IN COMPLIANCE WITH MARKET REGULATIONS, LAN CLARIFIES FACTS RELATED TO CALCULATION ERRORS CONTAINED IN TDLC RULING
Santiago, September 30, 2011–In compliance with Article 10 of Chilean Securities Law and with LAN‘s obligation to make public relevant information for its shareholders, investors and the market in general, as required by Item 2.2C of Regulation 30 of the Superintendencia de Valores y Seguros (“SVS”), and LAN‘s Relevant Information Disclosure Policy approved by the Board of Directors according to Regulation 211 of the SVS, and also considering repeated concerns from shareholders and other relevant market participants, LAN clarifies the following, in the context of its request to correct calculation errors presented on September 27, 2011 before the Tribunal de Defensa de la Libre Competencia (TDLC), Chile‘s Antitrust Court:
- LAN has fully complied with its self regulatory fare plan and has provided all information required by the TDLC in a transparent, timely and accurate manner;
- On September 26, 2011, through ORD. No. 422, the Junta de Aeronautica Civil (JAC), Chile‘s civil aviation authority, requested that LAN send all information provided to the TDLC related to compliance with its self regulatory fare plan;
- LAN, in a letter to the JAC dated September 28, 2011, sent all the required information in the same manner as it had been submitted to the TDLC. The information LAN submitted to the JAC included the request to correct the calculation errors presented to the TDLC on September 27;
- Through ORD. No. 438 dated September 28, 2011, and addressed to the President of the TDLC and with copy to LAN, the JAC states that “after revising the information, it is the opinion of this General Secretary that the TDLC did not use the correct methodology to calculate the yields. In this sense, we can indicate that the most significant calculation error results from not prorating the fares by the flown segment, which is fundamental to obtain the revenues per kilometer. Not prorating strongly overestimates the results;” and
- Considering the foregoing, LAN reaffirms that the calculations provided to the TDLC are correct and confirm that air travel in Chile is on average cheaper than in the United States, a recognized competitive industry.
LAN considers that, beyond the course of action it may pursue in relation to this process, the Company continues working intensely on the pending activities required to carry out the transaction and is confident that the merger process with TAM will be completed during the first quarter of 2012.
On this date, LAN has published on its website (www.lan.com), as required by its Relevant Information Disclosure Policy, the following documents:
- Letter No. 422 dated September 26, 2011 from the JAC to LAN;
- Letter from LAN to the JAC dated September 29 (SIC) 2011, received by the JAC on September 28;
- Document submitted by LAN to the TDLC dated September 27, 2011, requesting the correction of calculation errors in its ruling dated September 21 in the context of LAN‘s self regulatory fare plan; and
- Letter No. 438 dated September 30, 2011 from the JAC to the President of the TDLC and distributed to LAN.