REPORT 2011 A TICKET TO THE FUTURE - CheCked by - LATAM Airlines
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUSTAINABILITY
REPORT 2011
A TICKET TO THE FUTURE
Checked by
Welcome
2
I. Welcome
GRI 1.1
Letter from the Chairman of the Board
The present document represents an open invitation to read our Sustainability
Report for 2011 and, an opportunity to thank everyone at LAN for their daily
efforts to cater to the needs of millions of passengers and cargo clients who
have done us the great honour of choosing our services over others, and for all
their efforts, commitment and dedication. All the aforementioned contribute
toward enriching the public’s opinion of the company.
Jorge Awad M. In this, our second Sustainability Report, we endeavour to provide all the possible
information about our company in the hopes of answering the questions most
relevant to our groups of interest. We are encouraged by the recognition
received from “Acción RSE” for our 2010 Sustainability Report, celebrated for its
transparency and balance, characteristics we have established as fundamental
to documents of this nature. They provide the guidelines by which the Report
for 2011 was created and verified by an independent appraiser, we have given
it a B+.
In the current economic environment we have gone through periods I would
personally like to highlight, such as the merger between LAN and the Brazilian
company TAM, which has made us the largest airline in Latin America, and
confirmed our relevance in the global industry. In the same vein, on our way
to becoming a strong presence in region, the acquisition of the Colombian
airline Aires is also noteworthy, its conversion to LAN Colombia has granted the
company access to an important market in South America.
In regards to our commitment to the environment, in 2011 we measured our
carbon footprint and began working on a project to incorporate biofuels into our
daily operations. This may offer a real opportunity to incorporate biofuels into
commercial flights and help develop the aviation industry in a sustainable way.
At the same time we have, for the first time ever, reported on the environmental
performance of our company operations in the Carbon Disclosure Project (CDP);
said project gathers all the available information on the carbon emissions from
every major company in every industry the world over. In terms of efficiency, we
have installed elements that improve aerodynamics (winglets) on all our Boeing
767s, and we have also begun implementing more efficient navigation systems
(RNAV) on flights in the region allowing us to make important improvements
to our operations and our service.
3
During 2011 we reasserted our commitment to develop and promote
sustainable tourism creating job opportunities in every area we as a company
operate in, working in conjunction with promotional entities in some regional
governments. In addition to this we have made definitive progress in developing
our flagship CSR Project “I Care for my Destination” which has led to further
commitment in new locations in South America such as San Carlos de Bariloche,
Santa Cruz in the Galapagos Archipelago, Easter Island/Rapa Nui and Arequipa
as well as locations the company is already working in.
Considering our human resources, we invested in training for 80% of our people
during the period in question ensuring competitiveness in the global aviation
industry; we have also taken great strides in hiring people from a variety of
places by prioritising hiring personnel in countries we have the most presence
in, enriching culture in the workplace.
We look to the future with great optimism as we take important steps
toward ensuring our competitiveness in the world’s aviation industry. The
decisions taken to invest in, expand and renew our fleet over recent years
are a demonstration in themselves that the vision and strategic planning
implemented on a day to day basis are the right ones.
We trust that the present Sustainability Report will provide valuable information
about our company.
Cordially,
Jorge Awad Mehech
Chairman of the Board LAN Airlines S.A.
4
LETTER FROM THE CEO
During 2011 the airline business was faced with high fuel prices and financial
instability in Europe and The United States. Our operations were quite affected
by the eruption of the Puyehue-Cordon Caulle volcano, a natural phenomenon
that affected air traffic in parts of South America and the South Pacific route,
which meant the company was unable to fulfil scheduled flights planned for
that period.
Enrique Cueto P. In that climate the company was capable of dealing with adverse conditions
and, overcoming those difficulties, was able to grow and continue generating
value for its shareholders, staying true to our world class service for passengers
and cargo clients alike. During this time we secured new routes such as Lima
– Easter Island/Rapa Nui, Lima – Iguazu and Quito – Guayaquil – San Cristobal
on the Galapagos Islands. At the same time we kept to our commitment of
offering tariff structures that have made it possible for so many more people to
fly to countries in the region; an example being that in the last seven years the
cheapest tickets have decreased by an average of 15% for the most travelled
routes in South America. Our cargo business also grew broadening transport
services for exporters in our part of the world.
During the period there were significant advancements in the merger with TAM,
Brazil’s largest airline; unrestricted approval was granted by the authorities
governing free competition in Germany, Spain and Italy. In the meantime all
the necessary authorization was granted in both Brazil and Chile hinging on
the fulfilment of certain mitigation measures. Once the shareholders at LAN
approved the operation, all the technical and preparatory work began in
anticipation of the merger of both companies, which will finalize at the end of
June 2012.
In this fashion a new holding was born called LATAM Airlines Group, which
brought both LAN and TAM under one name. However both companies will
maintain their own corporate identity, and respective brands. The joint operation
will include over 300 planes and transport a little over 60 million passengers a
year and close to 1 million tonnes of cargo, making it the most transcendental
operation in LAN’s history. The association with TAM will also give LAN access
to the Brazilian market, the most important market in commercial aviation in
Latin America.
