF) said.

“In the face of these [various] demonstrations, (LAN) and (TAM) (TPR) airlines have not sent communications suspending their operations,” the (ITF) said.

The (LATAM) Airlines Group has not yet released any official comment on the various demonstrations and threatened strike actions.

July 2015: (TAM) Linhas Aéreas ((IATA) Code: JJ, based at São Paulo Congonhas) (TPR) will take delivery of its first A350-900 in December this year with plans to deploy the type into commercial service in January next year.

From its São Paulo Guarulhos longhaul hub, (TPR) plans to use its A350s to serve Manaus in Brazil's north first before deploying them on international flights to Miami International in March followed by Madrid Barajas in April.

"We chose the São Paulo/Guarulhos-Manaus route as the inaugural A350 XWB route to allow the different departments in our airline (primarily Operations) to familiarize themselves with this new, Next Generation model equipment," José Zaidan Maluf, VP Fleet & Engines (LATAM) Group, said.

The type's South American launch operator, (TAM) Airlines (TPR) has twenty-seven A350s on firm order from Airbus Industrie (EDS) with options for an additional five. Deliveries will run from later this year through to 2019.

A321-211 (6698, CC-BEE), ex-(D-AVZP), Parina Leasing leased.

August 2015: News Item A-1: The (LATAM) Airlines Group, parent of Brazil’s (TAM) (TPR) and Chile’s (LAN) Airlines, incurred a second-quarter net loss of -$49.7 million, narrowed -15.6% year-over-year.

The net deficit, lower than the year-ago quarter’s -$58.9 million net loss, is attributed to difficult macroeconomic conditions in Latin America, particularly in Brazil, to which (LATAM) has a great deal of exposure. (LATAM) has decided to reduce (TPR)’s domestic Brazilian capacity -2% to -4% year-over-year in the third-quarter and -8% to -10% in the fourth quarter. “We believe that this will help us fuel a recovery in yields because the capacity will be much more matched to demand,” (TPR) President, Claudia Sender told analysts.

(LATAM)’s second-quarter revenue dropped -20.8% year-over-year to $2.41 billion, but the steep decline was offset by a -21% decrease in expenses to $2.4 billion (fuel costs were down -34.3%). Operating profit was +$17.2 million, up +12.1% from operating income of $15.4 million in the 2014 June quarter.

(LATAM)’s system traffic lowered -2.9% year-over-year in the second quarter to 35.51 billion (RPK0s on a +0.7% increase in capacity to 49.88 billion (ASK)s, producing a load factor of 71.2% LF, down -2.7 points. Yield dropped -19.4% to 6.5 cents.

Sender said that in Brazil, where about 50% of (LATAM)’s capacity is tied up, “we finally started to see a slow [yield] pickup in the last weeks of July and the first weeks of August, but it’s too soon to say whether it’s a structural recovery in yields.” Regarding (TPR)’s large capacity cut, Sender emphasized, “We’re not leaving any of the airports that we currently serve. We’re leveraging our most important hub, Brasilia, so therefore, we can still provide connectivity in the Brazilian market.”

(LATAM) officials said the re-branding of (LAN) and (TPR) and their affiliates under a unified (LATAM) brand will begin to become visible in 2016 when (LAN) and (TPR) designations in airports start disappearing. The full $40 million re-branding initiative, including the repainting of more than >300 airplanes in a new (LATAM) livery, is expected to be completed by the end of 2018.

News Item A-2: The (LATAM) Airlines Group has announced it will rebrand its (LAN) Airlines ((IATA) Code: LA, based at Santiago de Chile International) (LAN) and (TAM) Linhas Aéreas ((IATA) Code: JJ, based at São Paulo Congonhas) (TPR) subsidiaries as "Latam Airlines." The unveiling of a singular, unified airline brand comes almost three years after the Chilean and Brazilian firms completed their merger thus creating the world's then second largest airline by market value.

"The first unified experiences for passengers are expected in April 2016, along with the presentation of the first aircraft with the new liveries, names and logos," Latam said.

The group said the new single brand would better facilitate promotion of its companies, while allowing customers to better identify the group's route network.

The (LATAM )Airlines Group includes (LAN) Airlines and affiliates (LAN) Perú (LPU), (LAN) Argentina (LNR), (LAN) Colombia (AIR), (LAN) Ecuador (LNE), (LAN) Cargo (LCO), Linea Aérea Carguera de Colombia, MAS Air (MSR) and ABSA Cargo, alongside (TAM) and its subsidiaries Pantanal Linhas Aéreas, (TAM) Airlines (TPR) and (TAM) - Táxi Aéreo Marília.

News Item A-3: "Trouble in Latin America" by (ATW) Aaron Karp in AirKarp Blog, August 19, 2015.

(Copa) (COP) (COPA) Holdings Parent (CFO), Jose Montero said: "Demand for air travel in our region continues to weaken, driven by currency devaluation and low economic growth."

While North American airlines are enjoying tremendous profitability, Latin America’s airlines are struggling mightily. The future may eventually be bright for (Copa) (COP), Avianca (AVI), (LATAM) (TPR)/(LAN) and other Latin American airline companies, but the present is stormy with no sunshine in sight. (LATAM) reported a -$50 million second-quarter net loss and subsidiary (TAM) (TPR) is slashing domestic Brazilian capacity. (Copa) (COP) stayed profitable in the second quarter, but its net income was down -45.8% year-over-year. Brazil’s (GOL) (GOT) reported a doubling of its net deficit in the second quarter and is cutting capacity -2% to -4% year-over-year in the 2015 second half.

The hardest hit Latin American economies are Brazil, Venezuela and Colombia, and Latin American airlines’ ties to formerly fast-growing Brazil are particularly damaging to their bottom lines. Brazil’s economy is expected to contract in 2015, and the value of its currency, the real, has plunged. Of 152 currencies tracked by "Reuters," only the currencies of Kyrgyzstan, Ukraine, and Azerbaijan have performed worse than the real in 2015.

As a result of all this, the airline revenue environment is horrendous in Latin America. Both (LATAM) and (Copa) (COP) reported year-over-year revenue declines of more than >-20% in the second quarter, and unit revenue performance was even worse.

Speaking to analysts to discuss Panama-based (COP)’s second quarter earnings, senior executives didn’t sugarcoat the situation. “Demand for air travel in our region continues to weaken, driven by currency devaluation and low economic growth,” (COPA) Holdings (CFO), Jose Montero said.

(COP) (CEO), Pedro Heilbron doesn’t foresee a recovery anytime soon. “The economies of Latin America, particularly in South America, still don’t show signs of recovery,” he said. About 40% of Copa (COP)’s (O&D) revenue is tied up in Colombia, Venezuela and Brazil, and the company’s revenue from those markets has been cut in half this year. “The regional economic environment has weakened further” in recent months, Heilbron said.

The biggest problem for Latin American airlines is the difficulty they’re having planning going forward with so much uncertainty in the air. “More than anything, we need stable currencies and stable economies,” Heilbron explained. “It’s not that we need economic growth to rebound to where it was a few years ago, we just need stability and more certainty.”

The difference in financial performance right now, between North American and Latin American airlines is striking. Airlines for America (A4A) VP & Chief Economist, John Heimlich told reporters that “weakness in Latin America has been a bit of drag on earnings” for USA carriers that operate to Latin American countries. But the USA “domestic situation is stable for the foreseeable future” and the problems for airlines in Latin America show no signs of migrating north, he said.

November 2015: News Item A-1: The (LATAM) Airlines Group, parent of Brazil’s (TAM) (TPR) and Chile’s (LAN) Airlines, reported a 2015 third-quarter net loss of -$113.3 million.

The net deficit, deeper than the year-ago quarter’s -$107.8 million net loss, is attributed by (LATAM) management to a weakening macroeconomic environment in Latin America, embellished by the ongoing devaluation of Latin American currencies (especially the “challenging economic scenario” of the Brazilian real’s -55.5% depreciation).

In response, in September, (TAM) Airlines (TPR) reduced domestic capacity in Brazil by -5.9%; (TPR) intends to further reduce capacity by approximately -8% to -10% during the 2015 fourth quarter.

As customer demand is expected to continue to weaken, (LATAM) announced it is revising its fleet capital expenditures through 2018. The company plans to restructure its delivery schedule for 2016 - 2018 by reducing fleet commitments for the period by about -40% through deferrals and sales of both wide body and narrow body aircraft (approximately $3 billion in savings).

“This restructuring seeks primarily to adjust capacity to the prevailing market conditions in Latin America, and is in line with our focus on maintaining a healthy balance sheet and adequate liquidity,” (LATAM) said.

(LATAM)’s third-quarter revenue fell -19.9% year-over-year (YOY) to $2.51 billion, but the Group’s operating expenses also declined during the quarter, falling -20.8% (YOY) to $2.39 billion (fuel costs declined -37.1% (YOY)). The Group’s operating profit was +$120.6 million, up +1.9% (YOY).

(LATAM)’s third-quarter system traffic was down -0.5% (YOY) to 38.53 billion (RPK)s on a +1.3% (YOY) increase in capacity to 53.1 billion (ASK)s, producing a load factor of 72.6% LF, down -2.6 points. Yield fell -20.1% (YOY) to 6.3 cents.

As of September 30, the (LATAM) Airlines Group’s consolidated fleet comprised 328 aircraft, including 237 Airbus A320 family aircraft and 10 A330-200s. (LATAM)’s Boeing (TBC) fleet includes 38 767-300 passenger airplanes and 11 767-300F cargo airplanes, 10 777-300ERs, four 777-200F freighters, plus 10 787-8 and six 787-9 Dreamliners.

News Item A-2: "Was the (TAM) (TPR) Merger a Mistake for (LAN)?"
by (ATW) Aaron Karp in AirKarp Blog, November 23, 2015.

The (LATAM) Airlines Group, created by the 2012 merger of Chile’s (LAN) Airlines and Brazil’s (TAM) (TPR), is going through a rough patch. Its net loss through the first nine months of 2015 topped -$200 million, prompting (LATAM) to embark on a restructuring of its 2016 - 2018 fleet plan, that aims to save -$3 billion by deferring aircraft deliveries and selling aircraft. Its fleet commitments for the three-year period are being reduced by -40%.

Prior to the merger with (TAM) (TPR), in which (LAN) acquired the second largest carrier in Brazil, via a stock-swap transaction valued at around $3.5 billion, (LAN) had steady financial success (despite the 2008 - 2009 global financial crisis, and a major earthquake in Chile in 2010. But Brazil’s once fast-growing economy is now shrinking, and the country’s currency, the real, has collapsed. The merger with (TAM) (TPR) and the creation of (LATAM) meant that (LAN) became highly exposed to Brazil, for better or worse. Lately, it has been worse.

Speaking at the Latin American & Caribbean Air Transport Association (ALTA) Airline Leaders Forum in San Juan, Puerto Rico, (LAN) (CEO), Ignacio Cueto (whose brother Enrique Cueto is (LATAM)’s (CEO)) said Brazil is in the midst of “a long, deep crisis,” adding, “In three years, I’ll tell you how we got out of this.”

Cueto was asked point blank whether he regretted (LAN)’s acquisition of (TAM) (TPR). “How many things in life would you not change if you could go back?” he quickly responded, generating a laugh from the crowd at the (ALTA) conference. He then turned more serious. “But sure enough, this is something I would not go back on,” Cueto said. “The question might be: Was it worth it to go into Brazil? - - Definitely.”

