LAN plans to add 10% in seat capacity in 2010


Chile’s largest carrier, LAN Airlines, plans to add 10% in seat capacity in 2010, with cargo capacity up about 16% to 18% next year, Alejandro de la Fuente Goic, chief financial officer, said Tuesday during a conference call.

While yield, or profit per passenger, remains weak due to sales promotions, the executive said international traffic is picking up as the global economy recovers.

LAN, which remains one of the world’s few airlines with an investment-grade debt rating, is prepared for long-term growth. The carrier will take delivery of 10 new aircraft in 2010, bringing its fleet to 103 aircraft. By 2019, the airline plans to operate 147 aircraft.

The recent merger of two airlines, Avianca in Columbia and TACA in El Salvador, won’t immediately pose “a huge competitive impact” for LAN, de la Fuente said, although there may be increased competition in some regions. He said LAN could face greater challenges if the merged airline makes changes to its business.

LAN continues to study possible acquisitions and airline alliances, but “there’s no news,” de la Fuente told analysts.

Late Monday, LAN posted a third-quarter net profit of $52 million, down 37% from the same period of 2008, as revenue from passengers and freight fell in the global economic slump and the H1N1 flu scare.

LAN’s total operating revenue fell 19% to $918 million in the third quarter. Passenger revenue fell 9.9% to $668 million, and cargo revenue fell 40% to $216 million.

Earnings per share fell to $0.15, down from $0.25 a year earlier.

During the quarter, LAN secured financing for three Boeing 767 jets to be delivered in 2009 and 2010. Additionally, the company has arranged financing for 15 Airbus A320 jets to be delivered in 2010 and 2011.