LAN records impressive second-quarter profit gain

LAN A318. Photo: courtesy, LAN.

LAN Airlines posted second-quarter net income of $60.6 million, significantly widened from a $4.2 million profit in the year-ago period, and credited "a strong recovery in both the cargo and passenger businesses" for the earnings growth.

Quarterly revenue jumped 31.7% to $1.04 billion as passenger revenue rose 24.5% and cargo revenue lifted 60.3%. Second quarter expenses increased 22.8% to $921 million and operating income was $112.6 million, more than triple $34.9 million in the prior-year quarter. LAN said operating margin reached 10.9%, up 6.4 points. Operating income included a $1.3 million realized fuel hedging gain, reversed from a $52.6 million realized fuel hedging loss in the 2009 second quarter.

LAN said full-year 2010 passenger capacity will be up around 10% with another 15%-17% boost in ASKs projected in 2011. Cargo capacity is projected to lift 20% for full-year 2010.

The carrier signed an MOU with Airbus at last week's Farnborough Airshow for 50 A320 family aircraft including 10 A321s. If consummated, the order will represent the largest single airline order for Airbus in Latin America and would bring LAN’s total Airbus orders to 152 units, according to Airbus.

Regarding LAN’s long haul fleet, it noted that it signed an agreement this month with Boeing to bring forward the delivery of two of its 12 787s to 2012. The Chile-based operator is slated to be the first airline in the western hemisphere to take delivery of the Dreamliner.

During the first half of 2010, LAN took delivery of one 767-300 aircraft. It expects to receive eight A320 family aircraft before year-end. Additionally, it expects to receive 17 A320 family aircraft in 2011 to "operate domestic and regional routes." Next year it will also receive three more 767-300s.

Second quarter traffic heightened 9.7% to 7.28 billion RPKs on an 11.1% lift in capacity to 10.03 billion ASKs, producing a load factor of 68.1%, up 2.7 points. Passenger yield rose 13.5% to 9.3 cents as RASK increased 12.1% to 6.8 cents.