5
During 2011 we all also restructured the Colombian company Aires which
was acquired toward the end of 2010; a series of operational changes were
implemented, modifications were made to itineraries and improvements
in efficiency. The aforementioned changes were made in an effort to reach
LAN standards in safety, punctuality and service. The process was finished
in December of 2011, when the company was renamed LAN Colombia. This
inclusion marked the entry of the fifth Latin American country into the
corporation with domestic passenger flights and led to the addition of 23 new
destinations in the LAN network. The Colombian economy is one of the most
important in Latin America and its passenger market is second after Brazil. It’s
worth noting that the Colombian market has the potential of becoming a hub
for international passenger flights and LAN cargo operations.
I would like to take the opportunity to thank everyone at LAN for their sincere
efforts in day to day operations, efforts that will make the company one of the
most important in the global industry. Let’s be proud.
Cordially,
Enrique Cueto Plaza
Executive Vice-President LAN Airlines S.A.
6
Our
Company
7
II. Our Company
Main figures for LAN during 2011
GRI 2.8
The company1
149 Airplanes in the LAN fleet
15 Awards won for CSR, Quality, E-commerce and Tourism
63 LAN and subsidiary memberships
1.149 Daily ticket transactions through LANPASS
1.682 Shareholders registered as of the 31st of Dec. 2011
320,2 Net profit in US$ Millions.
Income from ordinary activities (passengers + cargo excluding other income) in US$
5.585,4 Millions
1.457,4 LAN corporate patrimony in US$ Millions
6.191,3 Total LAN liabilities in US$ Millions
Accidents on flights resulting in severe injury to passengers, crew or damage to
0 planes since 1991
…of LAN operations including passenger and cargo subsidiaries were certified by
100% IOSA
1.603 Volunteers in the Passenger and Family Assistance group (PFA)
Areas covered by LAN’s Sustainability Strategy: Operational excellence, ethics,
8 clients, environment, community, suppliers, human resources and safety
100% …of personnel working at LAN are provided and comply with a code of conduct.
1. Given the mix in LAN businesses it is no longer relevant what countries tickets are sold in or where transactions take
place. This is why sales and costs are not indexed by country.
Clients
67% …of cargo clients indicated they were satisfied with LAN CARGO services.
The cheapest airfare for the 5 most travelled routes in the region have decreased over
15% the last 7 years.
68% …of LAN passengers buy tickets and fix problems using LAN.com
8
Suppliers
…of the money used for corporate purchases was spent on suppliers in countries with
82% domestic operations.
HUMAN RESOURCES
27.915 People under direct or indirect contract.
4.254 Internal mobility by personnel working for the company.
72,8% …of the main executives at the company come from local communities.
86% …of personnel hired indefinitely participated in some form of training.
704.128 Total amount of training hours.
43% …of the total workforce are women.
47% …of personnel at LAN are affiliated with a union.
2,4 Accident and injury incident rate.
Community
Of our publicity budget is spent on positioning destinations and locations in South
30% America.
…locations in South America were recovered thanks to the “I Care for my Destination”
8 program.
…collaborators with LAN participated as volunteers for the “I Care for my Destination”
300 program in Argentina, Chile and Peru.
…children were given a tour of company facilities and in some cases had their first
5.000 ever flight experience through the “Getting to know LAN” program.
2.244 …tickets donated to humanitarian aid institutions or other related projects.
Environment
104.792 …less tonnes of CO2 released into the atmosphere thanks to the LEAN Fuel program.
6,7 Average age of the LAN fleet, one of the most modern fleets in the world.
73,3 Kg. CO2/100 Km. Per passenger
33.397 Megawatt per hour; LAN’s power consumption.
100% …of our fleet complies with Chapter III of the OACI.
9
Our Business
83 years in the air!
GRI 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7
We are one of the leading passenger
airlines in Latin America and the
main cargo operator in the region.
PORT
Beyond being a simple transport RANS
company, we represent the ideal E RT
of an integrated business model. PASSE N G
Our success is by and large due to
the mixed character of our flights,
combining both cargo and passenger
elements. This goes hand in hand
with our concern for sustainable
NS
development and our continuing TRA POR
O T
efforts towards activities that
RG
benefit all our groups of interest.
CA
LAN is a global company present
S . ..
on the American Continent
ER
though mainly concentrated in
South America. We have internal H
operations in Argentina, Colombia, OT
Ecuador, Peru and Chile, the
Sketch of LAN business
latter home to the company’s
headquarters. The other side of the
business (cargo operations) has
its own operational headquarters
in Miami and subsidiaries in Brazil,
Mexico and Colombia
LAN PASSENGER COMPANIES:
LAN Airlines, LAN Argentina, LAN Peru, LAN Colombia and LAN Ecuador.
10Cargo companies:
LAN CARGO OPERATIONAL HEADQUARTERS
MASAIR, MEXICAN SUBSIDIARY
MIAMI
ABSA, BRAZILIAN SUBSIDIARY LANCO, COLOMBIAN SUBSIDIARY
From a legal standpoint our company is a publicly held corporation registered as LAN AIRLINES S.A.
before the Chilean Super-intendancy of Securities and Insurances, with stock in the Stock Exchange
of Valparaiso, the Chilean Electronic Stock Exchange and the Santiago Exchange, as well as the New
York Stock Exchange (NYSE), all of it in American Depository Receipts (ADRs).