He explained that (LAN), which prior to the (TAM) (TPR) merger had launched affiliates in Argentina, Ecuador, Peru, and Colombia, wanted to create a pan-continental airline, that would become South America’s signature air transport operator. How can you do that without Brazil in the fold?

Cueto said (LATAM) is maintaining “as much optimism as possible” through the current difficulties. “Tough times happen and you have to rough them out,” he said.

I visited (LAN)’s headquarters in Santiago de Chile in 2012 just months after the (LAN)/(TAM) merger closed. Here’s a paragraph from the October 2012 (ATW) cover feature, "(LAN)’s Leap." I wrote following that trip:

"A strong impression gleaned (after spending a couple of days at (LAN)’s downtown and airport headquarters, Maintenance base, and pilots (FC)’ training center) is that the early months of (LATAM) are proving to be somewhat overwhelming. “We could only see some [TAM] numbers” before the merger officially closed in June, (LAN) Senior VP Corporate Affairs, Pablo Querol said. “Now we are forced on the fly to understand how (TAM) (TPR) works and how that relates to how (LAN) works. The benefits of joining the two networks, the synergies expected, are going to be there. But we need to finish the research on how to combine the networks of (LAN) and (TAM) . . . Now that we can see the numbers of both carriers, we can figure out exactly what we need to do to get the synergies.”

My point in reprising the above paragraph is to note that, even before the current Brazil crisis, not all was smooth with the merger. (LAN) did “leap” into it without completely understanding (TAM).

In fact, at the 2013 (ALTA) Airline Leaders Forum in Cancun, Enrique Cueto conceded cultural integration issues had led him to push out management staff who had not bought into the merger. “There are people who don’t want to change, and you have to replace them,” he said then.

To be fair to (LATAM), all airlines in Latin America are suffering right now. “The economic weakness has spared no one,” Copa Airlines (COP) (CEO), Pedro Heilbron, also speaking in Puerto Rico, said. But Brazilian carriers (TAM) and (GOL) (GOT) appear to be, by far, suffering the most. Copa and Avianca (AVI), (LATAM)’s two biggest Latin American rivals, are managing to stay profitable.

Would (LAN) be better off without (TAM)? In the near term, undeniably yes. But the creation of (LATAM) was a bet on the long-term future of Latin American commercial aviation, about which Heilbron, the Cuetos, and, among others, Boeing (TBC) and Airbus (EDS) remain very optimistic.

(LAN) believes the current storm will eventually pass and, come the 2020s and beyond, it will have a network unrivaled in the region. As (LAN)’s Querol told me in 2012: “You don’t have any one [airline] company in the world that has the position on one continent that we have in South America. You don’t find one company on one continent that can offer the kind of connections we can, to all parts of the world.”

A320-214 (5125, CC-BAW) sold to Maquarie Airfinance and leased back.

December 2015: (LAN) Airlines and (TAM) (TPR) members of the (LATAM) Airlines Group, are the first South American airlines to develop and provide pilots (FC) and cabin crew (CA) members with tablets equipped with applications geared to facilitate, optimize and improve the information management process for Flight Operations and service on-board. The new system will accelerate the information management process for each flight, reducing the data processing time from 15 days to only 1 day in some cases, and leading to a reduction of paper consumption of up to -100,000 sheets per month.

January 2016: "(LATAM) Seeks Antitrust-immunized Joint Ventures (JV)s with American (AAL) and IAG" by (ATW) Aaron Karp, January 14, 2016.

The (LATAM) Airlines Group is seeking to form separate joint ventures (JVs) with American Airlines (AAL) and the International Airlines Group (IAG) for travel between North and South America, and between South America and Europe, respectively.

(AAL) and (LATAM), parent to Brazil’s (TAM) (TPR) and Chile’s (LAN) Airlines (as well as affiliated carriers throughout South America), said they will apply for antitrust immunity (ATI) with the USA Department of Transportation (DOT) and the relevant regulatory authorities in South America. Similarly, (LATAM) and the (IAG), the parent of British Airways (BAB) and Iberia (IBE), said they have signed “a joint business agreement” for the operation of “flights between Europe and South America.”

(LAN), (TAM), (AAL), (BAB) and (IBE) are all members of the Oneworld (ONW) alliance. (AAL), (BAB), (IBE) and Finnair (FIN) already operate an antitrust-immunized transatlantic (JV).

The (IAG) said in a statement that (LATAM), (BAB) and (IBE) “plan to seek approval from the appropriate competition authorities in South America and will inform the regulatory authorities in the European Union (EU),” adding, “Under the joint business, (BAB), (IBE) and the (LATAM) Airlines Group would cooperate commercially on flights between the European Union (EU) and South America. They would expand their code share arrangements on flights between and within Europe and South America, significantly increasing the number of destinations that the airlines can offer customers.”

(IAG) (CEO), Willie Walsh hinted at a potential (IAG)-(LATAM) (JV) in December, telling the Aviation Club of the UK that the (IAG) “would like to have closer ties to” (LATAM).

(LATAM) (CEO), Enrique Cueto called the potential (JV)s with (AAL) and the (IAG) “excellent news for Latin America,” adding, “Through these two agreements, we seek to significantly improve the benefits to our clients by providing them with greater connectivity between South America and the USA/Canada and also between South America and Europe. This step is necessary to offer the best network of connections for everyone in Latin America and increases the possibility of adding new routes and direct flights to new destinations, as well as flights already operated by (LATAM) and affiliates in the future.”

(AAL) Chairman & (CEO), Doug Parker said, “Customers will benefit from more frequent and convenient schedule options than the carriers could offer individually. Travelers headed to Latin America will soon have more seamless access to more than >100 additional destinations with (LATAM) beyond (AAL)’s already extensive network.”

Walsh added, “We already have a close commercial relationship with the (LATAM) Airlines Group as part of the Oneworld (ONW) Alliance and we look forward to enhancing the relationship further. This joint business would benefit customers by providing them with easier journeys to more destinations with better aligned schedules and increased frequencies. This would boost both tourism and business travel between South America and Europe.”

(LATAM) emphasized that it, (AAL) and the (IAG) “will continue to operate independently and maintain control of their respective operations,” adding, “These agreements will not cause any changes to the ownership or administration of the airlines.”

February 2016: News Item A-1: (LAN) Airlines, part of the (LATAM) Airlines Group, begins 3x-weekly, Los Angeles - Santiago Boeing 787 service on October 16.

News Item A-2: (TAM) Airlines (TPR), part of (LATAM) Airlines Group, begins 3x-weekly, New York (JFK) - São Paulo (GRU) Airbus A350 XWB service on July 23. (Tpr) A350 Orlando - São Paulo (GRU) service begins in July.

News Item A-3: (LAN) Airlines and (TAM) (TPR) international flights will feature 12 movies nominated in USA's 88th Academy Awards, which will be held February 28. The films nominated for Oscars are available on all long-haul flights that offer personalized (IFE) (Boeing 787, 767, 777) in both economy (Y) class and premium business (PC) class. The (LAN) and (TPR) (IFE) systems feature high-definition screens (15.4 inches in premium business (PC) class and 8.9 inches in economy (Y) class) as well as (USB) and iPod connections.

News Item A-4: Costa Rican Maintenance Repair & Overhaul (MRO) Coopesa (COO) has carried out its first "C" check for (LATAM) Airlines (TPR)/(LAN) on an Airbus A319s The "C" check marks the beginning of a series of scheduled services over the course of this year between the parties.

News Item A-5: (MTU) Maintenance has signed an exclusive agreement with the (LATAM) Airlines Group (TPR)/(LAN). (MTU) will maintain a portion of the airline’s (GE90-110)s on Boeing 777F freighters. The contract includes worldwide on-wing and on-site services.

March 2016: News Item A-1: Santiago, Chile-based (LATAM) Airlines Group posted a net loss of -$219.3 million for 2015, nearly doubling its 2014 net loss of -$109.8 million. Additionally, (LATAM) reported a net loss of -$16.3 million for its 2015 fourth quarter, reversing the -$98 million in net profit for the year-ago quarter.

The (LATAM) Airlines Group is parent company to Brazil’s (TAM) Airlines (TPR) and Chile’s (LAN) Airlines, and their affiliates.

(LATAM) was hit hard in 2015 by ongoing economic weakness in Latin America.

Following a 2015 third-quarter net loss of -$113 million, (LATAM) implemented a -40% reduction in its fleet commitments for 2016 - 2018. As of March 2016, the company has reduced its commitments by -$2.9 billion.

“In addition to this plan, the company sold four Airbus A330s, redelivered three A330s, one Boeing 767 and four A320s and subleased one 777F Freighter to a third party during 2015, and continues to seek opportunities to adjust fleet commitments,” the company said.

(LATAM) said its fourth-quarter losses included $71 million related to aircraft delivery costs (which was mainly associated with the phase-out of the A330 fleet, expected to occur in 2016) -$57 million in foreign exchange losses, and a $41 million charge that was related to the adjustment in the exchange rate of cash held in Venezuela.

For the full-year, (LATAM) reported non-cash foreign exchange losses of $467.9 million, primarily as a result of the -49% devaluation of the Brazilian real during the year.

(TPR) reduced fourth-quarter domestic capacity in Brazil by -9.4%, and plans to further reduce capacity in Brazil by -8% to -10% in 2016. Additionally, (LATAM) has reduced its 2016 capacity growth guidance on international routes to -3% to -5%.

(LATAM)’s full-year 2015 operating revenue was $10.13 billion, down -18.8% year-over-year (YOY). Operating expenses were $9.61 billion, a -19.6% drop (YOY), with a significant savings coming from the drop in aircraft fuel expenses, which at $2.65 billion, was down -36.4% (YOY).

(LATAM)’s operating income for the year came to $513.9 million, up +0.1% (YOY). “For the airline industry in South America, 2015 was a challenging year, especially in Brazil,” (LATAM) (CEO), Enrique Cueto said. “Despite the slowdown in Gross Domestic Profit (GDP) growth in the region and the depreciation of all local currencies, (LATAM) was able to improve our operating [margin] by +1% point [to 5.1%] as a result of our focus on cost discipline and network enhancement.”

In an effort to expand connectivity to North America and Europe, (LATAM) applied for joint venture (JV) agreements with both American Airlines (AAL) and the International Airlines Group (IAG) in January 2016.

(LATAM)’s system wide yield in 2015 fell -18.1% (YOY) to 6.4 cents as (RASK) dropped -20.5% (YOY) to 4.7 cents, while (CASK) fell -20.1% (YOY) to 4.8 cents. The consolidated group carried 67.8 million passengers in 2015, identical to 2014. Traffic increased +2.7% (YOY) to 111.5 billion (RPK)s as overall capacity grew +3.1% (YOY) to 134.3 billion (ASK)s. Load factor for the consolidated group was 83% LF in 2015, down -0.3 point from 2014.

As of December 31, 2015, (LATAM)’s fleet comprised 316 passenger aircraft (240 Airbus A320 family aircraft, plus 10 A330-200s, one A350-900, 38 Boeing 767-300s, 10 777-300ERs, 10 787-8s, and seven 787-9s) and 11 cargo aircraft (eight 767-300Fs and three 777-200Fs).

News Item A-2: Amadeus reached an agreement with (LATAM) (LAN)/(TAM)/(TPR) for global distribution services, enabling travel agencies subscribed to the Amadeus system to have access to all of (LATAM)’s flights and other services. Flight availability, pricing and other conditions provided to Amadeus travel agencies will be the same as in other channels, including (LATAM)’s website. Moreover, (LATAM) and Amadeus have agreed to continuous cooperation to accelerate (LATAM)’s merchandising capabilities with ancillary services to be made available to Amadeus travel agencies.

