LAN Airlines Better Positioned – Analyst Blog

Earlier this month, Chile based LAN Airlines S.A. (LFL) reported passenger traffic for April 2010. Total passenger traffic grew marginally by 0.1% year over year, with domestic traffic increasing 6.6% and international traffic falling 2.7%.

International passenger traffic accounted for approximately 69% of the total passenger traffic. The decrease in passenger traffic was attributable to the earthquake that took place in February 2010.  

The Santiago International airport remained closed due to the catastrophe leading to the cancellation of numerous flights. Cancellation of flights between Chile and North America also negatively affected international passenger traffic.

Cargo traffic bloated 39.6% year over year based on an improvement in imports to Latin America, and increase in operations to Europe with the Boeing 777-200 freighter fleet.  

During the first quarter of 2010, there was a 4.9% increase in passenger traffic year over year. The earthquake was the only reason for the decrease in traffic during April, the effects of which are expected to persist for a while. Otherwise, LAN’s continuous fleet expansion and renewal program is expected to fetch profitable returns in future.  

During the first quarter, LAN received one Boeing 767-300ER passenger aircraft and expects to receive eight Airbus A320s in 2010. LAN’s operating performance was also encouraging. During the quarter, net margin and operating margin stretched by 110 and 40 basis points, respectively. Net revenues grew 17.3% year over year due to the increase in passenger and cargo revenues.

Moreover, LAN is well positioned to benefit from the global economic recovery, particularly from the emerging economies in Latin America.