GROWTH IN THE REGION
GRI 2.9
In order to offer better service and greater Together with the aforementioned and in
coverage for our cargo and passenger clients, in conjunction with an integrated and sustainable
November 2010 LAN bought the local Colombian vision, the company established the corporate
airline AIRES. On the 5th of December 2011 this mission, Vision and values of the subsidiary,
was made official with the brand name changing including organizational structure. Performance
to LAN Colombia, becoming the fifth country assessments were implemented, and the first
with domestic passenger services. With this new survey into climate in the workplace “Great Place
subsidiary LAN added 23 new destinations to its to Work” was implemented, and the company
network, including 27 routes between cities in inaugurated the corporate building.
said country as well as an increase in traffic along
However, incorporating LAN Colombia wasn’t the
the direct route between Bogota and Miami.
only step taken in 2011. The merger between LAN
The change from AIRES to LAN was the product of and the Brazilian airline TAM was announced; the
a lot of effort, far beyond what might be imagined merger is scheduled to come into effect toward
as a simple coat of paint or change of logo. The the end of the first semester of 2012. The new
change covered areas such as safety, operations holding will be called LATAM Airlines Group and
and human resources. It also included opening will be the largest of its kind in Latin America.
more commercial offices all over Colombia, The merger will benefit our passengers as the
commercial and operational integration with the number of available flights will increase.
LAN flight network as well as a wide variety of
other aspects.
11our Fleet
GRI EC2 / GRI EN6
LAN operates one of the most same time optimises costs through
modern fleets in the Americas and fuel efficiency. This is all done in
constantly and consistently seeks the sincere hope of providing our
new technology to help reduce passengers and cargo clients with
contaminating emissions in an an efficient and environmentally
effort to mitigate the effects of friendly service.
climate change, as well as increase
An example would be the
fuel efficiency. As a company
purchase of the 32 Boeing 787-8
its fundamental we continually
Dreamliners, the first of which will
innovate to increase the efficiency
arrive during 2012. This particular
and safety of our fleet for
plane has been certified as the
passengers and cargo clients as
most eco-friendly plane in the
well as our people in the air and on
industry as it consumes less fuel,
the ground.
drastically reducing CO2 emissions
As of December 2011 our fleet compared to its predecessors;
numbers 135 passenger planes the planes turbines also produce
and 14 cargo planes, each of significantly less noise. 2011 also
them possessing several unique saw the gradual replacement of
characteristics dependent on the Airbus 318s with Airbus 320s
activities they engage in. It is worth which has resulted in a 10%
noting that the average age of a reduction in CO2 emissions per
plane in our fleet is 6.7, 0.2 years kilometre/passenger.
less than the average in 2010.
To reach the highest possible
standards in safety, quality and
sustainability we are constantly
striving to renew our fleet which in
itself helps reduce CO2 emissions
per kilometre/passenger and at the
12As of December 31st 2011 Rented Owned Total
2011 Passenger Fleet 43 92 135
Dash 8-200 10 0 10
Dash 8-Q400 4 0 4
Boeing 737-700 9 0 9
Boeing A318-100 0 10 10
Boeing A319-100 0 24 24
Airbus A320-200 9 33 42
Airbus 767-300 10 21 31
Airbus A340-300 1 4 5
Cargo Fleet 6 8 14
Boeing 777-200F 2 0 2
Boeing 767-300F 4 8 12
Total 49 100 149
13Boeing 787-8 Dreamliner There are also new air humidifiers installed in
the cabin area which help reduce fatigue and
A Little about the plane dryness so common in long haul flights
The plane is outfitted with auto-dimming Smart
glass window panes and dynamic lighting Passengers are likely to have a far more
which allows for a better lit cabin environment. pleasant flight experience thanks to the quieter
This particular technology simulates the light turbines, reducing noise levels both inside and
conditions outside the plane adjusting to outside the cabin.
night and day as well as the time zone of the
destination. What makes the plane so eco-friendly?
Cabin Windows are bigger with 40% more Up to 20% less CO2 emissions compared to
surface area than the current cabin windows on similar planes.
commercial flights; as a result passengers have
better visibility and subsequently better views
(from every seat on the plane).. Up to 40% less noise pollution than similar
planes during take-off, the noisiest stage of any
flight.
There is 30% more room in the overhead
luggage compartments.
50% of the main structure is a composite
material consisting in carbon fibre, which
The Boeing 787’s aerodynamics incorporate makes it a pioneer in design in the industry,
impact reduction technology which reduces the said material being the most resistant to
sensation of turbulence during the flight. Cabin fatigue and corrosion. This also translates to
pressure at lower altitudes (6,000 feet instead less non-recyclable waste produced during the
of 8,000) will have the effect of reducing manufacturing stage.
headaches among the passengers as well as
other uncomfortable symptoms a passenger
may experience during the flight.
14Safety:
A priority.
GRI 4.11 / GRI PR1
For LAN safety is a priority that takes precedence of nearly all others, that is why the company has
put in place equipment and procedures to guarantee said fundamental priority; we are concerned
with our performance diligently striving to act with professionalism and true commitment to our
cargo clients, our people and other groups of interest. This is why, since 1991 our company has a
record of zero accidents involving serious injury to passengers, crew or damage to our planes.
