Citi Annual Latin America Conference New York March 24-26, 2010

Transcription

1 Citi Annual Latin America Conference New York March 24-26, 2010

2 This presentation may include forward-looking comments regarding the Company s business outlook and anticipated financial and operating results. These expectations are highly dependent on the economy, the airline industry, commodity prices, international markets and external events. Therefore, they are subject to change and we undertake no obligation to publicly update or revise any forward looking statements to reflect events or circumstances that may arise after the date of this presentation. More information on the risk factors that could affect our results are contained on our Form 20-F for the year ended December 31, Information, tables and logos contained in this presentation may not be used without consent from LAN 2

3 Contents I. LAN S DIVERSIFIED BUSINESS MODEL II. GROWTH PERSPECTIVES 3

4 LAN Ownership Structure LAN Market Cap (March 19, 2010) US$ 5.8 Billion LAN Ownership (March 11, 2010) 33% Others 21,8% 34,1% CUETO Group Chilean Pension Funds 10,8% 4,2% Other Foreign Investors 8,4% 11,3% ADRs 9,4% PIÑERA Group EBLEN Group 4

5 IATA Projections for the Industry Several crisis have affected the industry in the last decade. IATA projects losses of US$9.4 bn in 2009 and US$ 2.8 bn in Despite industry losses, LAN has remained profitable over the years. Net Result (US$bn) ,6% 8, ,4% 4,0% 8,2 8,5 Actual IATA Projections ,3% 3, ,8% -0,5%-7,6-11,3-13,0-1,6% ,9% -5, ,9% 1,0% -4,1-0, ,9 3,9% -0,7% -15, ,6% -2,8-9,4-0,1% 2009E 2010E 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% Operating Margin (%) Note: Industry figures as published by IATA 5

6 LAN: Strong Revenue Growth US$ Million LAN Operating Revenues ,400 4,283 4,000 3,600 3,200 CAGR 20% 3,034 3,525 3,656 2,800 2,400 2,000 1,600 CAGR 24% CAGR 1% 1,4251,4281,454 1,639 2,093 2,506 1, ,0831, IFRS 2009 IFRS Note: 2008 and 2009 under IFRS; previous years under Chilean GAAP. 6

7 Consistent Profitability Despite Multiple Market Shocks LAN Operating Income and Net Income (US$ millions) 9/11 & Argentine Crisis Increasing Fuel Prices Financial Crisis + Salmon Crisis + Swine Flu Recession $172$164 $112 $142$147 $80 $83 $11 $15 $34 $46 $64 $44 $51 $50 $62 $84 $48 $48 $6 $25 $38 $31 $11 $31 $ IFRS $303 $241 $413 $308 $620 $336 $436 $ IFRS Operating Income Net Income LAN Airlines has been consistently profitable under the current management 7

8 LAN Operates with High Efficiency Levels EBITDAR Margin Industry comparison Ebitdar Mg. (%) 30% 25.3% 26.5% 25% 22.5% 19.3% 20.0% 20% 14.4% 14.8% 15% 10.1% 10.2% 10.3% 11.5% 10% 6.0% 6.7% 4.6% 4.8% 5% 3.0% 1.4% 0% Iberia American AF-KLM British Delta United US Airways Continental Southwest Korean Singapore TAM Jetblue GOL LAN Copa Ryanair Source: Companies Information for FY 2009, TAM, Singapore and Korean LTM September 09 8

9 LAN s Diversified Business Model: Passenger + Cargo Operations Diversified Business Model (% Operating Revenues) Cargo 24% Others* % 26% Domestic Passenger 46% International Passenger * Other Revenues includes Aircraft Leases, Logistic and Courier, Ground Services, Storage & Customs Brokerage, Duty Free, etc. 9

