2
This presentation may include forward-looking comments regarding the Company’s business outlook and
anticipated financial and operating results. These expectations are highly dependent on the
economy, the airline industry, commodity prices, international markets and external events.
Therefore, they are subject to change and we undertake no obligation to publicly update or revise
any forward looking statements to reflect events or circumstances that may arise after the date of
this presentation. More information on the risk factors that could affect our results are contained on
our Form 20-F for the year ended December 31, 2010.
Information, tables and logos contained in this presentation may not be used without consent from LAN
Cueto Group34,0%
Eblen Group9,4%Bethia
Group8,0%
ADRs3,6%
Other Foreign
Investors4,2%
Chilean Pension Funds13,3%
Other27,5%
Free Float48.6%
4
LAN's Ownership
LAN’s Ownership(Apr 30, 2011)
LAN’s market capitalization (May 11, 2011) US$ 9.7 billion
Source: DCV and Bloomberg
5
Diversified Business Model
Revenue Breakdown(LTM 1Q 2011 % of operating revenues)
* Other Revenues includes Aircraft Leases, Logistic and Courier, Ground Services, Storage & Customs Brokerage, Duty Free, etc
Total operating revenues (LTM 1Q 2011) US$ 4,853 million
Intl. Passengers
44.0%
Domestic Passengers
25.0%
Cargo28.0%
Other *3.0%
6
Regional Strategy
LAN Airlines Santiago, 1929
LAN Peru Lima, 1999
LAN Ecuador Guayaquil, 2003
LAN Argentina Buenos Aires, 2005
Aires Bogotá, 2010
Sao Paulo, 2001
Bogotá, 2009
Mexico City, 2000
Miami Headquarters
7
Geographically Diversified Business
Market Growth(LAN ASK growth 1Q2011)
Ecuador
Peru
Chile
Argentina
Long Haul
LAN Passenger Capacity(by ASK)
1998
1Q2011
Regional
+86%
+5%
+28%
+27%
+6%
-4%Intl.(Long Haul)
43%
Dom. Chile16%
Regional23%
Dom. Peru7%
Dom. Argent.
6%
Dom. Colombia
4%
Dom. Ecuador
1%
Colombia
+100%
Bucaramanga
BogotáPereira
Cali
Florencia Mitú
PuertoInirida
Cúcuta
Arauca
PuertoCarreño
Medellín
Cartagena
Barranquilla
SantaMarta
Colombia: Second Largest Market in the Region
Colombia represents an attractive opportunity to strengthen our position in Latin America
Colombia is the second largest market in the region with 13 million domestic passengers and 6 million international passenger in 2010
Acquisition of a strong player with relevant position
Colombia has all the necessary conditions to apply our domestic, passenger and cargo models
Colombia: Turnaround of Colombian Airline AIRES
Acquisition of AIRES:
In November 2010, LAN acquired 98.9% of AIRES for US$12 million (excluding debt)
AIRES Fleet:
BOEING 737-700Aircraft: 9Seats: 148
DASH 8-Q400Aircraft: 4Seats: 78
DASH 8-200Aircraft: 11Seats: 37
Aspects of the turnaround process:
Implement LAN standards (IOSA Certification)
Improving flight offers and quality of service
Eliminate unprofitable routes
Apply revenue management
Integration of domestic cargo operations
Define the new organizational structure and infrastructure
Converting AIRES into LAN Colombia
10
Leading Presence in the Region