To uphold this achievement safety concerns and measures start on the ground where experts go
through extensive checklists and procedures to verify everything is in complete working condition.
To ensure these measures are taken LAN has introduced the following five areas into its management
plan:
Security
Safety
Safety
Emergency
Audits
Occupational safety
Operational Safety In conjunction with the previously mentioned
aspects of flight safety, there are also
Operational safety includes all the established safety measures taken during maintenance;
procedures to guarantee safety and correct said maintenance workers are in charge of
functioning of a flight during every stage. In safeguarding all the measures taken in caring
this particular sketch we have indicated three for the planes. Lastly, the company also runs
important areas that safeguard operations, constant monitoring of in flight data and
in flight safety being the first; in flight safety preventative operational checks.
covers investigation into incidents, reporting
and observation during the flight, as well as an
inspection/audit of the cargo area.
15CORPORATE SECURITY
As safety is essential to LAN operations, it PASSENGER AND FAMILY
is also fundamental we provide adequate
protection against any threat or legal action;
ASSISTANCE
said protection must cover every flight, plane, (PFA Program)
passenger, crew members, ground personnel, The Passenger and Family Assistance
airport facilities and other services related to group (PFA) is a volunteer group intended
commercial aviation. In LAN, the area in charge to encourage employees to commit to
of ensuring said security is called “Corporate the company. Those forming part of the
Security” and is responsible for assessing, group dedicate a portion of their time to
analysing and assigning risk levels for domestic collaborate in the event of an accident.
and international operations, suggesting
security measures for each possible scenario. In addition to being prepared for a
contingency, the interaction between
CRISIS MANAGEMENT volunteers is one closely related to the
company and its operations and in itself is
In case of an accident, epidemiological
proof that they form an integral part of the
contingency, natural disaster or any other
corporation and gives them the opportunity
serious incident, LAN has elaborated an
for personal and emotional growth.
Emergency Response Plane (ERP) which will
mitigate any impact on the passenger, their In 2011 1,603 volunteers were registered
families and flight operations. The plan has members in Family Assistance, distributed
inbuilt emergency procedures that work throughout Chile, Argentina, Peru, Ecuador
closely with a Response Centre as well as a and the United States, sufficient amount
technological investigation centre and a rapid of volunteers to assistant both passengers
response team. and families in any company forming part
of the group.
SECURITY AUDITS
To ensure the correct functioning of all of
our procedures and mechanisms concerning
security, we have an audit area in place
responsible for verifying that indeed every area
has adhered to the IOSA and ISAGO program in
LAN and its subsidiaries.
16The Safety and Quality Management System During 2011 LAN and all its subsidiaries in both
certified by IOSA and ISAGO includes all safety the passenger and cargo business were certified
regulations and procedures as well as specific by IOSA. ISAGO certification was given to the
training programs for our people. All the following: LAN Argentina (Headquarters and the
aforementioned clearly define the functions and Cordoba Station); LAN Airlines (Headquarters and
responsibilities in matters of Safety & Security. the Miami Station); LAN Ecuador (Headquarters
In the same manner the system also reinforces and the Quito Station).
the commitment and the knowledge necessary
regarding any subject that may affect safety.
What is IOSA?
The IATA Operational Safety Audit (IOSA) is an internationally recognised assessment
system designed to evaluate operations management and an airline’s control system. The
underlying principles of the IOSA quality audit are designed to carry out standardised audits
in every operational process.
What is ISAGO?
The implementation of the IATA Safety Audit for Ground Operations (ISAGO) is a tool that
makes it possible to control and improve operational safety, as well as reduce airline costs by
drastically reducing the amount of accidents and injuries. ISAGO is developed by IATA based
on the IOSA program (IATA Operations Safety Audit).
17Our Corporate Government
Directory
GRI 4.1, 4.2, 4.3 / GRI 4.7
Chairman
Jorge Awad Mehech
Directors
Darío Calderón González José Cox Donoso Juan José Cueto Plaza Juan Cueto Sierra
Ramón Eblen Kadis Bernardo Fontaine Talavera Carlos Heller Solari Gerardo Jofré Miranda
A company backed by an experienced corporate standards and company regulations and
government is in itself a sign of transparency, ultimately making strategic decisions in benefit
ethics and proper conduct. LAN has a board of of the shareholders and other groups of interest.
directors that has led the company through
Our Board of Directors gathers every month and
clear and innovative management that has
in extraordinary sessions whenever social needs
successfully incorporated a vision of sustained
so require. The chairman of the board does not
development in all its corporate activities.
have an executive position in the company and is
LAN’s Board of Directors consists of nine named considered an independent entity. This structure
members, every which one of them vastly was established in 1982 and remained ever since.
experienced with long careers in corporate
Regarding the remaining board members they
business. They are elected every two years
too hold no executive positions in the company.
at the Annual Shareholders’ meeting; their
responsibilities include upholding ethical
18DIRECTORS COMMITTEE
GRI 4.6
Of the nine members of the board of directors three are in the Directors’ Committee which fulfils the
role stipulated in the Public Limited Company Act, as well as the functions of the Audit Committee as
required by the Sarbanes Oxley Act in The United States of America and the corresponding regulations
stipulated by the SEC.
