Third quarter 2012 Results Presentation November, 2012
This present at ion may include forward-looking comment s regarding t he Company’ s business out look and ant icipat ed financial and operat ing result s. These expect at ions are highly dependent on t he economy, t he airline indust ry, commodit y prices, int ernat ional market s and ext ernal event s. Therefore, t hey are subj ect t o change and we undert ake no obligat ion t o publicly updat e or revise any forward looking st at ement s t o reflect event s or circumst ances t hat may arise aft er t he dat e of t his present at ion. More informat ion on t he risk fact ors t hat could affect our result s are cont ained on our Form 20-F for t he year ended December 31, 2011. Informat ion, t ables and logos cont ained in t his present at ion may not be used wit hout consent from LATAM Airlines Group S .A.
LATAM Airlines Group: Highlights 3Q 2012 3Q1 1 ( US$ m illion) 3 Q12 % Change ( YoY) Pro Form a Total Revenues 3 ,4 77 3,3 45 -3 .8% Passenger Revenues 2,887 2,817 -2.4% Cargo Revenues 523 448 -14.4% Total Operating Expenses - 3,0 16 -3,2 60 8 .1% Operating I ncom e ( Ex one tim e) 2 18 105 -5 1.9 % Operating Margin 6.3% 3.1% -3.1 pp Net I ncom e ( Ex one tim e) -4 55 21 10 4.7 % EBI TDAR ( Ex one tim e) * 6 29 506 -1 9.6 % EBITDAR Margin 18.1% 15.1% -3.0 pp In this quarter the company recorded Net income of US$21 million and an operating margin of 3.1% excluding extraordinary items. Extraordinary Items include transaction related expenses of US$20 million and a one time tax charge of US$70 million * EBITDAR = Operating income + depreciation & amortization + aircraft rentals
LATAM Airlines Group operating margin analysis (ex one time items) 6.3% -5.9pp +1.8pp 3.1% +0.7pp 3.1% +3.5pp -3.3pp 3Q11 E xchange Yield Load Fuel Price Others 3Q12 Rate Factor 3.60 -2.1% 3.68 Fuel Price [ US$] 218 218 105 105 -51.9% Op. Margin [ US$MM]
LATAM Airlines Group: Passenger Business – Revenue decreases 2.4% + 7 .2 % + 3 .7 pp. + 2 .2 % 26,375 80.0% 32,989 32,265 24,607 76.3% Pax Capacity (million ASK) Pax Traffic (million RPK) Pax Load Factor -4 .6 % -9 .0 % 10.7 11.7 8.9 8.5 Pax Yield (US$ cents) Pax RASK (US$ cents) 3Q11 3Q12
LATAM Airlines Group: Diversified passenger capacity growth ASK 3Q 2012 Growth in ASK (3Q11 vs. 3Q12) 2.2% International (Long Haul) -0.6% Regional 14.8% Brazil Domestic -1.8% Chile Domestic 17.4% Peru Domestic 7.1% Argentina Domestic 38.5% Colombia Domestic -0.9% Ecuador Domestic 15.2%
Businesses performance January – S eptember 2012: Domestic Brazil TAM Domestic Passenger Operation - Capacity and Traffic Evolution Y oY Growt h Load Fact or 20% 90% 81% 80% 78% 77% 15% 74% 72% 70% 70% 65% 65% 63% 10% 60% 50% 5% 40% 0% 30% 20% -5% 10% -10% 0% Jan-12 feb-12 mar-12 apr-12 may-12 jun-12 jul-12 aug-12 sep-12 RPK Growth ASK Growth LF
LATAM Airlines Group: Cargo Business – Revenue decreases 14.4% -5 .6 % -1 .5 pp. -3 .2 % 1.865 1.131 1.067 1.925 58,7% 57,2% Cargo Capacity (million ATK) Cargo Traffic (million RTK) Cargo Load Factor -1 1 .6 % -9 .2 % 42,0 46,3 27,2 24,0 Cargo Yield (US$ cents) Cargo RATK (US$ cents) 3Q11 3Q12
Estimated US $700 Million in S ynergies Synergy Breakdown Synergy Schedule (US $ millions) Lower bound Upper bound
Passenger, Cargo and Cost synergies on track Passenger Operations New and improved agreements with international carriers Alignment of commercial practices and on board product New operations on regional routes Cargo Operations Integration of international cargo systems completed Improved connectivity for cargo at GRU and GIC airports New domestic Brazil cargo contracts Costs Synergies Fuel price negotiations in some airports completed Early redelivery of engine inventories Insurance j oint negotiation completed
2012 Estimated capacity expansion LATAM Airlines Passenger ASK Growth LATAM Airlines Cargo ATK Growth 25% 25% 20,5% 20% 20% 13,7% 15% 15% 12,4% 10,5% 9,6% 9,2% 10% 10% 6% - 8% 4% - 6% 5% 5% 3% - 4% 0% - 2% 0% 0% 2010 2011 2012E 2013E 2010 2011 2012E 2013E Domestic Brazil ASKs Domestic Brazil ASKs -2% -7% 1H2013 LAN TAM LATAM
LATAM Airlines Group fleet plan 2012-2015 379 356 336 323 Fleet Capex US$ US$ 2,195 US$ 1,613 US$ 2,979 US$ 2,354 M illion
Recently integrating the first 787 Dreamliner to our fleet Boeing 787 Dreamliner Will allow t he group t o achieve unprecedent ed efficiencies in fuel consumpt ion Consumes bet ween 12% and 15% less fuel t han a B767 20% less CO2 emissions Will operat e bet ween S ant iago, Buenos Aires, Lima, Los Angeles, Madrid, and Frankfurt .
LATAM Airlines Group fuel hedges LATAM Fuel Hedges (% of consumption) 47% 50% 13% 45% 4% 4% 40% 35% 30% 24% 9% 25% 20% 10% 15% 9% 10% 1% 8% 5% 8% 7% 6% 6% 6% 4% 1% 0% 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 WTI Swap WTI Collar Brent Collar Brent Call Opt ion Three -way WTI 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 101@75 47% WTI Band 101@67 31% WTI Band WTI Band 117@87 8% WTI Band 119@87 7% 6% WTI Band 102@80 7% 93@80 1% WTI Band Note: hedging position as of October 23, 2012 * Values are WTI equivalents
Thank Y ou
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