MercoPress. South Atlantic News Agency

Lan confident it can cope the coming air industry turbulence

LAN Chile is reviewing its investment plans given the expected deceleration in world air traffic next year, although the company remains particularly strong and resilient to outside turbulences, according to Enrique Cueto, executive vice-president of Chile's flan carrier.

Lan with its main offices in Santiago and the leading operator in Chile plus associates in Argentina, Ecuador and Peru has been involved in an aggressive expansion for the last few years and has become one of the most outstanding and renowned carriers in Latinamerica. However the world recession in developed countries and an unfavourable prospect for 2009 have forced Lan to review its coming budgets, more specifically investments. "We've begun to consider next year's budget and obviously we are going to review those investments which are not strictly necessary. We have to be careful" added Cueto "Nobody really knows yet how much the global crisis is going to impact world air travel and profits". Lan profits in the first nine months of the year totalled 218.6 million US dollars, with a healthy monthly 5.4% increase in revenue in spite of higher costs and extraordinary contingencies. Cueto said that Lan so far has not felt the impact in air traffic but the outlook for 2009 is not that certain. In October passenger traffic was 10% higher than the same month a year ago and freight was up 8.7%. "So far we haven't suffered a big impact on the demand side but looking ahead world air traffic according to analysts, the air business could contract up to 15%". However since next year there won't be a significant increase in the number of seats available, it should help to compensate a weaker demand. "We're checking the number of aircrafts to receive, it's not that much, therefore there won't be that increase in capacity, so we have to wait and see, wait for the storm to pass over and Lan will resist" insisted Cueto. He revealed that Lan's supply capacity expansion can be estimated in the range of 0 to 5%, which is considerable more modest than the 15 to 18% of previous years. Regarding costs Cueto cautioned that cheaper fuel is positive, but at the same time a strong depreciation of the Chilean peso and other currencies vis-à-vis the US dollar will make tickets dearer. "Obviously in these circumstances flying becomes more expensive and we need to make fares more accessible, but Lan will find ways to improve its marketing policies", said Cueto. According to the latest Chilean Civil Aviation, (JAC) statistics international traffic in October dropped 5.3%, which is the fourth month so far this year (April, July and September). However domestic traffic in October increased 5.3% over the same month in 2007, totalling 407.417 passengers. In the first ten months of the year Chile had a total of 8.055.768 international and domestic air passengers which is 9.6% higher than the same period in 2007. More specifically domestic passengers' traffic increased 19.3% in Jan-October, totalling 3.906.586. Buenos Aires, Sao Paulo, Lima, Madrid, Miami, Rio de Janeiro, Mexico City, Mendoza and Paris are the main destinations overseas leaving Santiago and make up 65% of international passenger traffic. Lan Chile dominates 50% of the international