April 2016: News Item A-1: "(LATAM) Airlines Group Unifies Cargo Brand" by (ATW) Aaron Karp, April 6, 2016.

The (LATAM) Airlines Group, as part of its brand unification initiative, has brought all of its affiliated cargo operations under a single brand: (LATAM) Cargo.

(LATAM) announced last year that all of its subsidiaries, which most prominently include Chile’s (LAN) Airlines and Brazil’s (TAM) Airlines (TPR), would all be branded “LATAM” by 2018. It said it is uniting (LAN) Cargo (LCO), (TAM) Cargo, (LAN) Cargo Colombia, and Mexico’s Mas Air (MSR) under the single banner of (LATAM) Cargo.

Together, the four carriers fly cargo to 140 destinations in 29 countries. “Apart from representing each affiliate’s best and offering consistent and impeccable service, this change also involves an evolution internally in relation to how we do things, how we deal with issues and how we come up with solutions,” (LATAM) Airlines Group Executive VP Cargo, Cristián Ureta said.

“(LATAM) Cargo will offer its customers unified service throughout the network and integrated products and communications channels,” (LATAM) said. “Changes to the company’s image will start to become visible during the first [half] of 2016 and will continue to be rolled out during the next three years. These changes will not impact the operation or the service delivered to customers.”

May 2016: News Item A-1: Ping An Leasing has delivered the first of four Airbus A321 aircraft to the (LATAM) Airlines Group, which will be operated by (TAM) (TPR), (LATAM)’s subsidiary in Brazil. The aircraft, which was delivered at the Airbus assembly facility in Hamburg, Germany May 25, is the first of four A321s leased to (LATAM) by Ping An Leasing.

News Item A-2: The first A350 XWB to cross the Atlantic, operated by (LATAM) Airlines (TPR)/(LAN), touched down at Adolfo Suárez Madrid-Barajas Airport on May 3. The flight had taken off hours earlier, on the evening of May 2, from São Paulo/Guarulhos, and was received on the runway with a traditional water salute.

July 2016: The (LATAM) Airlines Group’s first Airbus A320neo rolled out of the Airbus Final Assembly Line in Toulouse after the installation of Pratt & Whitney (PRW) Pure Power (PW1100-JM) engines in the airline (LAN)/(TPR)’s new livery.

SEE PHOTO - "LAN-A320neo New Livery - 2016-07.jpg."

August 2016: News Item A-1: (LATAM) Airlines Group reported a -$92.1 million net loss for the 2016 second quarter (2Q), deepened from the group’s -$49.7 million net loss in (2Q) 2015.

Revenues for the South American airline group (which comprises (LATAM) Airlines and its affiliates in Peru, Argentina, Colombia and Ecuador, (LATAM) Cargo, (TAM) S A (TPR) and its affiliates in Brazil and Paraguay, plus loyalty-program company Multiplus S.A.) fell -12.5% year-over-year (YOY) to $2.11 billion.

The drop in (2Q) revenue is attributable to the continuing “weak macroeconomic environment in South America (especially in Brazil) and the devaluations of Latin American currencies during the period,” (LATAM) said.

(LATAM)’s (2Q) passenger revenue decreased -13.7% (YOY) to $1.71 billion; (2Q) cargo revenue fell -22.3% (YOY) to $260 million. The group’s consolidated yield fell -12.9% (YOY) to 5.7 cents. The group’s operating margin for the quarter was 0.1%, down -0.7 point (YOY).

(LATAM)’s operating expenses for the quarter declined -12% (YOY) to $2.11 billion. The company reported $1.3 million in operating income for the quarter, down -92.4% from $17.2 million in operating income in (2Q) 2015.

In an ongoing effort to reduce fleet assets by $2 billion to $3 billion by 2018, (LATAM) said it had reduced its fleet assets by -$1.1 billion as of August 2016 through deferrals, cancellations and redeliveries. (LATAM) said the company has deferred 12 Airbus A320neo and two A350 aircraft, and has also opted to redeliver five additional A320s, three A319s and one Boeing 777-200F freighter in 2017.

In July, (LATAM) entered into an agreement with Qatar Airways (QTA) to acquire up to 10% of (LATAM)’s total shares. A shareholders meeting on August 18 will determine whether the agreement is approved. Once approved, the capital infusion of +$613 million should come in the 2016 fourth quarter. “[It] will be used to strengthen the financial position of the company, reducing debt, while expecting to end the year with a cash position of approximately $1.5 billion, which we consider to be an adequate level for the company under current market conditions,” (LATAM) said.

(LATAM)’s (2Q) consolidated system traffic was down -2.3% (YOY) to 34.7 billion (RPK)s on a -1.8% (YOY) systemwide decrease in capacity to 49 billion (ASK)s, producing a load factor of 70.8% LF, down -0.4 point (YOY).

Passenger traffic grew +1.8% (YOY) during the second-quarter to 26.3 billion (RPK)s. Passenger capacity was up +0.8% (YOY) to 31.8 billion (ASK)s and (LATAM)’s passenger load factor rose +0.8 point (YOY) to 82.7% LF. In particular, passenger demand is on the rise (up +8.4% (YOY)) in (LATAM)’s Spanish speaking country (SSC) affiliates (Chile, Peru, Argentina, Colombia, and Ecuador). Capacity in the (SSC) markets were up +7.2%, driven by growth in Peru and Chile, and load factors reached 78.8% LF. (LATAM) dropped its capacity in Brazil -13.7% (YOY) during the quarter as traffic decreased -11.9% (YOY), which raised the Brazil load factor to 81.2% LF. Capacity on international routes increased +7.9% (YOY), driven by added capacity on healthy (SSC) routes to the USA and Europe, (LATAM) said.

As of June 30, the (LATAM) Airlines Group’s consolidated fleet comprised 333 aircraft, including 241 Airbus (EDS) A320 family aircraft, five A330-200s and three A350-900s. (LATAM)’s Boeing fleet includes 37 767-300 passenger airplanes, 11 767-300F cargo airplanes, 10 777-300ERs, four 777-200Fs, plus 10 787-8 and 12 787-9 Dreamliners.

News Item A-2: "(LATAM) Takes First A320neo."

The (LATAM) Airlines Group has taken delivery of its 1st Airbus A320neo, becoming the 1st airline in the Americas and the 5th in the world to take delivery of the re-engined A320.

See attached photo of the 1st A320neo with following people present: Pictured (from the left): (LATAM) Airlines Group (LAN) Senior VP International & Alliances, Roberto Alvo, Airbus (EDS) President & (CEO), Fabrice Bregier, (LAN) (CEO) Enrique Cueto, (EDS) President Latin America & Caribbean, Rafael Alonso, and (LAN) VP Fleet & Engines, Jose Maluf:
"LAN-2016-08 - 1st A320neo Delivery.jpg."

A320-232 (3264, CC-BJB) to AerCap (DEA), A320-233 (1568, CC-COL), leased to LATAM Argentina, 2 A321-211s (7239, CC-BEM; 7287, CC-BEN), Jackson Square Aviation leased.

October 2016: The LATAM Airlines Group took delivery of A350-900 (048) on lease from AerCap (DEA) for operation by LATAM Airlines Brazil (TPR).

November 2016: News Item A-1: Santiago, Chile-based (LATAM) Airlines Group posted a +$4.7 million net profit for the 2016 3rd quarter, reversed from a -$113.3 million net loss in (3Q) 2015.

3rd-quarter revenue for the South American airline group (which comprises (LATAM) Airlines and its affiliates in Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay and Peru; (LATAM) Cargo; and loyalty-program company Multiplus) grew modestly (0.2%) to $2.5 billion.

On November 9, (LATAM) Airline Group and its affiliates announced the company will implement a low-cost carrier (LCC) model a “new travel model”) for domestic services in the 6 countries where it has domestic operations (Brazil, Chile, Peru, Argentina, Colombia and Ecuador).

Implementation of the program will be made by country and in stages beginning in the 1st half of 2017. (LATAM) said the model will affect 78% of the group’s passengers and 45% of the company’s capacity, and projects that basic fares on domestic routes will be up to 20% cheaper through to 2020 and passenger numbers on domestic routes will increase up to 50%.

“Our objective is that fares [will] continue to fall, widening access to air travel both to more people and to those who wish to fly more frequently. The new travel model seeks to satisfy the needs of today’s passengers, who value fast, convenient and seamless travel, as well as the ability to manage and personalize their travel experience, only paying for the services they require,” (LATAM) Airlines Group (CEO) Enrique Cueto said.

“The airline industry is being transformed and we feel confident that (LATAM) is well positioned to address the needs of today’s passengers by making their travel easier in a smart and relevant way,” (LATAM) said.

(LATAM)’s 3rd-quarter passenger revenue decreased 0.6% (YOY) to $2.1 billion; cargo revenue fell -14.3% (YOY) to $265.6 million. The group’s consolidated yield was down -0.9% to 6.2 cents. Other revenue, however, increased +68.2% during the quarter to $153.6 million, primarily from a $28 million increase in sales from tour operators associated with the Rio Olympics.

(LATAM) said it was the 1st quarterly revenue gain after 11 consecutive months of revenue decline and reflected “a stronger currency environment in South America, especially the 8.3% appreciation of the Brazilian real, as well as a positive revenue per (ASK) trend in [Brazilian domestic and international routes] driven by significant capacity adjustments,” (LATAM) said. The company reduced domestic capacity in Brazil 13.2%, and revenues per (ASK) increased 8.6% during the quarter. Capacity on international routes between Brazil and the USA were reduced approximately 31.5% during the quarter; (RASK) on these routes increased approximately +20% during the quarter, (LATAM) said.

(LATAM) deferred delivery of 2 Airbus A350 XWBs (from 2017 to 2018) during the quarter.

“Total fleet commitments for 2017 will amount to $482 million, the lowest in the history of (LATAM), all of which will be operating leases, requiring no fleet capital expenditures in 2017,” (LATAM) said, adding the company will also redeliver 1 Airbus A320 in 2017 and sell 1 Boeing 767-300 in 2018. The company plans to fully phase out its A330 aircraft is “on track to be completed by year-end,” (LATAM) said.

The group’s operating expenses for the quarter decreased 1.1% to $2.4 billion, as aircraft maintenance expenses declined 12.3% and aircraft fuel costs fell -13.5% (YOY). The group reported $152.3 million in operating income for the quarter, up +26.3% from $120.6 million in operating profit during 3Q 2015. The group’s operating margin for the quarter was 6%, up +1.3 points compared to 4.8% in (3Q) 2015.

(LATAM)’s 3rd-quarter consolidated systemwide traffic was down -1.4% (YOY) to 38 billion (RPK)s on a -2.1% systemwide decrease in capacity to 52 billion (ASK)s, producing a load factor of 73% LF, down -2.6 points (YOY).

Passenger traffic was up +1.1% (YOY) during the quarter to 29.3 billion (RPK)s. Passenger capacity was flat at 34.5 billion (ASK)s and the group’s passenger load factor increased +0.9 point (YOY) to 84.8% LF.

(LATAM)’s cargo traffic was down -9.2% to 824 million (RTK)s during the quarter; capacity decreased 5.9% to 1.7 billion (ATK)s; the group’s cargo load factor came in at 49.6%, down -1.8 points (YOY).

As of September 30, (LATAM) Airlines Group’s consolidated fleet comprised 339 aircraft: 244 Airbus A320 family aircraft, including the 1st A320neo delivered to an airline in the western hemisphere; 6 A330-200s and 5 A350-900s (2of which were delivered during the 3rd quarter). (LATAM)’s Boeing fleet includes 37 767-300s, 10 777-300ERs, 10 787-8s, 12 787-9s, 4 777-200F freighters and 11 767-300F freighters.