10 LAN Business Model: Distinct blend enhances returns and reduces risk Revenue Mix, Selected Companies Korean Air Cathay 30% 26% 12% 6% 58% 69% Passenger and Cargo Combination Lower break-even load factors Increased diversification LAN 24% 4% 72% Singapore 15% 12% 58% BELF Differential for long haul passenger + cargo routes 2009 (SCL MIA route) Air France-KLM 11% 11% 78% Gol 8% 92% Lufthansa BA Qantas Iberia Copa 8% 26% 7% 6% 6% 16% 6% 19% 5% 66% 87% 79% 75% 95% Load Factor 67% BELF w/o Cargo 17% Cargo Contribution 50% BELF w/ Cargo American 3% 11% 86% Delta 3% 12% 85% Note: BELF = Break-even load factor Cargo Others Passenger Source: Companies FY

11 LAN s Passenger Operations are Geographically Diversified Diversified Passenger Capacity (% ASKs) Dom. Chile 28% 39% 3% 72% Dom. Perú Dom. Chile 3% 20% 18% 59% Dom. Argentina Dom. Perú 8% 9% Dom. Chile 14% 23% Dom. Ecuador 0.3% 46% International Regional International (Long Haul) Regional International (Long Haul) Growth in ASK (2009 vs. 2008): +10% International (Long Haul) + 6% Regional + 6% Chile domestic +13% Peru domestic +16% Argentina domestic +44% 11

12 LAN s Regional Strategy LAN Ecuador Guayaquil, 2003 LAN Peru Lima,1999 LAN Airlines Santiago, 1929 LAN Argentina BAires,

13 Leading Presence in South American Markets LAN Market Share in Passenger Markets** Market Size: Passengers Transported 2009* (millions) Ecuador International: 39% Domestic: 16% Cargo Latin America 37% Guayaquil Peru International: 47% Domestic: 82% Santiago Chile International: 52% Domestic: 81% Lima Buenos Aires Argentina International: 17% Domestic: 30% ,9 5,8 4,6 5,0 4,8 3,7 3,1 2,6 Ecuador Chile Peru Argentina International Domestic *Sources: DGAC Chile, DGAC Peru, Undersecretary of Transportation Argentina for 2008, DGAC Ecuador for 2008, LAN Estimates. ** International market shares for Chile, Peru and Argentina as of November 2009; Domestic market shares as of November

14 Diversified Passenger & Cargo Network LAN is one of the leading passenger and cargo operators in Latin America Toronto New York Amsterdam Houston Los Angeles Miami Frankfurt Madrid Mexico City Cancun Pta. Cana Merida San Jose Panama Medellin Caracas LAN Codeshare Alliances Sydney Auckland Papeete Easter Island Bogotá Quito Guayaquil Piura Chiclayo Trujillo Lima Arequipa Tacna Arica Iquique Antofagasta Calama Copiapo La Serena Santiago Concepcion Temuco Valdivia Osorno Pto. Montt Balmaceda Pta. Arenas Iquitos Tarapato Pucalpa Puerto Maldonado Cuzco La Paz Salta Manaos Asunción Rosario Cordoba Mendoza Bariloche Iguazú Montevideo Com. Rivadavia Rio Gallegos Ushuaia Curitiba Rio de Janeiro Sao Paulo Porto Alegre Buenos Aires Salvador Belo Horizonte Vitoria Passenger + Cargo Network Freighter Network 700 destinations worldwide 14

15 Solid Financial Position December Cash Balance: US$792 million, representing 22% of 4Q09 revenues Financing Initiatives: US$MM 800 Liquidity 22% Cash/Revs Raised US$250 million in bilateral loans in the Chilean market during first half of Completed EX-IM supported financing for 3 Boeing B767s and accessed capital markets with the new EX-IM Bond product. 3. Arranged bank financing for PDP's related to 15 A320 Family aircraft % 472 Dec 08 11% 477 Mar 09 18% 700 Jun 09 17% 638 Sep Dec 09 20% 15% 10% 5% Financing Initiatives: Arranged long term ECA supported financing for 15 A320 family aircraft. LAN remains one of the few investment grade airlines in the world 15

16 Fuel Hedging % Total Consumption Hedged 80% 60% 40% 20% 0% 26% 33% 28% 35% 28% 29% 10% 10% 10% 10% 1Q10 2Q10 3Q10 4Q10 1Q11 ZCC Collar Swap HEDGE LAN Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Swaps 75.2 US$/bbl 33% Swaps 78.9 US$/bbl 35% Swaps 79.2 US$/bbl 10% Swaps 81.3 US$/bbl 28% Swaps 80.1 US$/bbl 36% Collar 50 10% Collar 55 18% 29% 10% Collar 55 10% 64% 62% 45% 38% 10% Note: Hedging position as of February

