Fourth Quarter and Full Year 2009 Results Presentation January 27, 2010
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, 2008. Information, tables and logos contained in this presentation may not be used without consent from LAN 1
Contents I. 4Q09 & Full Year 2009 Financial Results II. Strategic Initiatives & Future Outlook 2
Full Year 2009 Highlights Net Income for 2009 reached US$231 million despite global crisis. Total Revenue decline of 14.7% in 2009, driven mainly by a 32.1% decline in cargo revenues. 2009 margins affected by US$129 million fuel hedge loss. US$ millions 2008 2009 % Chg Total Revenues 4,283 3,656 (14.7%) Pax Revenues 2,821 2,624 (7.0%) Cargo Revenues 1,319 896 (32.1%) Total Operating Expenses (3,663) (3,220) (12.1%) Operating Income 620 436 (29.7%) Operating Margin 14.5% 11.9% (2.6 pp) Net Income 336 231 (31.3%) Net Income (Excl. extraord. items) 428 231 (46.0%) EBITDAR* 948 823 (13.1%) EBITDAR Margin 22.1% 22.5% 0.4 pp NOTE = Figures for 2008 and 2009 under IFRS. * EBITDAR = Operating income + depreciation & amortization + aircraft rentals 3
4Q09 Highlights Strong recovery in 4Q09: Net Income reached US$110 million. Total Revenue decline of 4.0% in 4Q09, offset in part by lower fuel costs. EBITDAR margin increased 0,2 points reaching 27,3% in 4Q09. US$ millions 4Q08 4Q09 % Chg Total Revenues 1,115 1,071 ( 4.0%) Pax Revenues 769 757 (1.6%) Cargo Revenues 316 282 (10.7%) Total Operating Expenses (901) (880) ( 2.3%) Operating Income 214 190 (10.9%) Operating Margin 19.2% 17.8% (1.4 pp) Net Income 93 110 17.6% Net Income (Excl. extraord. items) 143 110 (23.2%) EBITDAR* 302 292 ( 3.1%) EBITDAR Margin 27.1% 27.3% 0.2 pp NOTE = Figures for 4Q08 and 4Q09 under IFRS. * EBITDAR = Operating income + depreciation & amortization + aircraft rentals 4
4Q09 EBITDAR Margin Improvement EBITDAR Mg. (%) % 30 25 1,9 pp 5,7 pp +0,2 pp. 20 14,7 pp 5,1 pp 15 27,1% 2,2 pp 27,3% 10 5 0 4Q08 Capacity Yield Load Factor Fuel Price Others 4Q09-10.9% 2.40 Fuel Price* [cus$] 2.14 302 EBITDAR** [MMUS$] 292-3.1% *Fuel price excludes fuel hedge **EBITDAR Margin = (Operating income + depreciation & amortization + aircraft rentals) / Revenues 5
Passenger Business Revenue Decreases 1.6% in 4Q09 Traffic growth of 13.2% offset by 13.0% decrease in yields. 4Q08 4Q09-13,0% 10,9 9,5 8,9% Pax Yield (US$ cents) 3,0 pp. 9.333 10.163 75,8% 78,8% Pax Capacity (mill ASK) -9,6% Pax Load Factor 8,2 7,4 Pax RASK (US$ cents) 6
Important Growth in all Passenger Operations Despite weak global environment 2008 ASKs 2009 ASKs Peru dom; 8% Arg dom; 6% Peru dom; 9% Arg dom; 8% Ecuador Dom; 0,30% Chile dom; 14% Int. (LH); 48% Chile dom; 14% Int (LH); 46% Regional ; 24% Regional; 23% Growth in ASK (2009 vs. 2008): +10% International (Long Haul) + 6% Regional + 6% Chile domestic +13% Peru domestic +16% Argentina domestic +44% 7
Cargo Business Revenue Decreases 10.7% in 4Q09 Strong recovery in 4Q09 with traffic increase of 8.5% 4Q08 4Q09-17,7% 43,3 35,7 3,6% Cargo Yield (US$ cents) +3,2 pp. 1.049 1.087 69,6% 72,8% Cargo Capacity (mill ATK) -13,8% Cargo Load Factor 30,1 26,0 Cargo RATK (US$ cents) 8