News Item A-2: Brazil Clears Qatar Airways - (LATAM) Tie-up, but is Wary of (LATAM) - (IAG) (JV)" by (ATW) Aaron Karp, November 17, 2016.

Conselho Administrativo de Defesa Econômica (CADE), Brazil’s competition authority, has approved Qatar Airways (QTA)’s investment in the (LATAM) Airlines Group, but the regulator has also expressed misgivings about (LATAM)’s proposed joint venture (JV) with the International Airlines Group (IAG).

The approval of (QTA) taking up to a 10% stake in (LATAM) worth >$600 million is welcome news for (LATAM), the largest Latin American airline company, which believes foreign investment and transnational (JV)s are critical to its future. But the delay in approval of a transatlantic (JV) with (IAG) carriers British Airways (BAB) and Iberia (IBE) (Oneworld (ONW) Alliance partners with (LATAM)) is concerning to (LATAM) (CEO) Enrique Cueto.

At the Latin American & Caribbean Air Transport Association (ALTA) Airline Leaders Forum in Mexico City, Cueto said major airlines in North America, Europe and Asia in well-established antitrust-immunized (JV)s have an advantage over Latin American carriers. “Everything comes to our region 5 to 10 years later,” he said. “Either we get into this [JV] model or we’ll be bought by others and we’ll disappear.”

Cueto said competition authorities and labor unions concerned about (JV)s should understand that (JV)s will enable Latin American airlines to guarantee services and jobs over the long term, while being bought out altogether would mean nothing is secure. “(JV)s will guarantee a lot more than people think,” he said.

(CADE) said earlier this month that a (LATAM) - (IAG) (JV) “has the potential to cause harmful effects on competition,” particularly on the São Paulo - London and São Paulo - Madrid routes. (LATAM)’s application to start the (JV) with (IAG) has been forwarded to (CADE)’s Tribunal, which has final say on mergers and acquisitions in Brazil. (CADE) has jurisdiction over the proposed (JV) because one of (LATAM)’s primary subsidiarys, (LATAM) Brasil (formerly (TAM)(TPR)) is based in Brazil. (LATAM) is also seeking approval for a (JV) with American Airlines (AAL), but (CADE) has not reviewed that application yet.

* Attracting capital

Meanwhile, the investment from (QTA) provides a shot in the arm to (LATAM), which has struggled financially in recent years as Brazil and Latin American’s other economies have faltered. Speaking at the (ALTA) conference, Deutsche Bank Analyst Michael Linenberg pointed out that (LATAM)’s market capitalization stands at $5 billion today, less than half of (LATAM)’s implied equity value of $12 billion, when Chile’s (LAN) Airlines announced in 2011 that it was acquiring (TAM) (TPR) to form (LATAM). The merger closed in 2012.

At the time, the combined (LAN) - (TAM) market capitalization was higher than any airline in the world. (LATAM)’s current $5 billion equity value is just one-seventh of Delta Air Lines (DAL)’s $35 billion market capitalization, according to Linenberg, a demonstration of how much the global airline industry has changed in the last 5 years. But Linenberg predicted airlines from around the world will continue to invest in Latin American carriers, which still appear poised for strong long-term growth. “There’s a huge amount of potential in the region,” Linenberg said. “You have a lot of carriers in the world looking to invest in the region.” He said the economic fortunes of Latin American airlines are starting to brighten. “It does feel like we’re seeing a bottom here,” he noted.

Latin American airlines have “become an industry that is attracting capital” from outside the region, Aeromexico (AMX) (CEO) Andrés Conesa said. (AMX) and (DAL) earlier this month received tentative approval from the USA Department of Transportation (DOT) for an antitrust-immunized cross-border (JV). (DAL) owns a minority stake in (AMX) that it has said could rise to as much as 49% once the (JV) is cleared.

Conesa said Latin American airlines are trying to take advantage of the (JV) model and outside investment, just as airlines have in Europe and the USA. European and USA carriers have gained significantly from a “very developed” transatlantic (JV) structure, he said, adding, “What we’re asking is to be on the same level as other airlines.” Conesa said the (DAL) - (AMX) (JV) “also makes sense for the consumer” and will create “an additional wave of traffic” for (AMX).

Panama-based Copa Airlines (COP) Holdings (CEO) Pedro Heilbron indicated that his company and other major Latin American airlines, such as Colombia’s Avianca (AVI), will also pursue (JV)s with carriers outside of the region. “As airlines such as (AMX) and (LATAM) get into (JV)s, it will put pressure on the other airlines in the region to do something,” he said. “We can’t be left out of the game.”

News Item A-3: "(LATAM), and Copa (COP) Seek to Get in Front of Latin America’s Low Cost Carrier (LCC) Trend" by Aaron Karp aaron.karp@penton.com, November 22, 2016.

The (LATAM) Airlines Group in revamping its fare structure to offer a basic economy (Y) option on domestic flights and Copa Holdings launching a low-cost carrier (LCC) (Wingo), signal a move toward (LCC) services in Latin America, even among the region’s largest airlines.

(LCC)s have transformed the domestic Mexican market in recent years, and (LCC)s have a strong foothold in the Brazilian market, but the model has not yet caught on in the rest of Latin America. However, that now appears to be changing, particularly in domestic markets and on short-haul flights. (LATAM) (LAN)/(TPR) and Copa (GOP)/(REU) - (Wingo) are trying to get in front of the trend.

“Passengers are looking for a low, low price, as they are in Europe, and that is going to be the fastest growing segment in our region,” (LATAM) (CEO) Enrique Cueto said during the recent Latin American and Caribbean Air Transport Association (ALTA) Airline Leaders Forum in Mexico City. “We cannot let that segment be taken by someone else.”

(LATAM) is not launching a separate (LCC), but in the 1st half of next year it will start rolling out an unbundled fare structure in the 6 domestic markets its affiliates serve (Brazil, Chile, Peru, Argentina, Colombia, and Ecuador). Passengers will be able to choose a basic fare up to -20% lower than current prices, with the option to pay fees for add-ons such as checking baggage or selecting a seat.
Cueto said he expects to see multiple (LCC)s emerging to serve passengers on short-haul routes in Latin America, and (LATAM) decided it was necessary to modify its fare structure to remain competitive on flights of 2 hours or less. He acknowledged that (LATAM)’s costs on most of the short-haul routes will still be +10% to +15% higher than a pure (LCC)’s costs. “That is acceptable because we want to keep business (C) passengers,” he explained.

Though at a cost disadvantage, (LATAM) will have a “revenue advantage” on the short-haul routes and will offer a product that will be cost competitive enough to keep business (C) passengers from switching to (LCC)s and entice leisure passengers to choose (LATAM), Cueto argued. “If business (C) people go to another carrier, you’re doomed,” he said. “The challenge is we want to keep the business (C) passengers, but we will not give up that [LCC] segment.”

Copa (CEO) Pedro Heilbron conceded the decision to launch Wingo, a (LCC) subsidiary of Copa Airlines Colombia (REU) that will start flying December 1, was an uncharacteristic move for him. “Doing this is like if I were to arrive at this event [the annual (ALTA) gathering of Latin American airline executives] with red pants, a yellow checkered shirt and a hat,” the impeccably dressed Heilbron joked.

Wingo will operate 4 Boeing 737-700s configured with 142Y seats in a single-class cabin on point-to-point services to 16 destinations in Latin America and the Caribbean. Wingo is a “tool” to enable Copa (COP)/(REU) to retain passengers on short-haul routes where there is a growing (LCC) presence, Heilbron said. “Wingo doesn’t need to be profitable to be positive for Copa Holdings,” he said. “If they break even, it will be positive for us. Of course, we expect them to be profitable.”

Enrique Beltranena, the (CEO) of Volaris (VLS), the ultra-(LCC) credited with leading the low-fares revolution in Mexico that has moved millions of bus passengers to airlines, said there has been “a transformation of travel needs” in Latin America. Volaris (VLS) will take its model to the Central American market with the launch of Volaris Costa Rica next month. “The proof is here” in Mexico that offering low fares will create new air travelers in Latin America, Beltranena said. “I believe we have proven [the model] and we can do something similar in the Central American region.”

However, he cautioned that the low cost carrier (LCC) model has its limits, predicting that traditional service will continue to be the norm on long-haul routes within Latin America and to/from Latin America. “I don’t fully understand the virtues of a long-haul (LCC)" Beltranena said. “I do not understand the model for long-range flights.”

Aeromexico (AMX) (CEO) Andrés Conesa said that once passengers get accustomed to air travel, they may eventually migrate to long-haul services on more traditional carriers. “These passengers that used to travel by bus are flying with (LCC)s, but in the future they may be flying with us,” he said.

News Item A-4: (NORD)/(LB) Singapore Branch and (KfW) (IPEX)-Bank have closed a 10-year financing of 2 Airbus A321-200 aircraft with Ping An International Financial Leasing Company. (NORD)/(LB) Singapore Branch acted as arranger and lender and (KfW) (IPEX)-Bank as lender. The aircraft were delivered in June and November and are leased to the (LATAM) Airlines Group.

December 2016: News Item A-1: (LATAM) Airlines Group is estimating its 2017 operating margin will be in the 6% to 8% range in 2017, a +1.5 point boost over the company’s 2016 range of 5.5% to 6.5%, according to (LATAM)’s preliminary guidance for 2017 released December 19.

The South American airline group, which comprises (LATAM) Airlines and its affiliates in Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and (LATAM) Cargo, estimates the Group’s company-wide full-year 2017 capacity growth will be between 0% and +2%; up one point from between a 1% contraction and a 1% gain in 2016.

International capacity will grow between 0% and 2%, a 3 point decrease from 2016. Brazilian domestic capacity will decrease between -2% and 0%, a -10 point decline in capacity cuts compared to 2016. For (LATAM)’s domestic services in Spanish-speaking countries, the Group plans to increase capacity between 4% and 6% in 2017, down -2 points from 2016. For combined passenger and cargo capacity, (LATAM) estimates it will drop between -12% and -10% in 2017, down a further -8 points from 2016.

(LATAM) reviews its guidance on a quarterly basis to incorporate changes in macroeconomic variables or operating performance.

News Item A-2: "Qatar Airways Finalizes Stake in LATAM" by (ATW) Karen Walker, December 28, 2016.

(LATAM) Airlines Group (LAN)/(TPR) and Qatar Airways (QTA) have completed their transaction in which (QTA) has taken a 10% stake in the Latin America group.

The deal, which sees Qatar Airways (QTA) invest some $600 million through a capital increase in (LATAM), was completed December 28, (LATAM) announced. Both airlines are members of the Oneworld (ONW) global alliance. “The entrance of (QTA) as a shareholder of (LATAM) represents a unique opportunity to develop a long-term relationship and explore new opportunities for connectivity with Asia and the Middle East,” (LATAM) said.

The transaction was granted Brazilian regulatory approval in November. But (LATAM) is still waiting for approval of a transatlantic immunized joint venture (JV) with British Airways (BAB) and Iberia (IBE). Both European carriers are part of the (IAG) Group and are also Oneworld (ONW) Alliance members. (QTA) also has a 20% stake in the (IAG).

January 2017: 787-916 (38771, CC-BGM), AerCap (DEA) leased.

March 2017: News Item A-1: Santiago, Chile-based (LATAM) Airlines Group reported a 2016 net profit of +$69.2 million, reversed from a net loss of -$219.3 million in 2015.

