LAN Q1 Profit Falls, Cites Fuel Hedges

Chile's dominant airline LAN said its first quarter profit fell around a third in the first quarter, weighed down by losses due to fuel hedging.

LAN said it made a profit of USD$65 million during the January-March period, down 34.7 percent from the USD$99.6 million profit posted during the same quarter last year.

"The results were affected by a loss of USD$57.9 million due to fuel hedging," LAN said in a statement.

LAN said its first quarter operating profit was USD$118.1 million, down 21 percent from the USD$149.5 million in the same period in 2008.

If it had not been for the fuel hedge loss, LAN would have had an operating profit of USD$176 million, the statement added.

LAN said consolidated revenues fell 14.5 percent during the first quarter, while passenger revenue fell 6.4 percent during the period from a year earlier. Cargo revenues fell 32.3 percent during the first quarter from a year earlier.

"Traffic in the cargo business fell in line with global cargo markets, which have been hit by the global economic slowdown and depreciation of local currencies against the dollar," the LAN statement said.

LAN said this month it would invest around USD$1.4 billion between 2009 and 2011 to expand its fleet. LAN, which has operations across South America, will buy long- and short-haul planes as well as new-generation cargo aircraft.

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.