Earlier this month, LAN Airlines S.A. (LFL) of Chile released its passenger traffic data for June 2010. Total passenger traffic grew significantly by 15.5% year over year, with domestic traffic increasing 16.1% and international traffic rising 15.2%.
 
International passenger traffic accounted for approximately 71% of the total passenger traffic. The World Cup 2010 was one reason for the increase and new routes to Europe, Mexico and the Caribbean was the other reason.
 
Cargo traffic increased 34.7% year over year based on higher imports into Latin America, and increased operations to Europe with the Boeing 777-200 freighter fleet. 
 
During May 2010, total passenger traffic grew significantly by 13.9% year over year, with domestic traffic increasing 15.2% and international traffic rising 13.3%.
 
However, during April, total passenger traffic grew marginally by 0.1% year over year, with domestic traffic increasing 6.6% and international traffic falling 2.7%. The decrease in international passenger traffic was attributable to the earthquake that took place in February 2010. 
 
Thus, during the second quarter of 2010, we expect a considerable increase in passenger traffic, both domestically and internationally. The earthquake was the only major reason for the decrease in international traffic during April, which did not spill over into May and June 2010. Moreover, LAN’s continuous fleet expansion and renewal program are 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 also inspires confidence. 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. The economic growth in emerging markets will be higher than the developed markets.
 
Thus, Latin American airliners such as LAN, Gol Linhas Aereas Inteligentes S.A. (GOL) and TAM S.A. (TAM) are expected to grow, powered by the regional economy.
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