* Sources: International market shares as of Dec 2010; domestic market shares as of Mar 2011** Sources: DGAC Chile, DGAC Peru, Undersecretary of Transportation Argentina, DGAC Ecuador, Aerocivil Colombia, ANAC Brazil, LAN estimates
Market Sizes(mm pax transported in 2010**)
LAN’s Market Share(passenger markets*)
EcuadorIntl:23% Dom: 20%
PeruIntl:44% Dom: 66%
ChileIntl:62% Dom: 77%
ArgentinaIntl:16% Dom: 30%
Colombia:Intl:9% Dom: 20%
2,8 5,1 5,09,1
6,2
15,9
3,76,0 5,5 6,8
13,2
71,9
0
15
30
45
60
75
Ecuador Chile Peru Argentina Colombia Brazil
International Domestic
6,1%6,5%
6,0%
4,5%4,1%
Chile Peru Argentina Colombia Brazil
2,36
2,25
0,66
0,44
0,44
0,44
0,38
0,35
0,0 0,5 1,0 1,5 2,0 2,5
United Kingdom
United States
Chile
Colombia
Brazil
Ecuador
Argentina
Peru
6,8%
3,4%
4,4%
7,1% 6,9%
5,5%
Asia-Pacif icN. America Europe Mid. East Latam Africa
11
Region’s High Growth Potential
Source: Boeing, IMF, CIA, Bloomberg and LAN estimates
Trips per Capita(as of 2010)
Peru
Brazil
Argentina
Ecuador
Chile
USA
UK
Colombia
GDP Growth Projections(2011E)
World Average
4.0%
Boeing Growth Projections(Passenger RPK %CAGR up to 2029)
3%
3%
5%
6%
7%
8%
9%
10%
11%
13%
18%
28%
29%
33%
86%
86%
95%
80%
74%
87%
78%
90%
70%
74%
66%
69%
66%
55%
11%
11%
14%
19%
5%
13%
19%
13%
16%
3%
5%
12%
0% 25% 50% 75% 100%
Delta
American
Copa
Qantas
Iberia
British Airways
TAM
Gol
Lufthansa
Air France-KLM
Singapore
LAN
Cathay
Korean Air
Cargo Passenger Other
12
Efficiencies of Passenger + Cargo Mix
Revenue Mix(selected companies FY 2010)
Source: Companies’ information for FY 2010
BELF Differential(long haul passenger + cargo routes Jul 2010, based on SCL – MIA route)
Passenger and cargo combination allows:• Lower break even load factors (BELFs)• Increased diversification
69% 18%51%
BELFw/o Cargo
CargoContribution
BELFw/ Cargo
Lo
ad
Fa
cto
r (%
)
13
Cargo Business: Consolidation and Expansion
Growth Drivers:
Strong Brazilian import market driven by an appreciated local currency
3 additional Boeing 767F to add capacity to the growing northbound routes (recovery of the salmon industry)
Strengthening of new domestic routes within Brazil
Active capacity management and new revenue management tools have allowed more efficient growth
Lima
Santiago
Guayaquil
Frankfurt
Amsterdam
Bogota
Buenos Aires
Sao Paulo
Miami
Buenos Aires
Sao Paulo
Manaus Fortaleza
Recife
Bogota
Miami
14
Cargo Business: Latin America Cargo Market
SouthboundNorthbound
Fish, flowers and vegetables dominate northbound flows
Consumer electronics, machinery, spare parts and automotive parts dominate southbound flows
Operational efficiencies must be obtained by managing unbalanced flows and seasonal fluctuations
Source: Boeing World Air Cargo 2008 - 2009
318 407600 694
972 1.0831.237
1.425 1.428 1.4541.639
2.093
2.506
3.034
3.525
4.283
3.656
4.523
0
1.000
2.000
3.000
4.000
5.000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
US$ mm
CAGR24%
CAGR1%
CAGR20%
16
Revenue Growth
LAN’s Operating Revenues(1993 – 2010)
Note: 2008 – 2010 under IFRS; previous years under Chilean GAAP
1Q 2011Revenues +31.9%
CAGR3%
0 625
3864
3148 48
1131
84
164147
241
308
336
231
420
0
100
200