The (LATAM) Airlines Group is parent company to Brazil’s (TAM) (TPR) and Chile’s (LAN) Airlines, and their affiliates.

Full-year revenue for the group fell -6% year-over-year (YOY) to $9.5 billion, while operating expenses dropped -6.8% to $9 billion, producing an operating profit of +$5.7 million, up +10.5% (YOY).

(LATAM) Airlines turned in a 4th-quarter 2016 net profit of +$54.3 million, reversed from a -$16.3 million net loss for the year-ago quarter. Operating revenue for the quarter was up +6.7% (YOY) to $2.6 billion, while expenses increased +5.2% (YOY) to $2.4 billion, producing an operating income of $195 million, up +31% (YOY).

During the 4th quarter, (LATAM) Airlines (LAN)/(TPR) said it made “significant progress in its plan to reduce total fleet assets and fleet commitments, reaching the lowest fleet commitment levels in the recent history of (LATAM) Airlines for 2017 and 2018.” (LATAM) Airlines reduced fleet commitments for 2018 by $1.1 million and said it will also reduce existing fleet assets by returning additional aircraft as compared to the previous quarter fleet plan. “With this, the company will have reached $2.2 billion reduction in fleet assets for 2016 – 2018, in line with our previously announced plans to achieve a decrease of $2 to $3 billion in our expected fleet assets by 2018,” (LATAM) Airlines said.

(LATAM) Airlines described 2016 as “challenging, with weakening regional economies and recession in Brazil, devalued local currencies and high inflation rates in certain countries. Furthermore, Qatar (QTA)’s investment recognizes (LATAM) Airlines’s achievements and supports our project for the future, strengthening our conviction that we are on the right path to reach our goals.”

In November 2016, Brazil’s competition authority approved Qatar Airways (QTA)’ investment in (LATAM) Airlines. On March 8, the company said the joint business agreement with American Airlines (AAL) and the International Airlines Group (IAG) was approved.

In April 2016, the group unveiled a new unified livery, which is the culmination of the 2012 merger of Santiago, Chile-based (LAN) and Brazil’s (TAM) Airlines (TPR) under (LATAM) Airlines. The repainting of the entire fleet is scheduled to be completed in 2018.

During 2016, (LATAM) Airlines took delivery of 24 aircraft and returned 23, ending the year with an operating fleet of 329 aircraft. By the end of 2017, the company said it will operate a total fleet of 311 aircraft, and will have 7 aircraft under subleasing contracts.

In August 2016, (LATAM) Airlines became the 1st airline in the Americas to take delivery of an Airbus A320neo. (LATAM) Airlines’s A320neo is powered by Pratt & Whitney (PRW) (PW1100G) geared turbofan (GTF) engines. (LATAM) Airlines has 67 A320neo family aircraft on order.

Looking forward, (LATAM) Airlines said it will continue to implement its new travel model for domestic services gradually over the coming months. “During the 2nd quarter, (LATAM) Airlines will start to implement a branded fare model with clear attributes differentiation and payable ancillaries to provide to our customers more accessible prices and more alignment to their needs.” (LATAM) Airlines said it maintains its guidance for an operating margin of between 6% and 8% for full-year 2017.

News Item A-2: "European Commission (EC) Re-imposes Cargo Cartel Penalties" by Alan Dron alandron@adepteditorial.com, March 17, 2017.

The European Commission (EC) has reinstated fines totaling €776 million/$834 million on 11 airlines for operating a price-fixing cartel on air freight from 1999 to 2006. More legal hearings are likely, as at least 1 of the carriers immediately said it would appeal the decision.

The (EC) originally imposed the penalties in November 2010, but these were annulled by a decision of the European Union’s (EU) General Court in December 2015 on procedural grounds, which ruled there was a technical discrepancy in the prosecution. In a March 17 announcement, the (EC) said it had resolved the discrepancy and was re-imposing the financial penalties on 11 air cargo carriers: Air Canada (ACN), Air France (AFA)/(KLM), British Airways (BAB), Luxembourg-based Cargolux (CLX), Hong Kong flag carrier Cathay Pacific Airways (CAT), Japan Airlines (JAL)/(JSA), (LAN) Chile, Dutch cargo carrier Martinair (MTH), Australia's Qantas (QAN), (SAS) Scandinavian Airlines and Singapore Airlines (SIA).

The (EC) said that a 12th member of the cartel, Lufthansa (DLH) and its subsidiary Swiss International Air Lines (CSR), was spared from the financial penalties after it applied for immunity in 2005 and revealed details of the alleged arrangements between the airlines.

These were said to consist of collusion between the airlines at both bilateral and multilateral levels to fix the level of fuel and security surcharges on cargo. After the initial verdict, all the airlines except Qantas (QAN) appealed. The financial penalty thus became final for QAN). Millions of businesses depend on air cargo services, which carry >20% of all (EU) imports and nearly 30% of (EU) exports,” (EC) Commissioner Competition Policy Margrethe Vestager said. “Working together in a cartel rather than competing to offer better services to customers does not fly with the (EC). Today’s decision ensures that companies that were part of the air cargo cartel are sanctioned for their behavior.”

The (EU) can fine companies participating in cartels up to 10% of their revenue in the year preceding the adoption of a verdict. (SAS) immediately said it would appeal. “We strongly question the European Commission’s move to re-impose a decision that has already been annulled once by the [General Court],” (SAS) General Counsel Marie Wohlfahrt said. “Throughout the entire process, (SAS) has cooperated with the (EC) and, for >11 years, has argued against the (EC)’s perception that (SAS) Cargo had participated in a global cartel.”

Nevertheless, the fine would be recognized as a nonrecurring expense by (SAS) in its earnings for (2Q) 2016/2017. Air France (AFA) - (KLM), which will be fined €325 million if the penalties become final, said it would analyze the new decision and whether to appeal it again at the General Court. It added that the fines had been covered in its financial accounts since 2010.

April 2017: The Chairman of the board of directors of (LATAM) Airlines (LAN), Mauricio Amaro, wrote in a letter to investors that he may step down, saying that it was time for "renewal."

(LATAM) (LAN), formed via a tie-up between Brazil's (TAM) (TPR) and Chile's (LAN) in 2012, is the biggest Latin America-based airline. In 2016, it registered its 1st profitable year, despite an ongoing recession in Brazil, its principal market. "I'm very proud to have participated in the construction of this great company," Amaro wrote in the letter, which was made public late April 12th.

"But for (LATAM), renewal is the 1st word," he added.

Amaro did not give a timeline for his departure, nor did he state concretely that he would leave the board. But he hinted heavily at the possibility throughout the letter.

(LATAM) (LAN) declined to comment on the matter.

(LATAM) Airlines (LAN), which is based in the Chilean capital Santiago, has units in Argentina, Brazil, Colombia, Ecuador, and Peru, among other nations. Chile's powerful Cueto family and Qatar Airways (QTA) are also on the board.

May 2017: (LATAM) Airlines (LAN) received a 3rd of its revenue from within Brazil last year; 17% Chile, 12% Argentina, 10% USA.

August 2017: News Item A-1: (LATAM) Airlines Group’s route capacity and fleet management efforts, combined with a +10.6% rise in passenger revenues, helped to push its 2017 2nd-quarter operating profits to a company record of +$48.2 million, compared to +$1.3 million for (2Q) 2016.

However, (LATAM) (LAN) posted a -$138 million net loss for the quarter, deepened from its -$92.1 million net loss a year ago. (LAN) attributed the net loss -$120.2 million in foreign exchange losses recognized during the quarter, partially offset by lower income tax payments. (LAN) has reduced its total operating fleet by -5.2% so far in 2017, from 329 aircraft on December 31, 2016 to 312 on June 30, and said is it on track to reduce the fleet to 306 aircraft by the end of the year “ensuring [LAN] has the right level of capacity to match market conditions while maintaining a healthy balance sheet.”

During the quarter, (LAN) deferred 2 Boeing 787-9s and 3 Airbus A320 family aircraft, and converted orders of 2 A350-1000s into 2 A350-900s, shaving -$448 million off its fleet commitments for 2019. (LAN) is evaluating further fleet restructuring.

(LAN) is also capitalizing on its Latin American hubs by introducing new strategic point-to-point routes within the group’s domestic markets. 2 new routes connecting (LAN)’s Lima hub with Rio de Janeiro and San Jose, Costa Rica were announced during the (2Q), adding to 8 new routes announced in the (1Q). Summer service between Brasilia - Punta Cana and Santiago - Bariloche and Santiago - Punta del Este will also be implemented.

Additionally, the company’s new low cost carrier (LCC)-like domestic market travel model is gaining acceptance among passengers. The program, with branded fares, ancillary fees for checked baggage and preferred seating, and a buy-on-board “Mercado (LAN),” helped to push (LAN)’s (2Q) revenue to $2.3 billion, up +7.7% year-over year (YOY). Passenger revenue made up the bulk of that, growing +10.6% (YOY) to $1.9 billion. (LAN)’s cargo revenue slipped -1.3% during the quarter, to $256.5 million.

(LAN)’s consolidated operating expenses increased 5.5% to $2.2 billion, with significant cost rises in aircraft fuel expenses (up +9.1%), maintenance expenses (up +41.3% resulting from redelivery costs as (LAN) returned 7 leased aircraft during the quarter) and aircraft rental expenses (up +10.5% as the company has leased more modern aircraft (A321s, 787s, A350s) while reducing its leased A320s, A330s and Boeing 767s since (2Q) 2016). Since the end of (2Q) 2016, (LATAM) has reduced its fleet of leased aircraft by -9.

(LAN)’s consolidated system traffic increased +0.9% during the quarter, to 35 billion (RPK)s, as capacity decreased -3.1% to 47.4 billion (ASK)s, producing a systemwide load factor of 73.9% LF, up +2.9 points (YOY). Yield increased +8% (YOY) to 6.1 cents. (RASK) increased +12.5% (YOY) to 4.5% and (CASK) was up +8.6% to 4.9 cents. (CASK) ex-fuel increased +7.6% (YOY) to 3.8 cents.

December 2017: See Airways latest news re-(LATAM AIRLINES) new routes.
https://airwaysmag.com/airlines/latam-airlines-group-adds-two-new-routes-united-states-brazil/

Fleet:
(definitions)

Click below for photos:
LAN-737-200F
LAN-737-204
LAN-767
LAN-767
LAN-767-300ER
LAN-767-300ER-2011-02
LAN-767-316F
LAN-767-WINGLETS-2009-10
LAN-787 - 2013-05
LAN-787 CC-BGG-2017-08.jpg
LAN-787-8 - 2014-08
LAN-787-9 - 2015-01
LAN-787-9 - 2016-11.jpg
LAN-A318
LAN-A318-2007-07
LAN-A319-132
LAN-A320
LAN-A320-233
LAN-A320-233-K
LAN-A320neo New Livery - 2016-07.jpg
LAN-A340
LAN-A340-313X
LAN-A340-313X-C
LAN-DC-8

December 2017:

0 707-331C (JT3D-3B, 15,500 LBS), (FAR) WET LSD, (FAC) OPS.

0 737-2L9 (JT8D-17) (711-22602, /80 CC-CEE), EX-(MRS), (GUI) LSD, RTND. 8C, 102Y.

0 737-2M6 (JT8D-15) (399-20913, /75 CC-CTW), EX-(RBA), (ANZ) LSD; RTND 2002-11, LST (SOW). 8C, 102Y.

