LATAM Airlines Group S.A. (LAN Airlines and TAM Linhas Aereas) (Santiago) has announced a second quarter net profit of $49.7 million. This is the first financial report for the group. Here is the full statement.

“LATAM Airlines Group has announced its consolidated financial results for the second quarter and for the six months ended June 30, 2012. “LATAM” or “the Company” makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S Dollars, except for TAM S.A. (“TAM”) second quarter 2012 Income Statement figures, which are expressed in Brazilian reais.

HIGHLIGHTS

•   LATAM Airlines Group S.A. today reported its first consolidated financial results for the second quarter and first half of 2012, following the successful completion of the exchange offer and mergers that combined the businesses of LAN Airlines S.A. and TAM S.A. (“TAM”). Because the transaction was completed on June 22, 2012, results for the period ended June 30, 2012 include the last eight days of TAM results, from June 23 to June 30, 2012.
•   Net income of LATAM Airlines Group reached US$49.7 million in the second quarter 2012. Operating income reached US$23.2 million, resulting in a 1.5% operating margin for the second quarter 2012. Consolidated LATAM results include net income of US$46.3 million and an operating loss of US$13.9 million corresponding to the eight days of consolidation of TAM between June 23 and June 30, 2012. Non-operating results for this eight day period reflect a foreign exchange gain of US$57,4 million and a positive mark-to-market of fuel hedging derivatives in the amount of US$ 26,7 million, as a result of the appreciation of the Brazilian real and an increase in the price of fuel, respectively, during the last eight days of the quarter.
•   The second quarter 2012 presented a challenging environment due to reduced cargo demand and the depreciation of local currencies, especially the Brazilian real. However, passenger demand in most of Latin America remains solid and the successful completion of the business combination between LAN and TAM provides the Company with a more diversified revenue base and significant growth and synergy opportunities. Furthermore, the domestic Brazil market has shown sustained capacity discipline, providing the basis for improved profitability.
•   LATAM Airlines Group is advancing in the process of achieving the expected synergies from the business combination with TAM. Regarding its international passenger operations, the Company has established fare combinability between LAN and TAM, cross selling of LAN and TAM flights, and code shares on various international routes, such as Santiago – Orlando, Santiago – Madrid, and Santiago – London. Cross selling will assist the Company in capturing connectivity synergies by offering our customers a single network in a one- stop shop.
•   In July 2012, the cargo divisions of LAN and TAM were integrated, taking advantage of the highly complementary nature of their operations.
•   On September 4, 2012, LATAM Airlines Group will hold an Extraordinary Shareholders’ Meeting in order to reelect the Board of Directors of the Company, as well as to approve the placement, through a preemptive rights offering to LATAM shareholders, of the remaining 7,436,816 shares of the Company that were authorized for the TAM exchange offer, and that were not exchanged.

LATAM Airlines Group S.A. 2Q12