300
400
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
US$ mm
Financial crisis +salmon crisis +
swine flu
Increasing fuel prices
9/11 & Argentinian crisis
Recession
17
Consistent Profitability
LAN’s Net Income(1993 – 2010)
Note: 2008 – 2010 under IFRS; previous years under Chilean GAAP
1Q 2011Net Income +10.1%
18
High Efficiency Levels
EBITDAR Margin(FY 2010 industry comparison)
Source: Companies’ information for FY 2010
8,9%10,3% 10,7%
11,9%12,9% 13,0%
14,3% 14,8% 15,4%
18,0%
19,8%
22,0%23,5% 23,6%
25,2% 25,7%
0%
5%
10%
15%
20%
25%
30%
EBITDAR Mg %
19
Highlights 1Q 2011 Results
* EBITDAR = Operating income + depreciation & amortization + aircraft rentals
(US$ million) 1Q 2010 1Q 2011 % Change (YoY)
Total Revenues 1,035 1,365 31.9%
Passenger Revenues 741 978 32.0%
Cargo Revenues 266 346 30.2%
Total Operating Expenses -892 -1,212 35.8%
Operating Income 143 153 7.3%
Operating Margin 13.8% 11.2% -2.6 pp
Net Income 88 97 10.1%
EBITDAR * 249 293 17.6%
EBITDAR Margin 24.1% 21.5% -2.6 pp
1Q 2011 results reflect strong growth in both passenger and cargo businesses
EBITDAR margin decreased 2.6 point s for 1Q11, reaching 21.5%
1Q 2011 Results include a US$11 million negative impact generated in Aires.
79,3%80,9%
Pax Load Factor
8.118
9.786
Pax Traffic (million RPK)
7,2
8,1
Pax RASK (US$ cents)
9,110,0
Pax Yield (US$ cents)
10.232
12.094
Pax Capacity (million ASK)
20
Passenger Business: Revenue Increases 32.0% in 1Q 2011
1Q 2010
1Q 2011
+18.2% +20.5% +1.6 pp.
+9.5% +11.7%
68,7%67,9%
Cargo Load Factor
731
852
Cargo Traffic (million RTK)
25,027,6
Cargo RATK (US$ cents)
36,4
40,7
Cargo Yield (US$ cents)
1.063
1.254
Cargo Capacity (million ATK)
21
Cargo Business: Revenue Increases 30.2% in 1Q 2011
+18.0% +16.6% -0.8 pp.
+11.7% +10.4%
1Q 2010
1Q 2011
22
41,3
43,5
44.1
48.9
March 2011 Cash Balance: US$388 million, representing 8% of LTM revenues
US$ 160 million committed credit lines
Long term debt related to fleet financing
Low interest rates
LAN remains one of the few investment grade airlines in the
world
Solid Financial Position
4,4
4,13,9 3,8
3,9
3,4
3,6
3,8
4,0
4,2
4,4
4,6
Mar-10 Jun-10 Sep-10 dec-10 Mar-11
Adj. Debt / EBITDAR
3,5
3,8
4,1 4,24,1
3,2
3,4
3,6
3,8
4,0
4,2
4,4
Mar-10 Jun-10 Sep-10 dec-10 Mar-11
EBITDAR / Interest Expense
Current High Fuel Scenario
Fuel Surcharges: LAN applies fuel surcharges in line with practices in the industry in passenger and cargo businesses
Operations: LAN has adjusted the capacity on certain routes as part of tactical decisions
Efficiency Initiatives: LAN is constantly developing efficiency initiatives, which now become more attractive
Fuel Hedging: Active fuel hedging strategy
WTI Prices (US$)
US$ 108.9(4 May 2011)
B767-300 WingletsB767-300 Winglets
Efficiency Initiatives
Installation of winglets in all the B767 fleet
Between 4% and 5% additional efficiency in fuel consumption
“LEAN Fuel” Project
Reduction of 2% of the fuel consumption per flight
Reconfiguration of cabins in LAN Ecuador’s B767s
Reduction of 7% of costs per ASK by increasing the amount of Economy seats
25
Fuel Hedge
Fuel Hedge(% of consumption)