0 737-2Q3 (JT8D-17) (706-22367, /80 CC-CVI; 896-22736, /82 CC-CVJ), EX-(SWL), (ECC) LSD (LAN), WET-LST (LPU). 22367 WFU 2005-03 & RTND. 8C, 102Y.

0 737-2T5 (JT8D-15) (737-22397, /81 CC-CJW), EX-(ORN), (GUI) LSD. RTND. 8C, 102Y.

1 737-204F (JT8D-9A) (255-20417, /70 CC-CSD), LST (LCO). FREIGHTER.

0 737-204 (JT8D-15) (318-20633, /72 CC-CSI; 316-20632, /72 CC-CSH), EX-GLENDALE SVCS 2001-09); (342-20808, /74 CC-CSP), EX-(LIC) 2001-03. ALL WET-LST (LDE). 20632; WFU AND BECAME "AIRPUB CHARLIE YANKEE" IN 2008-11 - - SEE ATTACHED ARTICLE & PHOTO - - "LAN-737 PUB-2008-11." 8C, 102Y.

0 737-205 (JT8D-9A) (460-21219, /76), RTND, LST (SOW) 2002-10. 8C, 102Y.

0 737-219 (JT8D-15) (428-21131, /75 CC-CYC), EX-(ANZ)/(LDE) 2000-03. 8C, 102Y.

0 737-229 (JT8D-15) (617-21840, /79 CC-CVD), EX-(SAB) (529-596, /78 CC-CVC), EX-(LIC) 2001-03. 8C, 102Y.

6 737-230 (JT8D-15) (657-22114, /81 CC-CRR; 715-22120, CC-CDB 2004-06; 720-22121, CC-CDH 2004-09; 791-22139, /81 CC-CDS; 777-22134, /81 CC-CDP; 781-22135, /81 CC-CDQ), EX-(DLH), (DEA) LSD. 22114 LST (LNR) 2005-04. 22121; & 22122; LST (LNR) 2005-08. 8C, 102Y.

0 737-230 (JT8D-15) (721-22122, CC-CDL), (GRB) LSD 2004-11. 8C, 102Y.

0 737-230 (JT8D-15) (694-22115, CC-CQQ, 2005-11; 727-22124, /81 CC-CQT, 2006-03; 735-22126, CC-CQU, 2006-03; 745-22127, CC-CQS, 2006-02; 752-22128, CC-, 2005-11), EX-(RYR), ADL LSD. 22124; RTND; & TO (REP) 2008-06. 8C, 102Y.

0 737-236 (JT8D-15A) (628-21792, /80 CC-CHR; 712-21808, /80 CC-CZL; 654-22027, /80 CC-CZM; 722-22031, /80 CC-CZP; 686-21804, /80 CC-CZK; 693-22030, /80 CC-CZO), EX-BAB, 21792 RTND ICON 2000-11, LST (SFA). 21808; 22029; 22031; RTND (GEF). 22027 RTND (GEF), LST (SKB) 2001-08. 21808 LST (LAM) 2001-10. 22030; TO (PCP) 2008-12. 120Y.

1 737-248QC (JT8D-9A) (208-20219, /69 CC-CEI), EX-(ARL), (ECC) LSD 1995-12. LST (LCO). FREIGHTER.

0 737-291 (JT8D-17A, 16,000 LBS) (923-22744, /82 CC-CDE), (909-22743, /82 CC-CVG), EX-(FRO). 22744 RTT (PLM) 2001-11. 1 LST (LPU) 1999-07 (954-23024, RTND 2003-08). 120Y.

0 747-2U3, (TWX) WET-LSD 2004-10. RTND.

0 747-200F, (TLS) WET-LSD, OPS BY (FAC). REPLACED WITH MD-11F. FREIGHTER.

0 767-2Q8ER (272-24448, N201LF), EX-(COH), RTND (ILF) 2001-10.

0 767-219ER (239-24150, N241LF), EX-(COH), (ILF) LSD 2001-09. RTND.

0 767-284ER (PW4056) (307-24762, /90 CC-CDJ), (AWW) LSD 1990-06. WET-LST (AMX). 18C, 172Y.

1 767-3Q8ER (CF6-C2B6F) (570-26265, CC-CEN), EX-(AAR), (ILF) 3 YR LSD 2003-09. 10F, 28C, 181Y.

1 767-3Q8ER (CF6-80C2B6F) (694-28206, /98 CC-CML "CORDOBA"), EX-(SOW), (ILF) LSD 2004-01. 24F, 36C, 145Y.

1 767-3YOER (PW4060) (464-46204, /92 CC-CEL), EX-(AMX), (GUI) LSD, 10F, 28C, 181Y.

2 767-316ER (CF6-80C2B6F) (602-27597, /96 CC-CDP; 621-36327, /96 CC-CEB), (ILF) LSD. 10F, 28C, 181Y.

21 767-316ER (CF6-80C2) (641-26329, /96 CC-BJA; 729-29229, /98 CC-CZU; 940-34626, CC-CWF, 2006-03; 34628, CC-CWH; 944-34629, CC-CWG, 2006-06; 945-34628, CC-CWH, 2006-07; 968-34696, CC-CXE, 2008-06; 949-35229, CC-CWN, 2006-11; 955-35230, CC-CWV, 2007-05; 961-35231, CC-CWY, 2007-11; 967-35697, CC-CXD, 2008-05; 962-36710, CC-CXC, 2007-12; 984-37800, CC-CXI, 2009-11; 985-37801, CC-CXJ 2009-12; 987-37802, CC-CXK, 2010-02; 40590, CC-BDB, 2011-10; 40591, CC-BDB, 2011-11; 40592, CC-BDE, 2012-07; 41746, CC-BDF, 2012-07). 26329; RF LAN ARGENTINA 2010-06. 34628; LST LAN ARGENTINA 2015-11. ALL WITH WINGLETS. 10F, 28C, 181Y.

2 767-316ERF (CF6-80C2B7F) (778-29881, /99 CC-CZX; 806-30780, /00 CC-CZY), 127,130 LB PAYLOAD. (LCO) OPS. WITH WINGLETS. FREIGHTER.

7 767-316ERF (CF6-80C2B7F) (712-25756, /98 CC-CZZ; 846-32572, /01 N312LA; 848-32573, /01 N314LA; 860-30842, /01 N316LA; 34245, PR-ABD, 2005-07, & LST (BGS); 936-34246, N418LA; 948-34627, N420LA, 2006-10; ). 32573 WET-LST (MAS) 2001-10. (30842; WET-LST (PAI) 2001-11). +1 ORDER. (LCO) OPS. 34627 WET-LST (MSR) 2006-10. WITH WINGLETS. FREIGHTER.

1 767-346F (35818, N422LA), EX-(JAL) 2010-09. EX-(JA633J). WITH WINGLETS. FREIGHTER.

1 767-352ER (PW4062) (575-26261, /95 CC-CDM), EX-(VIE), (ILF) LSD; RTND 2002-04. (ILF) LSD 42 MTHS (AGAIN) 2005-11. 10F, 28C, 181Y.

2 767-375ER (CF6-80C2B6F) (426-25864, /92 CC-CRH; 430-25865, /92 CC-CRG), EX-(CDI), (GUI) & (TCI) LSD. 10F, 28C, 181Y.

2 767-383ER (330-24849, CC-CCZ 2004-06; 412-26544, CC-CGN 2004-04), NORDBANKEN FINANS LSD.

1 767-38EER (417-25132), (AWAS) LSD 2004-11.

4 777-26NF (774-37708, N772LA, 2009-04; 782-37710, N774LA, 2009-05), INCL 2 (GEF) LSD. FREIGHTER.

32/10 ORDERS 787-816/-916 DREAMLINER (TRENT 1000) (10-38464, CC-BBA - - SEE PHOTO - - "LAN-2012-09 - 1ST 787;" 16-38475), INCL 6 787-9 (ILF) LSD, 30PC, 217Y.

10 +12 ORDERS 787-816 DREAMLINER (TRENT 1000) (10-38464, CC-BBA - - SEE PHOTO - - "LAN-2012-09 - 1ST 787;" 38473, CC-BBE, 2013-10; 16-38475; 38476, CC-BBF, 2014-06; 38477, /14 CC-BBG, 2014-08), 30PC, 217Y.

1 +9 787-916 DREAMLINER (TRENT 1000) (38771, CC-BGM, (DEA) LEASED 2017-01), INCL 6 787-9 (DEA) LSD, 30PC, 283Y:

3 DC-8-71F (CFM56-2C1, 22,000 LBS) (372-47976, XA-MAS, LST (MSR) 2000-11), (GEH) LSD, (FAC) OPS. FREIGHTER.

1 DC-8-71F (449-46040, /69 N872SJ), EX-(UAL), (DEA) LSD, (FAC) OPS. FREIGHTER.

1 MD-11F, (GMN) WET-LSD 2001-11 TO REPLACE (TLS) 747-200F'S. FREIGHTER.

7 +30 ORDERS A318 (PW6000)/A319 (V2500)/A320-200:

0 A318-122 (PW6000) (3001, CC-CVA, 2007-05 - SEE PHOTO; 3030, CC-CVB, 2007-08; 3062, CC-CVF, 2007-10; 3214, CC-CVH, 2007-12; 3216, CC-CVN, 2007-12; 3220, 2007-08; 3225, 2007-08; 3280; 3371, CC-CVP, 2008-01; 3390, CC-CVR, 2008-03; 3438, CC-CVS, 2008-04; 3469, CC-CVU, 2008-05; 3509, CC-CVV, 2008-06). 3469, CC-CVU; LST (LNE) 2010-10.

2 A319-112 (4871, CC-BCD, 2011-10; 5005, CC-BCE), ex-(D-AVYA & D-AVYH).

18 +2 OPTIONS A319-132 (V2500-A5) (2295, CC-COY, 2004-09; 2304, CC-COZ 2004-10; 2321, CC-CPE, 2004-11; 2572, CC-CPF, 2005-09; 2585, CC-CPI, 2005-10; 2845, CC-CPJ, 2006-08; 2858, CC-CPL, 2006-08; 2864, CC-CPM, 2006-08; 2872, CC-CPO, 2006-08; 2886, CC-CPQ, 2006-09; 2887, CC-CPX, 2006-09; 2892, CC-CQK, 2006-09; 2894, CC-CQL, 2006-09; 3770, CC-CYI, 2009-01; 3772, CC-CYJ, 2009-01; 3779, CC-CYL, 2009-01), WET-LST (LDE) 2004-01. 136 PAX.

1 +41 ORDERS A320neo (PW1100GT-JM) FAMILY AIRPLANES (1ST, 2016-08).

1 ORDER A320-200 (V2527E-A5), (SIL) LSD:

4 A320-214 (4892, CC-BAR, 2011-10; 4896, CC-BAS, 2011-11; 4921, CC-BAT, 2011-11; 4943, CC-BAU, 2011-11).

6 A320-214 (5124, CC-BAW, 2012-04; 5229, CC-BAZ, 2012-07; 5686, CC-BFO; 5707, CC-BFP; 5801, CC-BFR; 5818, CC-BFS), EX-(D-AVVD; D-AUBO; D-AVVE; D-AVVI; D-AXAI; D-AXAM).

