Lan Airlines S.A.'s (Lan) ADR price has gained substantially since our last update report and achieved our ADR target price on 01 June 2009. The rally in the ADR price reflects broader market movements. Moreover, preliminary monthly traffic statistics and punctuality indicators for April 2009 indicate an increase in passenger traffic. However, following the appreciation in ADR price, we believe its upside potential has been exhausted…

We expect a relatively steep y-o-y decline in Lan’s total operating revenues in FY 2009, primarily due to an expected deterioration in both passenger and cargo yields and an expected decline in cargo volume, only partially limited by higher passenger traffic as a result of the company’s expanding operations. Overall expected yield decline partially reflects our expectation of the removal of fuel…

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Lan Airlines S.A’s (Lan) reported strong revenue growth during 3Q 08, surpassing our estimate given higher than expected growth in passenger and cargo traffic as well as significant increase in yields. Its operating and net income benefitted from top-line growth and a decline in operating expenses. Going forward, revenues are expected to benefit from sustained strength in Lan’s domestic and regional routes given its capacity expansion plans....