On Friday, Chile-based Lan Airlines S.A. (LFL), posted an increase in July passenger flow after market close. During the month, total passenger traffic rose 6.7%.
Domestic passenger traffic jumped 19.5% and International passenger traffic climbed 2.1%. International passenger traffic accounted for approximately 71% of total passenger traffic. The performance was mainly driven by higher operations on US and European routes, as well as on certain regional routes.
However, cargo traffic decreased 10.2% due to a slowdown in import and export markets in Latin America, which was partially offset by an increase in exports from Peru to the United States. In line with the fall in demand, capacity dropped 5.5% on reduction of ACMI leases, generating a 3.5 basis point decrease in load factor to 67.4%. However, we expect the cargo business to grow based on the launch of the Colombian operations and the arrival of two Boeing 777 Freighter aircraft in the second quarter of 2009.
Considering current market conditions, the company reviewed its projections for 2009 and forecast cargo traffic to decline by approximately 5%. However, it sees passenger traffic growing by approximately 10% in 2009. Growth in the passenger business is expected to be mainly driven by the domestic markets of Chile, Peru and Argentina.
Solid cash position and a still reasonable economic environment in some Latin countries like Chile and Brazil will help the company in the following quarters. Moreover, we believe that consistent positive results, solid financial and liquidity positions will enable Lan to move ahead with a number of long-term initiatives.
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