1 A320-214 (5125, CC-BAW), SOLD TO MAQUARIE AIRFINANCE & LEASED BACK 2015-11.

1 A320-214 (5764, CC-BFQ), EX-(D-AVVW), TUCUQUERE LSG LSD 2013-08.

1 A320-214 (6135, CC-BFW), (SMBC) AVIATION CAPITAL LSD 2014-06.

1 A320-232 (990, CC-CZB), (SIL) LSD 2005-11.

1 A320-232 (3264, CC-BJB), (DEA) LSD 2016-08.

20 +4 OPTIONS A320-233 (V2527E-A5) (1304, /00 CC-COC; 1332, /00 CC-COD; 1351, /00 CC-COE; 1355, /00 CC-COF; 1526, CC-COI; 1568, /01 CC-COL; 1626, /01 CC-COM; 1854, CC-COO; 1903, /02 CC-COT; 3280, CC-CQM, 2007-10; 3319, CC-CQN, 2007-11; 3535, CC-CQO, 2008-06; 4383, CC-BAA, 2010-07; 4400, CC-BAB 2010-08; 4414; 4439, CC-BAC; 4461; 4476, CC-BAD). (1491, /01 CC-COG) RF (LPU) 2002-12. 1 WET-LST (LNR) 2008-06. 1568 LEASED TO LATAM ARGENTINA 2016-08. 16F, 120Y.

3 +79 ORDERS A321-211SL (6698, CC-BEE; 7239, CC-BEM, 2016-08; 7287, CC-BEN, 2016-08), PARINA LEASING LSD 2015-07 TO LATAM AIRLINES GROUP. ALSO JACKSON SQUARE AVIATION LSD 2016-08.

4 A340-313X (CFM56-5C4) (167, CC-CQG, 2007-07; 170; 273; 278), EX-(ACN). & EX-(SAS). 5F, 36C, 228Y.

5 +6 OPTIONS A340-313X (CFM56-5C4) (359, /00 CC-CQA; 363 /00 CC-CQC; 429, /01 CC-CQE; 442, /01 CC-CQF). 5F, 36C, 228Y.

2 +25/5 A350-941 (O48, 2016-10; 079, A7-AMA), OPS BY LATAM AIRLINES BRAZIL (TPR).

Management:
(definitions)

Click below for photos:
LAN-1-ENRIQUE CUETO - 2013-11
LAN-1-ENRIQUE CUETO - 2014-11
LAN-1-ENRIQUE CUETO-2004-08
LAN-1-ENRIQUE CUETO-2008-11-A
LAN-1-F-2008-11-B
LAN-1-F-2008-11-C
LAN-1-F-2008-11-D
LAN-1-F-2008-11-E
LAN-5-MARTIN MODARELLI-2014-05

MAURICIO ROLIM AMARO, CHAIRMAN LATAM AIRLINES GROUP.

JORGE AWAD, CHAIRMAN (LAN).

ENRIQUE CUETO, CHIEF EXECUTIVE OFFICER (CEO) (LATAM) AIRLINES GROUP (2012-04) (OWNS 71.6% OF (LAN).
"AIRLINE BUSINESS" MAGAZINE INTERVIEW 2013-11:
LATAM (LAN)/(TPR) (CEO) Enrique Cueto has had a hectic 3 years managing the merger of (LAN) and (TAM) (TPR) to create Latin America’s biggest airline. While many challenges specific to this region persist, Cueto said he saw huge opportunities ahead for the combined carrier.

* CREATING A LATIN AMERICAN POWERHOUSE

For an airline chief who oversees Latin America’s biggest airline group, Enrique Cueto’s office on the 19th floor of a building in Santiago’s Las Condes neighborhood is surprisingly modest. Airplane models and family photographs line the cramped shelves behind his glass-topped desk, and the window looks out to the Araucano park across the street. The only indication of Cueto’s 30-year illustrious career in the airline industry is the wall beside his desk, adorned with framed newspaper articles and magazine covers bearing his photograph.

In those 30 years, the Latin American airline industry has gone through several rounds of consolidation. Carriers have merged, many have folded, and yet more new airlines have sprung up against a backdrop perpetually clouded by concern over government regulation and infrastructure challenges. However, few airlines have made the same sort of headlines that (LAN) and (TPR) did 3 years ago, when they announced their plans to merge to become the (LATAM) Airlines Group.

With local affiliates in seven markets (Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, and Peru) (LATAM) is Latin America’s largest airline. The merged carrier posted $13.3 billion in revenues in 2012, placing it among the world’s top 20 airlines by revenue. However, one would be wrong to assume that Cueto is resting on his laurels. Consolidation has its pains, as he would find out during the first year of (LATAM), which closed its merger in June 2012.

Severe depreciation of the Brazilian real and sky-high fuel prices in Brazil were among some of the issues Cueto encountered head on in the first year of (LATAM)’s merged operations. “These issues were more difficult than we expected at the beginning,” said Cueto.

Other challenges that (LATAM) faced in Brazil, included the continued slowness in sales of Europe-bound flights as well as competitive capacity to the South American country mounted by USA airlines. “The results were below our expectations,” Cueto said of the 1st year of operations in the Brazilian market.

When (LAN) and (TAM) (TPR) merged, Cueto inherited a Brazilian carrier that was growing at about +10% a year, a rate that he knew was not sustainable as the market grappled with overcapacity. Cueto oversaw a series of actions to bring rationality back to the domestic Brazilian market, including significant capacity cuts. (ASK)s were lowered by -1% in 2012, and they will go down by at least -7% this year. As a result, load factors went up to about 80% LF from a range of 60% LF to 65% LF.

“We increased our (RASK) and now we feel really comfortable about how we are managing the domestic Brazil market, which is around one-third of our (ASK)s,” said Cueto.

He reduced the frequency of (TAM)’s flights to Europe, bumped up flights to the USA and replaced the Airbus A330s on (TAM)’s international flights with Boeing 767s, which have lower operating costs. The 767s, configured with lie-flat seats in business (C) class, also offer an improved product on these routes.

* MELDING THE CULTURES

Airplanes and capacity aside, Cueto was confronted with the task of melding two different airline cultures together. “When we announced the merger, some part of the management team in (TAM) preferred to leave the company, they didn’t think it was a good idea,” said Cueto. “And things happen. We had the same experience in (LAN).”

Changes soon followed, and Cueto said 80% of (TAM)’s management is new, with many executives hired from outside the carrier. He believes that (TAM)’s current team, a mix of experienced airline veterans and fresh blood from outside the industry, is the right formula the carrier needs to move forward. “With this new group of people, we feel happy. We really feel comfortable.” Now that (LATAM) has a firm grasp on the domestic ­Brazilian market, Cueto is looking to the next big development – a new terminal at São Paulo Guarulhos airport that could create the combined airline’s biggest hub besides Lima. The new terminal is expected to ease the airport’s trademark congestion, and presents a “big opportunity” for (LATAM), Cueto believes. “For many years, the Guarulhos airport has been saturated. If you tried to create a hub there, you will realize it’s impossible.”

However, the new terminal, which many hope will be ready before the 2014 (FIFA) World Soccer Cup, will help change that. “It is going to increase the number of operations per hour,” said Cueto. “You have a huge amount of local traffic, and we will have the opportunity to connect to all the (LAN) affiliates in Argentina, Chile, Peru, Colombia and others. Plus, you have the domestic Brazilian traffic.”

Being able to create a large hub at São Paulo will help put in place a vital piece of the puzzle in the integration of (LAN) and (TAM)’s networks. With a strong hub in São Paulo, (LATAM) will feed it regional traffic from its (LAN) affiliates and from other cities in Brazil. This will help the airline group compete more effectively with foreign carriers, such as those in Europe.

“If you don’t have some feeding, some connectivity, some hub in that place, it’s impossible to compete with European carriers, who are flying from their hub in London or Paris. We were flying from Rio to Paris, without an agreement with Air France (AFA). Those flights were difficult to sustain in the long term, because you don’t have a strategic competitive advantage to do that,” said Cueto.

Having a strong hub in São Paulo will also help make (LATAM) the top carrier that airlines outside the region would want to partner with, Cueto believes. Despite (LATAM)’s powerhouse status in Latin America, Cueto has no illusions about his airline’s position in the world. “We are not going to be the main player in long-haul operations,” he says. “We prefer partnerships, to give passengers the best way to be in any part of the world in the best form.”

The main point of the merger of (LAN) and (TAM), he reiterates, is to create “a very strong airline in one continent.” Cueto pointed out that the best way for a passenger traveling from, say Chile to China, is still through Europe. “We don’t have any advantage in this area, so our strength must be the intra-South American traffic,” he said.

* DECIDING ON A SINGLE ALLIANCE

(LATAM)’s objective is intricately linked to its decision to group all of its airlines under the Oneworld (ONW) Alliance, announced in March. (LAN) was already in the (ONW) alliance before it merged with (TAM), which was a Star (SAL) Alliance airline. Conditions imposed on the merger required (LATAM) to be in a different alliance from the other major Latin American airline, Avianca (AVI), which became a Star (SAL) Alliance member in June 2012.

While (LATAM) had the option of being an airline unaffiliated with any alliance, Cueto said American Airlines (AAL)’s membership in the (ONW) alliance sealed the deal. (AAL) has a hub in Miami, which is considered the traditional gateway to Latin America from the USA.

“By far, for the Spanish speaking countries, Miami is the main gateway for the Latin American people,” said Cueto. “Who goes to Houston to connect? Miami has one name. American. So if you look at connecting traffic, distribution, and offering our passengers more destinations, Miami is the best place to do that.”

Cueto said it is “difficult to understand what happened” with the USA Department of Justice’s challenge against the American Airlines (AAL)-US Airways (AMW)/(USA) merger (a settlement for which has just been brokered). “If they merge with US Airways (AMW)/(USA), we will have a conversation with them on that, and we will be very happy to co-operate and partner with them too,” he said.

Despite the (ONW) alliance affiliation, Cueto is not closing the door on partnering with airlines outside the alliance. (LATAM) has code share agreements with non-Oneworld (ONW) Alliance airlines, such as Aeromexico (AMX) and Alaska Airlines (ASA), and Cueto does not rule out more.

While Cueto is open to partnering with other carriers, he remains certain of one thing ((LATAM) does not plan to bring another airline into its fold). “I think there will be more consolidation in the region. But we don’t plan to be a part of it.” In his 30-year airline industry career, Cueto has often spoken out against government intervention and protectionism in the aviation sector. While he says that certain governments in the region have made necessary changes in recent years, he believes there remains much work to be done.

* DEALING WITH PROTECTIONISM

(LATAM) knows a thing or two about dealing with protectionist actions in the countries it operates in. Earlier this year, (LAN) Argentina (LNR) was faced with the threat of eviction from a hangar it leases at the downtown Buenos Aires Aeroparque airport. Argentinian airport regulator (ORSNA) had told (LAN) to vacate the hangar within 10 days, despite an existing lease agreement which allows (LAN) to remain until July 2023.

(LAN) Argentina (LNR) has a 27% share of the country’s market and employs 2,780 staff in the country. Observers linked the eviction threat to individuals loyal to loss-making, state-owned carrier Aerolineas Argentinas (ARG). The dispute prompted (LATAM) to issue a public statement vowing legal action, a move that departed from the usually diplomatic remarks the airline has made in past skirmishes with the Argentinian authorities.

Rationality on the part of the Argentinians looks to have prevailed, and (LATAM) says it is staying on in the hangar. Cueto pointed out that (LAN) Argentina (LNR) received strong support in Buenos Aires, including that of key politicians, the media and other opinion leaders.

He also singled out government regulations in the region which, he believes, make Latin American airlines less competitive than carriers in other parts of the world. For example, he said pilots (FC) in Brazil are required by law to fly fewer hours a year than pilots (FC) for airlines in other countries.

“We think Brazil must have "open skies" with the world,” said Cueto. “But when you say you are going to be open to the world, you have to be competitive at the same time. The competitiveness has not been moving.”

