LATAM Airlines Group reports consolidated financial statements as of September 30, 2012

LATAM Airlines Group reported net income of US$21.3 million in third quarter 2012, excluding a one-time accounting charge of US$70.4 million related to the publication of the law increasing the Chilean corporate income tax rate from 17% to 20%. This figure also excludes US$19.5 million of transaction-related expenses resulting from the business combination between LAN and TAM S.A. (“TAM”) completed on June 22, 2012. Excluding these one-time items, operating income reached US$104.6 million in third quarter 2012, resulting in a 3.1% operating margin.

· The third quarter 2012 represents the first three months of the business combination between LAN and TAM. As such, LATAM Airlines Group began the integration of its business units and the transformation necessary to achieve the estimated merger synergies, implementing adjustments to commercial practices and aligning operations and processes in the international and domestic passenger operations in Brazil. We expect this transformation to lead to the achievement of the expected merger synergies, although in the short term the Company’s results are expected to continue to reflect the transition costs as the businesses become fully integrated.

· The Company has advanced in the turnaround process of the domestic Brazil passenger operations, maintaining capacity discipline during the quarter. Load factors showed an improvement of 10.6 percentage points as compared to the third quarter 2011, reaching 78.1%. However, operating results in this business unit have been impacted by the 24% depreciation of the Brazilian real as well as by an industry accommodation in the fare structure in the domestic market in order to operate at higher load factors accompanied by a decreased demand for corporate travel.

· Total revenues in the third quarter 2012 reached US$3,344.9 million compared to pro forma revenues of US$3,476.8 million in third quarter 2011. The decline of 3.8% is a result of a 2.4% decrease in passenger revenues and a 14.4% decrease in cargo revenues, partially offset by a 19.6% increase in other revenues. In addition to the challenges related to the transition to LATAM Airlines Group and to the turnaround of the Brazilian domestic operations, operating revenues this quarter reflect the negative impact of the depreciation of the Brazilian currency and continued weak market demand in the cargo business. Passenger and cargo revenues accounted for 84.2% and 13.4% of total revenues, respectively, during third quarter 2012.

· The work done during the first months of integration has allowed us to reaffirm our synergy target of between US$600 and US$700 million, to be fully achieved by the fourth year after the merger. The international passenger and cargo business units have made progress to deliver the estimated synergies. Passengers of both LAN and TAM are directly benefiting from improved connectivity, cross-selling and easier access to more destinations via new codeshares. The Company has established new and improved agreements with international carriers, and has aligned certain commercial practices as well as parts of the on-board product for certain routes. In addition, LAN and TAM have published new operations on regional routes. Regarding cargo operations, in August the Company completed the integration of the international cargo systems of LAN and TAM, which allowed for increased efficiencies in the distribution network.

· In September, LATAM received its first Boeing 787-8 Dreamliner and became the first airline in the Americas (and one of the first in the world) to operate this modern and efficient aircraft. LATAM currently operates two 787s on routes between Santiago and Buenos Aires and Santiago and Lima. Additionally, the Company received a total of 6 Airbus A320, 4 Boeing 767-300, 2 Boeing 777-300ER passenger aircraft, and 1 Boeing 777 freighter aircraft during third quarter 2012.