To better understand the role of this particular committee (said committee gets together on a monthly
basis) the following is a list of their corresponding functions: to break down and examine external
audit reports; analyse the balance and other financial statements, examine the wage system and
compensation plans for managers and head executives and to analyse operational history related to
the aforementioned positions.
BOARD SALARIES
GRI 4.5
During 2011 a total of US$184,640 was paid to members of the board, said payments unrelated to
other variables. The details of said salaries are indicated in the table below.
Directors’
Board
Board Salaries Position Committee Salary
Salariy(US$)
(US$)
Jorge Awad Menech Chairman 30.416,40 16.646,16
Darío Calderón González Director 13.035,60
Juan Cueto Sierra Director 13.035,60
Ramón Eblen Kadis Director 13.035,60 16.646,16
Juan José Cueto Plaza Director 13.035,60
José Cox Donoso Director 13.035,60
Juan Gerardo Jofre Miranda Director 13.035,60 16.646,16
Bernardo Fontaine Talavera Director 13.035,60
Carlos Heller Solari Director 13.035,60
19OWNERSHIP STRUCTURE
LAN is controlled by the Cueto Group represented form of ADRs (American Depositary Receipts)
by Costa Verde Aeronáutica S.A. and Inversiones traded on the New York stock Exchange (NYSE).
Mineras Cantábrico S.A.
The following graph and table indicate the
As of the 31st of December 2011 there were a company’s ownership structure and the main
total of 1,682 shareholders on record where shareholders at the closing of 2011.
2.99% of ownership of the company was in the
Main Shareholders Shares % of the total
Costa Verde Aeronáutica SA 90.575.407 26,61%
INV Andes SA 22.288.695 6,55%
Inversiones Nueva Costa Verde Aeronáutica LTDA 17.745.000 5,21%
Axxion SA 13.551.637 3,98%
Axxdos SA 13.551.636 3,98%
Larraín Vial SA Corredora de Bolsa 12.216.292 3,59%
Banco de Chile C de B SA 11.368.599 3,34%
J P Morgan Chase Bank 10.182.261 2,99%
INV Mineras de Cantábrico SA 7.079.095 2,08%
Banco de Chile por Cuenta de Terceros No Residentes 6.664.072 1,92%
AFP Provida SA para FDO Pensión C 5.841.605 1,72%
Celfin Capital SA C de B 5.655.969 1,66%
20Executive Level
Our company has an executive and management team led by 10 members distributed
throughout every area and key business in the company; said executives possess the profiles
and competencies necessary for their respective positions and the development of each area.
Enrique Cueto Plaza
Executive Vice-President of LAN Airlines
Ignacio Cueto Plaza
General Manager of LAN Airlines
Alejandro de la Fuente Goic
Vice-President of Corporate Finance of LAN Airlines
Armando Valdivieso Montes
General Manager of LAN Passenger Airlines
Cristián Ureta Larraín
General Manager of LAN Cargo Airlines
Roberto Alvo Milosawlewitsch
Vice-President of Research, Planning and Management of LAN Airlines
Cristián Toro Cañas
Vice-President Legal Affairs of LAN Airlines
Enrique Elsaca Hirmas
Vice-President of Operations and Service of LAN Airlines
Emilio del Real Sota
Vice-President of Human Resources of LAN Airlines
Pablo Querol
Vice-President of Corporate Affairs of LAN Airlines
Bruno Ardito
Director of Corporate Relations and CSR of LAN Airlines
21Risk Management
GRI 1.2 / GRI 4.9, 4.11 / GRI EC2
The risks inherent to our operations and the
aeronautical industry, as well as the economic
climate, social environment and environmental
conditions in the countries we operate in are
factors that have direct influence on operational
management.
The possible risks are constantly assessed and
managed by each one of the areas and divisions
in the company in every country we operate
in; these risks have led to the establishing of
specific procedures to control them and reduce
their impact. This is why different risks, once
identified and managed, are monitored and
the board informed at their monthly meetings.
The following are the main risk factors we have
identified so far:
In the economic aspect, we find ourselves in there
are fluctuations in supply and the cost of fuel, as Our people are a fundamental part of our
well as fluctuations in Exchange. Accessibility to management strategies and a pillar of our
airports and route maintenance are key to our success. Their importance has great weight
operations functioning correctly, should these in cases such as collective agreements with
elements go awry, company operations could unions; stagnant negotiations with the unions
be jeopardised. Our company depends on the most definitely constitute a risk. Difficulties
demand for air transport of cargo and passengers; in personnel training and the creation of new
demand accompanied by both local and global talent, as well as retaining qualified people are
economic growth. LAN operates using Airbus also potential risks.
and Boeing planes which means, if they are not Environmentally speaking we are faced with the
delivered to the company in timely fashion our possibility of adverse weather conditions. Global
operations are put at risk. Lastly, a difference in and local environmental legislation amended
the interests between majority shareholders and to fit the times and maximum limits imposed
the remaining shareholders also constitutes a on CO2 emissions are also risks pertaining to
risk. the environment. These risks have led to the
In the social environment we have assessed incorporation of innovative technology into
the possibility of external contingencies such operational procedures in an effort to mitigate
as epidemics, war, natural disasters and others. the effects of climate change.