What is perhaps most frustrating to Cueto, though, is Latin American governments’ wariness of joint ventures and code share agreements between airlines. “For them [the governments], any consolidation in the region, any code sharing is in some way considered anti-competitive,” he lamented.

“We are behind the USA and Europe, when it comes to these antitrust issues. Their operating system is version 3.0, Chile is perhaps version 1.5, and in some places, it’s version 0.”

Despite the challenges of operating in the Latin American market, Cueto pointed out that there are many opportunities in the region, and he is not giving up the fight any time soon. He smiled wistfully when asked if he has thoughts about retirement. “I have a lot of work in the next two to three years,” he said. “I would like to continue after that, but perhaps not in this current position.”

Cueto’s family, which owns a stake in (LATAM), has interests in other industries as well. However, he said that he and his brother Ignacio ((CEO) of (LAN)) could not imagine leaving the airline business.

“We dedicate most of our time to this, and we are happy to do only this. No other industry can compare, there are so many issues to challenge us, especially in this part of the world. But we are happy.”

LIBANO BARROSO, CHIEF FINANCIAL OFFICER (CFO) (LATAM), EX-(TPR) (2012-04), RESIGNED FROM (LATAM) POSITION TO RETURN TO ONLY (TPR) (CFO) (2012-08).

MRS MARIA CLAUDIA AMARO, CHAIR (TAM) (TPR).

GONZALO UNDURRAGO, CHIEF EXECUTIVE OFFICER (CEO).

CRISTIAN URETA, GROUP EXECUTIVE VP CARGO.

IGNACIO CUETO, (CEO) (LAN) (2012-04).

PEDRO PABLO ERRAZURIZ, (CEO) LANEXPRESS (LDE) (2001-11).

ARMANDO VALDIVIESO, (CEO) PASSENGER DIVISION.

ALEJANDRO DE LA FUENTE, CHIEF FINANCIAL OFFICER (CFO) (LAN), NOW (CFO) (LATAM) GROUP (2012-08).

FRANCISCO VIDAL, GENERAL MANAGER EUROPE (LATAM) (2006-02).

PAUL PETRELLI, GENERAL MANAGER LAN ARGENTINA.

ARMANDO VALDIVIESO, GENERAL MANAGER PASSENGERS (2006-02).

CARLOS PRADO, SENIOR VP CORPORATE INVESTMENT.

MS SUSANA TONDA, SENIOR VP ORGANIZATION & PROCESSES.

MARCO JOFRE, SENIOR VP OPERATIONS, MAINTENANCE & ENGINEERING.

ENRIQUE ELSACA, SENIOR VP CORPORATE PLANNING.

PABLO CHIOZZA, SENIOR VP USA, CANADA & THE CARIBBEAN (LATAM) GROUP.

ROBERTO ALVO, SENIOR VP INTERNATIONAL & ALLIANCES.

JORGE TSUMBOYAMA, VP MAINTENANCE & ENGINEERING LAN PERU, EX-(COH) (1999-01).

ALVARO CARRIL, VP CARGO MARKETING & SALES.

CLAUDIO SILVA, VP CARGO NORTH AMERICA.

FREDERICO GERMANI, VP PLANNING (LAN) CARGO (2004-08).

PEDRO PABLO ERRAZURIZ, VP PASSENGERS DOMESTIC.

ABEL BOUCHON, VP PASSENGERS INTERNATIONAL.

LUIS EDUARDO RIQUELME, VP NORTH/CENTRAL AMERICA & ASIA (2005-07).

EMILIO DEL REAL, VP ORGANIZATION & PROCESSES (2006-02).

PABLO QUEROL, VP CORPORATE AFFAIRS.

JOSE ZAIDAN MALUF, VP FLEET & ENGINES (LATAM GROUP).

CARLOS ROMAN, MARKETING DIRECTOR - NORTH/CENTRAL AMERICA & ASIA (2004-05).

MARTIN MODARELLI, COMMERCIAL DIRECTOR, UK & NORDIC COUNTRIES.
anna-aero's Vlad Cristescu Interview conducted 2014-05:
The LATAM Airlines Group, the parent company of Brazil’s (TAM) Airlines (TPR) and Chile’s (LAN) Airlines, which when combined account for almost 40% of weekly seat capacity in South America, has recently chosen membership of the Oneworld (ONW) Alliance over the Star (SAL) Alliance. This comes as a result of the Chilean anti-trust authorities forcing (LATAM) to leave one of the alliances as part of their merger agreement, as (LAN) was already a member of Oneworld (ONW) Alliance since 2000, while (TAM) (TPR) belonged to the Star (SAL) Alliance. On March 31st, its Brazilian arm officially joined (ONW), giving anna.aero’s Vlad Cristescu a chance to catch up with (LATAM) Airlines Group’s Commercial Director UK & Nordic Countries, Martin Modarelli, during a special drinks reception organized in London.
anna.aero (aa): What are your major commercial plans for 2014?
Martin Modarelli (MM): Our major aim this year is to increase the awareness of (LATAM)’s long-haul flights to South America, with a strong emphasis on the London Heathrow - Sao Paulo Guarulhos daily operations. We believe there are great opportunities to develop South America as a niche destination from Europe; therefore my aspirations are to increase the leisure passenger numbers this year. This said, we have not only started working with Tourism Boards to reach our final consumers, but we are also offering competitive packages of £999 for seven nights to Brazil.

aa: Why did you choose membership in Oneworld (ONW) over the Star (SAL) Alliance?
MM: We evaluated all the existing possibilities and chose the alliance that offers the greatest network and distribution benefits in both North America and Europe, which in this case is (ONW) (the biggest and most successful global alliance over the recent years).

aa: What is (LATAM)’s network planning focus? What new routes would you like to develop as part of your ongoing strategy in the next months?
MM: (LATAM)’s ongoing strategy is to consolidate its presence in the European markets that are currently served (London Heathrow, Paris (CDG), Frankfurt, Milan Malpensa, and Madrid. In the short-term, we don’t have any plans to opening any new routes, however, we will start evaluating a number of potential new services once our future airplane orders arrive.

aa: How many airplanes is (LATAM) going to incorporate into its fleet as part of the future order?
MM: We are expecting a total of 32 more 787-8s/787-9s, along with 22 A350-900s to join (LATAM)’s fleet in the next few years, with the latter being our main choice for operating future long-haul flights. In addition, the A350s will replace the existing long-haul fleet, including our A330s and A340s, providing passengers with a more efficient and enhanced product.

aa: What is the directionality like from your European destinations to South America?
MM: Currently, it can be defined as an 80 - 20 split between passengers originating from Europe, heading mainly to Guarulhos in Brazil, which gives us an idea about the huge opportunity we have to continue growing. In fact, our target for this year is to achieve a 70 - 30 split.

aa: According to (LATAM)’s preliminary monthly results for March 2014, international passenger traffic decreased by -2.2%, while capacity went down by -8.1%, when compared to the corresponding month of 2013. What has caused this decline?
MM: This decline came as a result of the cancellation of (TAM) (TPR)’s operations from Frankfurt and (CDG) to Rio de Janeiro Galeao, due to the operational rationalization of our long-haul network. Following the withdrawal of these services last summer, (LATAM)’s revenue with regard to international flights decreased less than the downsized capacity. Furthermore, the international load factor went up +5% to 84.4% LF, when compared to the corresponding month last year.

aa: Could you tell us how the bookings for the (FIFA) World Football (soccer) Cup are going?
MM: Our Brazilian destinations have received an extremely large interest during the (FIFA) World Cup, with the UK bookings being four times higher when compared to last June’s. In order to accommodate this massive demand, on June 4th we are going to re-launch the thrice-weekly flights from London Heathrow (LHR) to Galeao that will be operated until July 18th. Moreover, examination of June’s bookings indicates that around 27,000 English football fans are likely to be part of the legendary competition this year.

RODRIGO CONTRERAS, SALES DIRECTOR - NORTH/CENTRAL AMERICA & ASIA (2004-05).

DAMIAN SCOKIN, INTERNATIONAL GENERAL MANAGER.

FELIPE CASTRO, GENERAL MANAGER, LAN PERU (LIMA).

FRANCISCO COSTA, GENERAL MANAGER REPAIR STATION.

CAPTAIN CARLOS ARELLANO, FLIGHT OPERATIONS MANAGER (carellano@lanchile.cl).

CAPTAIN JAIME SILVA, FLIGHT SAFETY OFFICER (jasilva@lanchile.cl).

SERGIO VELIZ, FLIGHT STANDARDS MANAGER.

CAPTAIN CRISTIAN PRADO, 767 CHIEF PILOT.

CAPTAIN RODRIGO LEON, 737 CHIEF PILOT.

CAPTAIN JAIME QUIROGA, A320 CHIEF PILOT.

CAPTAIN JAIME PIZARRO, A340 CHIEF PILOT.

CRISTIAN URETA, GENERAL CARGO MANAGER MIAMI (2006-03).

CARLOS AGUIRRE, DIRECTOR LAN ECUADOR.

VICTOR IDE, DIRECTOR LINE MAINTENANCE (2003-01).

MICHAEL WAGNER, DIRECTOR HEAVY MAINTENANCE (2003-01),
(mwagner@lanchile.cl).

OSCAR CESPEDES, DIRECTOR ENGINEERING, QUALITY ASSURANCE & HEAVY MAINTENANCE, (ocespedes@lanchile.cl) (SCLILLA) (2001-10).

OSCAR PRIETO, DIRECTOR REPAIR STATION/COMMERCIAL.

VICTOR IDE, DIRECTOR PURCHASING.

DIEGO DE RISIO, DIRECTOR PLANNING & PROGRAMMING, EX-(LAZ) (2002-01).

MAURICIO ITURBISQUI, DIRECTOR PRODUCTION REPAIR CENTER.

RAIMUNDO MARTINEZ, SALES MANAGER (2006-02).

DANIEL GONCALVES, MANAGER ENGINEERING DEPT, (TAM) MAINTENANCE REPAIR & OVERHAUL (MRO) (LATAM) AIRLINES.

LUIS VEGARA, MANAGER MAINTENANCE OPERATIONS CONTROL (MOC) (2003-01).

LUIS GOMEZ, QUALITY ASSURANCE (QA) MANAGER (2001-10).

CRISTIAN GARCIA HUIDOBRO, QUALITY CONTROL (QC)/TRAINING MANAGER.

LUIS HERNANDEZ, QUALITY CONTROL (QC) MANAGER.

VICTOR SARTORI, MANAGER ENGINEERING (2001-12).

JORGE ROA, PRODUCTION MANAGER (1996-10).

PEDRO BAEZA, MAINTENANCE MANAGER.

FULVIO BARBIERI, PROJECTS MANAGER.

LUIS REYES, SYSTEMS MAINTENANCE MANAGER.

MANUEL SAN MARTIN, RELIABILITY MANAGER.

RAUL PONCE, MANAGER PRODUCTION PLANNING REPAIR STATION.

PATRICIO SOTO, MANAGER AIRCRAFT DELIVERIES (2000-08).

JORGE HANSON, 767 FLEET MANAGER (2001-10).

JAIME GONZALEZ, 737 FLEET MANAGER (2001-10).

MAURICIO ITHURBISQUI, CABIN MAINTENANCE MANAGER (2003-01).

LUIS EBENSPERGER, HANGAR PRODUCTION MANAGER (2001-10).

RICARDO MENDEZ, HANGAR PRODUCTION MANAGER (2001-10).

RODOLFO QUINTAS, HANGAR PRODUCTION MANAGER (2001-10).

 
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