LAN Airlines To Acquire Colombian Airline AIRES

NEWSROOM


LAN Airlines To Acquire Colombian Airline AIRES By Bill Goldston

		October 29, 2010 - LAN Airlines announced an agreement to acquire 98.942% of the outstanding shares of Colombian airline Aires Airlines, through the purchase of its parent entities. The acquisition is subject to a due diligence process and compliance with all corresponding regulatory requirements and authorizations, as well as the incorporation of Colombian shareholders into the company. The acquisition price is US$32.5 million, to be adjusted according to variations in Aires Airlines? debt between the value at closing of the transaction and the value as stated in the company?s financial statements as of August 31, 2010. The estimated time frame in order to conclude the due diligence process and finalize the acquisition is between 30 and 60 days from the signing of this agreement. Aires Airlines is a Colombian airline founded in 1980 and is currently the second largest operator in the Colombian domestic market with a 22% market share. Aires Airlines provides scheduled service to 27 domestic destinations within Colombia, as well as 3 international destinations. The company?s fleet consists of 9 B737-700s, 11 Q200 and 4 Q400.

Aires Airlines has suffered a few incidents, notable was the kidnapping of a Dash 8 in 2002 by the narco-terrorist group FARC, planned event to ensure the kidnapping of a senator after forcing the crew to land on a narrow road (with what was demonstrated the skill and poise of the flagship Dorian Ospina, who commanded the aircraft) The plane was damaged but was repaired and returned to work. Another incident was the kidnapping after a Dash 8-300 en route to Florence - Neiva - Bogota by a paraplegic ex-cop and his son, who claimed a benefit to the government, an event that culminated in the peaceful surrender of the kidnappers without unfortunate consequences. Aires Airlines Flight 8250 was a domestic scheduled passenger flight which crashed on August 16, 2010 on the Colombian island of San Andres, in the Caribbean, with two fatalities. The aircraft, an Aires Airlines -operated Boeing 737-73V, was en-route from the Colombian capital Bogota when it crashed while attempting to land in bad weather, breaking into three pieces on impact with the runway. It was the second fatal accident involving a 737-700, and the first one leading to the plane being destroyed. Once the acquisition occurs, Aires Airlines would become an affiliate of LAN Airlines and each Company would comply with the foreign ownership and control regulations in each country where they operate. If the combination with Brazilian airline TAM is successful, Aires Airlines would become part of the new Latin American airline group, LATAM Airlines Group S.A.

This purchase agreement has no impact on the technical support and service consultancy provided by LAN to Colombian airline AEROASIS S.A. in the process of obtaining its operating permit issued by the Colombian Civil Aviation Authority (Unidad Administrativa Especial de Aeron?utica Civil). LAN Airlines is one of the leading passenger and cargo airlines in Latin America. The company and its affiliates serve over 70 destinations around the world through an extensive network that offers full connectivity within Latin America, while also linking the region with North America, Europe and the South Pacific, as well as 70 additional international destinations through its various alliances.

LAN Airlines and its affiliates have a leading position in their respective domestic markets of Chile and Peru as well as an important presence in the Argentinean and Ecuadorian domestic markets. Currently, LAN Airlines and its affiliates operate one of the most modern fleets in the world, with 91 passenger aircraft. LAN Cargo and its respective affiliates have a fleet of 11 dedicated freighters.

The Company has one the youngest fleets in the world which has meant greater efficiency and a significant reduction in CO2 emissions, reflecting its strong commitment to environmental protections. LAN is one of the few Investment Grade airlines in the world (BBB). The company is a member of ?oneworld,? an alliance of leading global airlines of which LAN has been a member for over 10 years.

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