LAN Airlines Reports Net Income of US$76.1 Million for First Quarter 2012

SANTIAGO, Chile--(BUSINESS WIRE)--

LAN Airlines S.A. LFL, one of Latin America's leading passenger and cargo airlines, announced today its consolidated financial results for first quarter ended March 31, 2012. “LAN” or “the Company” makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S Dollars.

HIGHLIGHTS

• LAN reported net income of US$76.1 million for first quarter 2012, a decrease of 21.8% compared to the US$97.2 million reported in first quarter 2011. Results this quarter were impacted by a 14.7% increase in fuel prices and a more challenging environment in the cargo business, as well as by the ongoing development of LAN Colombia's operations. In addition, first quarter 2012 results include a one-time cost of US$14.3 million related to the successful completion of the collective bargaining process with certain unions.
• For first quarter 2012, operating income reached US$111.2 million, a 27.4% decrease compared to the US$153.3 million in first quarter 2011. Operating margin reached 7.2%, a decrease of 4.0 points compared to 11.2% in 2011.
• Total revenues in first quarter 2012 reached US$1,536.7 million compared to US$1,364.9 million in first quarter 2011 due to a 16.4% increase in passenger revenues and a 6.2% increase in cargo revenues. Revenue increases continue to reflect healthy passenger operations, reaching a record high load factor of 82.9%, whereas the cargo business faced a more challenging demand and competitive environment. Passenger and cargo revenues accounted for 74.1% and 23.9% of total revenues, respectively, in first quarter 2012.
• LAN and TAM S.A. (“TAM”) have successfully obtained the required registrations and authorizations in Brazil and in the United States in order to commence and complete an offer to exchange TAM shares initially for Holdco II shares and ultimately for LAN shares, in the form of Brazilian Depositary Receipts (“BDRs”) in Brazil and American Depositary Receipts (“ADRs”) in the United States. On May 10, 2012, LAN and a newly formed entity, Holdco II, commenced the exchange offer for TAM shares simultaneously in Brazil and in the United States. The exchange offer is currently scheduled to remain open until 5:00 pm, New York time (6:00 pm, Sao Paulo time) on June 11, 2012 and the auction will be held on Bovespa at 9:00 am, New York time (10:00 am, Sao Paulo time) on June 12, 2012.

For a full version of this release, please visit www.lan.com

About LAN

LAN Airlines is one of the leading passenger and cargo airlines in Latin America. The Company and its affiliates serve over 100 destinations around the world through an extensive network that offers full connectivity within Latin America, while also linking the region with North America, Europe and the South Pacific, as well as 70 additional international destinations through its various code share agreements. LAN Airlines and its affiliates have a leading position in their respective domestic markets of Chile and Peru as well as an important presence in the Argentinean, Ecuadorian and Colombian domestic markets.

Currently, LAN Airlines and its affiliates operate 137 passenger aircraft while LAN Cargo and its respective affiliates have a fleet of 14 dedicated freighters. The Company has one of the youngest fleets in the world which has meant greater efficiency and a significant reduction in CO2 emissions, reflecting its strong commitment to the protection of the environment.

LAN is one of the few Investment Grade airlines in the world (BBB).The Company's world class quality standards enabled its membership in oneworld™, an alliance of leading global airlines of which LAN has been a member for 10 years. For more information please visit www.lan.com or www.oneworldalliance.com

Note on Forward-Looking Statements

This report contains forward-looking statements. Such statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other similar expressions. Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors and uncertainties include in particular those described in the documents we have filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them, whether in light of new information, future events or otherwise.

This press release relates to a proposed business combination between Lan Airlines S.A. (“LAN”) and TAM S.A. (“TAM”), which will become the subject of a registration statement and prospectus to be filed with the SEC by LAN and a new entity to be formed in connection with the combination. This press release is not a substitute for the registration statement, prospectus and offering materials that LAN and the new entity will file with the SEC or any other documents that they may file with the SEC or send to shareholders in connection with the proposed combination. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROSPECTUS, EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION. All such documents, if filed, would be available free of charge at the SEC's website (www.sec.gov) or by directing a request to LAN Investor Relations, at 56-2-565-8785 or by e-mail at investor.relations@lan.com, or to TAM Investor Relations, at 55-11-5582-9715 or by e-mail at invest@tam.com.br.