Loss and obligations stemming from possible
accidents in the air, terrorist attacks and other
incidents are also external factors that are
included in our assessments.
22CORPORATE MISSION; VISION AND VALUES
GRI 4.8
Mission • Efficiency: A factor we consider key to
sustainability. We create structures and
To transport dreams and do our utmost best to simple processes that allow us to provide
attract customer and community preference and timely and effective answers and solutions.
in so doing, build a sustainable company where We work as a team and coordinate to
people love to work. maximise our time and resources. We control
Vision costs without ever putting our core qualities
at risk, such as safety and level of service.
To be recognised as one of the top ten airlines in
the world. • Warmth: The way we relate to our clients.
We value everyone working with us or for
Values us and treat them with nothing but respect.
We have four key values: We are known for hospitality, politeness and
our concern for people. We trust in people
• Safety: A non-negotiable trait as reflected in
and their work and celebrate their daily
the level of care we have for our passengers
contributions. We work towards solving
and employees. In every activity and in
problems as a team and we recognise every
all the decisions we make, safety is a key
achievement across the board.
element and in all cases, compliant with the
highest possible standards in the industry.
• The ability to overcome: Part of our DNA,
we share objectives and propose challenging
goals. We constantly strive to be the best on
a daily basis, we are open to change and we
sincerely love innovation and use it often to
overcome the obstacles we are faced with.
ETHICS AND TRANSPARENCY
GRI SO2, SO3 / GRI HR3 / GRI 4.6
Transparency, ethics and responsibility are virtues that LAN as a company are committed to and are
upheld through our people and adhered to in each and every one of our businesses and operations.
As a result we always encourage our staff to comply with the highest possible standards based on our
key values; Safety, the Ability to Overcome, Efficiency and Warmth; these are the four central pillars
on which we base everything we do:
23Code of Conduct
Alignment with our people is of fundamental importance for our
success. To achieve this we have established a code of conduct
that watches our complying to the highest possible standards
of ethics; said code also guides us on matters concerning
various issues such as interpersonal relations, human rights,
behaviour, regulations concerning conflicts of interest and the
required compliance with normative regulations. This code,
given to the entire workforce at the company, is supervised by
a management committee with an accompanying reporting
channel, and forms part of the content in the company’s basic
training program, where current collaborators also participate.
Code of Ethics for Top-tier Financial Executives
The main objective is to promote honesty and ethics concerning
the disclosure of financial information, compliance with company
regulations and the absence of conflict of interest. This particular
code of ethics is applicable to top-tier financial executive positions
in the companies forming part of the LAN group.
The “Handling Information of Interest” Manual
Despite the manual being a required item as stipulated by the
Super-intendancy of Securities and Insurances, also required
according to stipulations in Law N° 20,382 on Corporate
Government, and also a requirement according to Stock market
legislation, LAN made the conscious decision to go a step further
by creating regulations governing disclosure of operational
information, voluntary cessation of the purchase and sale of
shares, devices used to continually distribute information of
interest to the market and safeguard mechanisms for LAN
employees and executives concerning confidential information.
Compliance Program for Company Regulations
The program is put in place to ensure compliance with the rules
and regulations governing LAN business and other activities in
the various countries the company operates in. Compliance with
said program and its development is under the supervision of the
Board of Directors and the Directors’ Committee.
24Awards
GRI 2.10
• 1st place, category “Sustained • 2nd place: Staff Service Excellence – South
Development”. Chilenter Awards. America, SkyTrax World Airlines Awards
2011.
• “Most socially responsible tourism
company 2011”, Fedetur Awards. • “Airline of the year 2010”, by the
magazine AirFinance Journal, AirFinance
• LAN is awarded by the Chilean Agency for Journal Awards.
Energy Efficiency in the transport category.
• Award for LAN.com as an e-commerce,
• 1st place “Chilean Ranking for Corporate 2010, E-commerce LATAM 2010.
Transparency and Credibility”, Universidad
del Desarrollo e Inteligencia de Negocios. • First place, category E-commerce in tourism
by Turismo Award.
• “Most balanced and transparent
Sustainability Report”, Best Sustainability • Most outstanding company of 2011, La
Report Award, Acción RSE. Segunda and Adimark.
• LAN is singled out as one of the “7 best • Most Outstanding overseas company 2011,
airline Sustainability Reports in the world”, Qué Pasa and Universidad Adolfo Ibáñez.
PwC Publication.
• Most reputable company, Merco.
• 9th position as the most responsible
company, Merco. • Third place in Leaders with the best
reputation, Merco.
• 2nd place, Best Airline South America,
SkyTrax World Airlines Awards 2011.
25Our Clients
PASSENGER SATISFACTION AND EXPERIENCE
GRI 2.7 /GRI PR5
Relying on quality products and services is In a case like this the platform provides the
an acquired commitment at LAN. Given our clients’ contact information for those people
permanent concern with creating long-term affected by the delays or cancellations. In said
relationships with a passengers and cargo clients, fashion the company is able to anticipate their
we have diverse mechanisms in place to ensure needs and inform the passengers of the change
they have the best possible experience and are in their itinerary and in so doing, minimise any
left well satisfied with all of our operations. inconveniences.
