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LAN Airlines reported net income of US$88.3 million for the first quarter 2010, reflecting a strong recovery in both the cargo and passenger operations. Net income increased 35.8% compared to the first quarter 2009, while operating income reached US$ 142.9 million in the first quarter 2010, a 21.0% increase compared to the first quarter 2009 and operating margin reached 13.8%. Operating income in the first quarter 2009 included a US$57.9 million realized fuel hedging loss, while the realized fuel hedging loss for the first quarter 2010 reached US$2.6 million.
During the first quarter 2010, LAN’s total revenues increased 17.3% compared to first quarter 2009. Passenger revenues increased 13.7% during the quarter, driven by continued traffic growth and a 6.6% recovery in yields. Despite the negative impact of the earthquake on the Company’s Chilean operations, LAN continued to report strong growth and healthy load factors in its passenger operations, largely driven by a recovery in international long-haul and regional operations during the quarter.
During the first quarter 2010, passenger traffic growth reached 6.7% and load factors improved 1.4 points reaching 79.3%. Total passenger capacity as measured in ASKs grew 4.9%, with capacity increases focused mainly on long-haul routes to Europe, the United States and the South Pacific. Revenues per ASK (RASK) increased 8.4%, mainly due to the increase in load factor coupled with an increase in yields compared to first quarter 2009.
During the first quarter 2010, cargo revenues increased 35.3%, reflecting a strong recovery in cargo traffic, with RTK growth of 29.0%. Cargo capacity during the quarter grew 22.2%, allowing cargo operations to reach a 68.7% load factor, a recovery of 3.7 points compared to first quarter 2009. Yields showed a 4.9% increase compared to the first quarter 2009, leading to a 10.8% increase in unit revenue. During the first quarter 2010, LAN received one Boeing 767-300ER passenger aircraft. For the remainder of 2010, the Company expects to receive a total of eight Airbus A320 family aircraft.
In March 2010, LAN signed an agreement with Boeing to adjust the delivery of ten Boeing 787-8 Dreamliners to be incorporated into the Company’s long-haul fleet. This new delivery schedule anticipates the arrival of this aircraft by three years, previously scheduled for 2014, and is now expected starting in the first semester of 2011.
Considering current market conditions, the company maintains its expectations for 2010 with passenger ASK growth of approximately 10% in 2010. Growth in the passenger business during 2010 is expected to be mainly driven by international and regional markets.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
