LAN Airlines S.A. (LFL) and its subsidiaries have reported preliminary traffic statistics and punctuality indicators for February 2010.

System passenger traffic for February increased 9.6%. International passenger traffic accounted for approximately 69% of total passenger traffic. The data considers flight cancellations on February 27 and 28 due to the shutdown of the Santiago International Airport following the earthquake that struck Chile on February 27, 2010.

Domestic passenger traffic in Chile, Argentina, Peru, and Ecuador rose 7.9% and international passenger traffic rose 10.4%. International capacity was mainly driven by an increase in operations on routes to the United States and Europe.

During February, cargo traffic increased 31.4%. This increase was mainly due to the recovery in imports to Latin America driven by Brazil, as well as increased operations to Europe with the B777-200 freighter fleet.

During February, 83.8% of Lan’s total flights left on time based on a fifteen-minute standard. This represented a decrease of 7.6 points compared to February 2009. Punctuality figures exclude operations on February 27 and 28 in Santiago when the Santiago International Airport was closed.

The company’s operating results for the fourth quarter 2009 were reasonable, despite a challenging environment. Passenger traffic during the quarter was good and cargo traffic finally showed some improvement. However, we believe that the large planned investments by the company are not consistent with the current economic environment.

Nevertheless, consistent positive results in the medium-term and solid financial and liquidity positions will enable Lan to move ahead with a number of long-term initiatives.

Thus, we are retaining our Neutral recommendation on the stock.
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