THE TRAVEL EXPERIENCE
“68% of our clients purchase
For LAN, providing the
best possible experience
a ticket or solve their
for our passengers is a problems using our virtual
fundamental concern, platform.”
especially considering our
vision of becoming one of
the top ten airlines in the
world. Another concern is how we maximise the use of
For that we have diverse teams of people that the passengers’ time and endeavour to make
monitor, check and assess each stage of our them comfortable and, LAN.com provides a ready
service starting from the purchase of a ticket to solution. LAN.com is the main web platform for
the arrival at the desired destination. our company; clients can purchase tickets, pay
for bookings, change tickets, check in, reserve
Among the innovative elements the company
seats, request flight information, buy ground
has at its disposal, the company has a few
based programs and purchase travel assistance.
more noteworthy tools used to improve the
The platform is continually updated and, as such,
passengers’ travel experience, they are the
is capable of offering solutions for passenger
following: a customer service and relations
problems.
platform that stores all strategic information
and client history, all of which feeds LAN’s
“Customer Relations Management” platform
(CRM). LAN uses said platform to manage
passenger notification procedures for delayed or
cancelled flights.
26FEEDBACK AND PERMANENT to participate, adding their input to the
management and strategy of our businesses,
IMPROVEMENT
making surveys an important tool indeed.
Our Customer Service areas are in charge of Measuring passenger satisfaction takes place at
attending to our passengers’ needs during each point of contact with the company (sales
every stage of our services, which means offices, call centres, LAN.com, airports and on
analysing, integrating and managing comments, flights), gathering information on a monthly
improvements and complaints received through basis and through specific surveys for each point
the various service channels available; said of contact.
channels operate round the clock, 7 days a week
online, by telephone or e-mail. In addition to the
above we have created development centres that
Percentage of Customer Satisfaction
provide feedback from customer comments and (Passengers)
will aid in implementing future improvements.
2010 54,7%
SATISFACTION SURVEYS
Gauging customer satisfaction is a constant
2011 54,6%
process in passenger transport services as well * Since 2011 the methodology used to measure customer
as cargo services, given that through them we satisfaction was adjusted to improve the quality of
can monitor the effectiveness of the measures information and its coverage. Therefore, the information for
2010 was readjusted to make both periods comparable.
put in place to offer better service and quality
of service. Where LAN is concerned surveys are
important mechanisms that allow customers
CARGO CLIENT
SATISFACTION AND EXPERIENCE
GRI 2,7 / GRI PR8
At LAN CARGO we are primordially concerned with giving our
clients concrete answers to their questions in timely fashion.
As a company offering specialised global services we are deeply
interested in providing our clients with the best possible experience
in air freight. Therefore we are fully committed to live up to the
trust our clients have in us and do so efficiently and responsibly,
responding to their concerns and transporting our customer’s
assets with professionalism.
27To measure cargo clients’ satisfaction with our services, we ask them to answer a survey to find out
how they perceive this part of our business and their expectations. Although we are fully aware
that cargo clients and passengers are two different types of clients, we still prefer the questions
focus on other relevant areas as well and so doing maintain continual improvements to our services.
Improvement plans are designed around the answers we get back from these surveys and said
plans include aspects of our service clients find most critical.
Year 2010 2011
Percentage of Customer Satisfaction (Cargo) 57% 67%
Solving problems: We as a company consider ourselves responsible
for any possible problems our cargo clients may have. To deal with those
problems the company has a specialised area of professionals who are
responsible for managing a series of procedures through several different
channels of communication such as call centres, import customer service,
internet, post-sales service, all of which are mechanisms clients can use
to request information at a time of their choosing.
Confidentiality: Last but certainly not least this particular trait
refers to the relationship between cargo clients and passengers and the
company. All the information given to the company by a customer of
either business is kept strictly confidential. As a company we constantly
strive to ensure the confidentiality of our clients, and as such, strict
policies have been put in place regarding how said information is
handled as well as internal procedures and firewalls on company servers
to protect it. To date, the company is unaware of any case where said
practices have been questioned.
28Our view
on Sustainability
GRI 4.12 / GRI HR1, HR2 / GRI HR6, HR7
Our company is aware that it is an
agent capable of influencing society and
affecting the environment and economic
development. This is why we have a onal Excelle
sustainability strategy consisting of 8 areas, erati nc
which as a company we consider priorities
Op y
we must deal with and which represent our
contribution to sustainable development.
Operational
Excellence:
Our company constantly
searches for new
technology and procedures
that will help us become
one of the top 10
airlines in the world be it
economically, socially or
environmentally.
HOST LEAN
Implementing the HOST Project has meant Since the beginning of the program’s
changes to the booking system and implementation in 2009, the LEAN program,
passenger checklists at LAN, and will allow program dealing with efficiency and
the company to grow without sacrificing any sustainability, has managed to reduce the
of the quality our customers are accustomed amount of time planes are left grounded,
to and increase cost efficiency. reduced the amount of mistakes in every
process, increased productivity and has
achieved important benefits for the
environment.