WTI Swap:
WTI Collar 1:
WTI Collar 2:
WTI Call Option:
HO Call Option:
$78.5
$62 / $85
—
—
—
$79.0
$60 / $85
$70 / $105
—
—
$85.9
$60 / $90
—
$120
$144.9
$100.3
$60 / $90
—
$130
—
27%18% 16%
3%
27%
8% 9%
9%
48%
10%
10%
10%
0%
20%
40%
60%
80%
1Q11 2Q11 3Q11 4Q11
WTI Swap WTI Collar 1 WTI Collar 2 WTI Call Option HO Call Option
15 14 14 14 119 9 9 9 2
6176 84 94 109
28
3136
40 405
812
5
5
5
55
11
12
12
1212
2
2
4
44
0
40
80
120
160
200
2010 2011 2012 2013 2014
Boeing 777-200F Cargo
Boeing 767-300F Cargo
Airbus 340-300
Boeing 787
Boeing 767-300ER
Airbus A320 Fam
Boeing 737-700
Dash Q200 & Q400
26
LAN’s Fleet Plan: Growth and Flexibility
LAN’s Fleet Plan(2010 - 2014)
131
149
169
186
Total FleetCapex (US$ MM) 434 841 1,810 1,343 1,119
195
US$ 5.5 Bn
27
LAN’s Fleet Plan: Deliveries 2011 - 2014
Long Haul
Short Haul
Cargo
2013 15 15
2011 2012 2013 2014
A320 Fam
12
2011 2012 2013 2014
B777F
B767F
37
4
5
34
2011 2012 2013 2014
B787
B767
11,5% 10,2% 9,2%
-10%
-5%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011E
12,3%
-6,0%
20,5%
-10%
-5%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011E
28
2011 Estimated Capacity Expansion
Cargo ATK GrowthPassenger ASK Growth
Expansion in regional markets
Strengthen Lima hub and increase connectivity within the region
Continue growth in domestic markets
3 additional B767 freighters (2010-2011)
Increased operations in Brazil and Europe
Increased capacity in bellies of passenger aircraft
16% -18% 16%-18%
30
LATAM Airlines Group: Status and Next Steps
January 18, 2011:
LAN and TAM signed binding agreements
August 13, 2010:
LAN and TAM announce their intentions to combine
March 1, 2011:
ANAC approved the proposed corporate structure
Approvals & Registrations:
CVM (Brazil), SVS (Chile), SEC (USA)
Antitrust authorities in Chile, Brazil, Spain, Germany, Italy and Argentina
Shareholder Meetings
Exchange Offer & Closing
May 26, 2011:
Public HearingLAN, TAM and interested parties will give their opinion about the transaction to the TDLC Court (May 10, 2011 is the deadline for delivering related information to the TDLC)
*Pending steps
31
LATAM Airlines Group: Benefits for our Clients
Our clients will have access to a network of over 120 destinations in 23 countries
Opportunity to open new international destinations which couldn’t be possible with each airline operating separately
For cargo clients, the new airline group will provide more capacity, frequencies and destinations
32
LATAM Airlines Group: Corporate Structure
LATAM AIRLINES GROUP(Currently LAN)
Chile
TAM S.A.Brazil
HoldCoChile
TEP Brazil13.5%
LAN Controlling shareholders
24.1%
Others LAN46.6%
100% ON Shares
Others TAM15.8%
100% PN Shares
80% Class A Shares(voting)
20% Class A Shares (voting)100% Class B Shares (non voting)
PantanalBrazil
TAM MilorBrazil
TLABrazil
100% 100%
100%
34
LATAM Airlines Group: Unparalleled Service in the Region
SOURCE: Company 20-F filings, Airline Business, + IR presentation, company websites and LAN estimates
Estimated Synergies of US$400 Million
Revenues: Passenger US$170 MM ; Cargo US$110 MM
Costs: US$120 MM