17 Contents I. LAN S DIVERSIFIED BUSINESS MODEL II. GROWTH PERSPECTIVES 17

18 Operational Update after Chilean Earthquake LAN stopped operations out of the Santiago airport between February 27th and March 1 st. LAN re-launched operations on Tuesday, March 2, Currently the company is able to operate approximately 80% of regular domestic and international passenger operations out of Santiago. Santiago Airport expected to be fully operational by the end of March Limited damage to LAN s buildings, equipment and aircraft. Insurance deductibles total approximately US$3 million.

19 2010 Estimated Capacity Expansion Passenger ASK Growth Cargo ATK Growth 25% 20% 15% 10% 5% 0% 19.5% 11.5% 11.5% 10.2% ~10% E 20% 15% 10% 5% 0% -5% -10% ~16%/ ~18% 12.3% 7.0% 6.9% -6.0% E 19

20 2010 Passenger Growth Driven by International Traffic Passenger Traffic Growth (%RPKs) 10.7% grwth in 2009 Enhance Lima's regional Hub and make it a Regional/Long Haul Hub generating new growth opportunities Connect secondary cities south of Lima connected through Lima to main cities in the US, Europe and Mexico Increase LAN opportunities in North America adding new gateways to US (San Francisco), as well as to Europe 4% 12% 10% 17% 16% 13% 15% 11% 5% 13% 18% 6% 21% 10% 10% Increase frequencies within the region and in long haul routes. 2% 0% 1% 2% -1% Ago 09 Sep 09 Oct 09 Nov 09 Dic 09 Jan 10 Feb-10 Industry Lan Total Lan International Note: Industry figures as published by IATA 20

21 International Passenger Capacity Growth 13% 28% 2% 29% 12% 12% 6% 8% 23% 20% 3% Capacity Growth 5% % international ASK growth in 2009, with 1 pp increase in load factor, reaching 78%. 13% international ASK growth expected for

22 Strong Recovery in Cargo Traffic Cargo Traffic Growth (%RTKs) 9.7% decrease in 2009 Recover high freighter utilization rates. Brazil continues to be an important source of growth both in the import market as well as on domestic routes 28% 26% 24% 24% 31% Consolidate 4 weekly flights to Europe with the Boeing 777 freighter fleet 10% 10% -1% -4% -5% -8% -10% -6% Aug 09 Sep 09 Oct 09 Nov 09 Dic 09 Jan 10 Feb 10 Industry Lan Note: Industry figures as published by IATA 22

23 Strong Recovery in Cargo Traffic EUROPEAN CARGO OPERATION BRAZIL DOMESTIC OPERATION AMS FRA MANAUS MIA SAO PAULO VCP Continue growth in European routes with the new Boeing 777 freighter Consolidate and continue to expand domestic Brazil cargo operation 23

24 Incorporation of 30 New Airbus A320 Family Aircraft For regional and domestic operations To be delivered between 2011 and 2016 in addition to existing orders for 15 A320 family aircraft. For the renewal and growth of the Company s short haul fleet In addition, LAN s strategic fleet renewal plan involves the sale of five Airbus A318 aircraft in A320 Fam Delivery Schedule A A

25 Incorporation of 32 B787 Dreamliner Delivery Schedule starting in 2011 LAN has ordered 22 B787-8 and 10 B787-9 B787 Delivery Schedule Owned Leased

26 Fleet Plan Fleet Age (Dec 09) :5.6 years Boeing F Cargo Boeing F Cargo Airbus Boeing 787 Boeing ER Airbus A320 Fam CAPEX Aircraft Spare Engines/Others

27 In Conclusion: LAN is well positioned to take advantage of growth opportunities Cargo and Passenger mix provides competitive advantage in long haul operations Regional network provides flexibility to manage capacity Fleet plan provides for continued growth with flexibility to adjust for demand fluctuations 27 Strong Balance sheet supports Investment Grade rating 27

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