LAN’s net income drops 73% in Q2

LAN has announced a significant yoy drop in profitability for the second quarter. The Chilean carrier reported net income of US$15.9 million for the period ending 30 June, a decrease of 73.7% compared to the US$60.6 million reported in Q2 2010. According to LAN, Q2 results were significantly impacted by one- time non-operating effects, operational impacts including higher fuel prices, the presence of volcanic ash on certain routes and the start-up of LAN’s operations in Colombia. Higher fuel prices have hit all airlines and LAN reported a fuel cost increase of 46.3% compared to second quarter 2010, generating a US$142.9 million increase in fuel costs. At an operational level, the airline was also impacted by the consolidation of US$11 million in losses generated by the turnaround process of its Colombian operations, and US$18 million in losses resulting from the presence of volcanic ash, which affected air traffic in the region during June.Costs aside, total revenues in second quarter 2011 reached US$1,331.5 million compared to US$1,033.6 million in second quarter 2010 due to a 31.8% increase in passenger revenues and a 26.3% increase in cargo revenues. Rising demand however was obscured by rising operating costs.

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