Cargo, Passengers Boost LAN's 2008 Profit

Chile's leading airline LAN said on Tuesday its net profit rose 8.9 percent in 2008 and 16.1 percent in the fourth quarter as demand for passenger and cargo services offset fuel costs.

LAN said in an earnings statement that fourth-quarter profit was USD$117.1 million, versus USD$100.8 million for the same period last year. For the year, LAN reported profit of USD$335.7 million, compared with USD$308.3 million in 2007.

"This result is mainly a result of greater demand in the markets in which the company operates, for passenger and cargo operations, impacted by the drastic rise in fuel prices that affected the industry in general," the company said in the statement to the local market regulator.

LAN reported a USD$24.5 million loss for fuel price hedges in the fourth quarter, compared to a gain of USD$20.8 million in the same period in 2007.

This year, LAN has 30 percent of its estimated fuel demand hedged for the first quarter, 40 percent for the second quarter and 20 percent for the remainder of the year, the company said.

Revenue in 2008 rose 28.6 percent from a year earlier to USD$4.534 billion, while operating profit rose 29.7 percent to USD$536.18 million, LAN said.

For 2010, it has 10 percent of estimated demand covered.

LAN said under current market conditions it planned to raise passenger capacity 10 percent in 2009 and forecast passenger business growth would be driven in the year by domestic markets in Chile, Peru and Argentina.

LAN's cargo unit said last week it had agreed to pay an USD$88 million fine as part of a price-fixing investigation led by the US Department of Justice, which was offset against the company's results for 2007 and the third quarter of 2008.

LAN's cargo network covers about 75 destinations worldwide. It has operations in Chile, Brazil and Mexico and has been given the green light to set up an affiliate in Colombia.

Parent LAN has affiliates in Ecuador, Peru and Argentina. It accounts for more than half of Chile's international passenger traffic and nearly three-quarters of its domestic traffic.