4Q09 - Cost Analysis Unit costs decline 9.4%; unit costs ex-fuel decreased 4.6% in the quarter CATK (US$ cent) 46,0 45,0 44,0 43,0 45,8 2,9 0,9 0,5 0,9-9,4% 42,0 1,0 0,0 4Q08 Fuel W&B Commercial Fleet Other Op. Costs 41,4 4Q09 Unit costs decreased 9.4% in 4Q09 driven by: Fuel costs decreased 13.0% driven by a 10.9% decline in fuel prices which was offset by a US$3.8 million fuel hedge loss. Wages & Benefits increased 21.0%, driven by the appreciation of domestic currencies in Latin America and increased headcount. Commercial costs decreased in line with a 4.2% decrease in traffic revenues (passenger and cargo). Fleet Costs decreased mainly driven by lower ACMI leases in the cargo business and lower average interest rates related to fleet financing. Other Operating Costs decreased driven by lower sales costs and general expenses. 9
% Total Consumption Hedged Fuel Hedging Total realized fuel hedging loss of US$129 million in 2009 60% 50% 40% 30% 20% 10% 0% 9% 20% 28% 28% 34% 29% 10% 1Q10 2Q10 3Q10 4Q10 ZCC Collar Swap Q1 10 Q2 10 Q3 10 Q4 10 Swaps 78.8 US$/bbl 9% 20% - - Swaps 78.9 US$/bbl - - 34% - Swaps 81.3 US$/bbl - - - 29% Collar 80 @ 50 10% - - - Collar 80 @ 55 18% 28% - - ZCC 140 @ 92 10% - - - 47% 48% 34% 29% Note: Hedging position as of January 2010 10
Contents I. 4Q09 & Full Year 2009 Financial Results II. Strategic Initiatives & Future Outlook 11
Solid Financial Position December Cash Balance: US$792 million, representing 22% of LTM revenues. 2009 Financing Initiatives: 1. Raised US$250 million in bilateral loans in the Chilean market during first half of 2009. 2. Completed EX-IM supported financing for 3 Boeing B767s and accessed capital markets with the new EX-IM Bond product. 3. Arranged bank financing for PDP's related to 15 A320 Family aircraft. 4. Completed EX-IM supported spare engine medium-term refinancing. US$MM 800 700 600 9% 500 400 472 Dec 08 Liquidity 18% 11% 700 477 Mar 09 Jun 09 17% 638 Sep 09 22% 792 Dec 09 Cash/Revs 25 20% 15% 10% 5% 0 LAN remains one of the few investment grade airlines in the world 12
Orders for 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 2011. A320 Family Delivery Schedule 14 12 10 8 6 4 2 0 5 10 8 5 5 6 4 2 2010 2011 2012 2013 2014 2015 2016 13
Fleet Plan 180 150 120 90 60 30 Average Fleet Age (Dic 09): 5.6 years 96 9 5 27 +9 105 9 5 28 +18 118 10 5 124 3 10 5 30 33 129 10 3 5 33 53 61 71 73 78 +6 +6 Cargo Passenger Long Haul Passenger Short Haul 171 3 10 32 33 93 Boeing 777-200F Cargo Boeing 767-300F Cargo Airbus 340-300 Boeing 787 Boeing 767-300ER Airbus A320/A319/A318 0 2009 2010 2011 2012 2013 2014-2019 CAPEX (US$ million) 2010 2011 2012 2013 2014-2019 Aircraft 412 755 518 213 3.557 Spare Engines & Others 113 130 138 103 US$5.5 Billion 2010-2019 14
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% 2006 2007 2008 2009 2010E 20% 15% 10% 5% 0% -5% -10% ~16%/ ~18% 12.3% 7.0% 6.9% -6.0% 2006 2007 2008 2009 2010E 15
Fourth Quarter and Full Year 2009 Results Presentation January 27, 2010