29Ethics and Governance: Environment: Caring for the
Encouraging and ensuring environment is an issue ever present
ethical behaviour with the in all the procedures we carry out as a
corresponding transparency company.
in every decision or action As a result we strive to manage and
carried out by the company is an integral part minimise the impact on the environment by
of LAN’s commitment since its very beginning: acting in a responsible manner internally as
Commitment that extends to every employee well as with the external entities we work with.
encouraging them to uphold the highest Our commitment manifests in every area of
standard of ethics. action as we manage our operations in an
From this point on, respect for Human Rights is efficient and responsible manner, reducing
a fundamental issue. That is why our company our impact on the environment, investing in
considers current Chilean legislation the new technology, optimizing our resources and
very minimum requirement and as such, the promoting the protection of the environment
company adheres to the following; child labour in the immediate surroundings of the groups of
is strictly forbidden, forced labour, strictly interest we interact with.
forbidden; due to their close relationship with Please take the time to take a look at some of
the company suppliers are also asked to adhere our more important initiatives at Commitment
to said legislation. To date there have yet to be to the Environment.
any incidents where Human Rights have been
transgressed in any shape or form.
To learn more about our ethics and Safety: caring for our people, operations
transparency policies, please see: Ethics and and passengers is a fundamental issue for us.
Transparency. Therefore, we are constantly seeking to comply
with the utmost standards of
safety on every journey requiring
Our people: The professional development our services.
of our people, as well as supporting their There are five areas forming the
initiatives and requirements is structure used by the company to
a key factor to the success of manage every aspect related to
our company. We work toward safety.
a comfortable environment If you would like to know more about how LAN
in the workplace and aim to handles safety please take a look at: Safety: A
develop talent. This creates an priority in everything we do / Occupational
environment where people genuinely feel we Health and Safety
look after our own.
This is why it has always been essential that
we as a company give our employees the
opportunity to develop in performance and
competency, as well as provide a great sense of
well-being in the workplace for the benefit of
increasing productivity.
To learn more about our people please see: Our
People and Society.
30Suppliers: Passengers and cargo
CWe always seek to form clients:
long lasting relationships The offer of quality and
with our suppliers, trustworthy service together
strengthening their with providing the best possible
development and welfare. experience is how we contribute
Given our company is to each one of our clients and
present in several countries around the world, passengers.
we prefer to deal with local suppliers where We consider it a priority to concentrate efforts
consumables are required. in implementing practices that guarantee an
To learn more about our relationship with our efficient, fluid and friendly relationship while
suppliers please feel free to take a look at the adhering to the highest standards. For our
following: Creating value for suppliers. cargo clients we are the connection, the bridge
between South America and the rest of the
world.
Community: If you wish to learn more about how we create
LAN assumes the role of
value for our cargo clients please see: Creating
developer and connector
value for our cargo clients / Creating value for
in the region, lending
South American exporters.
humanitarian aid in natural
If you wish to know more about the value we
disasters, promoting
create for our passengers please see: Creating
responsible tourism and care
value for our passengers.
for the environment, the
idea being to ensure that today’s destinations
continue being destinations in the future. In
this manner we boost fluid and transparent
relationships with government organisations
and citizens.
If you would like to know more about how we
interact with the community please see: Our
contribution to society.
31Dialogue with our groups and
associations of interest
GRI 4.4 / GRI 4.13, 4.14, 4.15, 4.16, 4.17
In our interest to become far more familiar with our groups of interest (or stakeholders as they are also
known), in order to create a stronger, more solid and long-lasting relationships, in 2011 we created
our first “Stakeholder Map” based on the groups of interest we were in contact with on a regular basis.
Getting to know the realities they were inserted in, their concerns and the opportunities that we as
a company could exploit with them in joint ventures are all fundamental aspects to the company’s
sustainability. The map also made it possible to familiarize ourselves with them and improve channels
of communication, making them far faster and clearer, fluid and constant, channels providing clear
communication for answers and solutions as well as notification of significant changes. Even though
the map made it possible to identify our stakeholders and their relationship with the company, to
date, we have yet to manage the relationships based on this diagnosis.
Groups of interest How we communicate
• Annual Report
• Board Meeting
• Shareholder Assembly
• Communication with the Press
SHAREHOLDERS • The Investor Relations Office
• Road shows
• Shareholder Service Offices at the Central Securities
Depository
• The web portal LAN.com
• The Investor Relations Office
INVESTORS • 20F Report
• The intranet and Corporate Bulletins
• Electronic mail, bulletin boards and information screens
• Surveys on organizational climate
• Committees and expanded meetings
OUR PEOPLE AND UNION • Communication with immediate supervisors
ASSOCIATIONS • Performance assessment
• Training sessions
• Personnel Service Networks
• Interviews during induction and retirement
32AIRPLANE, MATERIALS, • Telephone and electronic mail
• Website platform
FUEL, IN-FLIGHT PROVISIONS,
• Supplier trade fairs
ASSETS AND GENERAL • Bidding procedures
SERVICE SUPPLIERS
• Commercial offices
• LAN.com and LANCARGO.com
• Newsletters
• Events
OUR PASSENGERS AND CARGO • Call Centre
CLIENTS • Cabin crews
• Airport Counters
• Loyalty programs
• Web-Portal Chilecompra
• Meetings
NATIONAL GOVERNMENT AND • Personal telephone communication
LOCAL AUTHORITIES IN BOTH • Electronic mail
COUNTRIES AND REGIONS • Letters and reports
• Meetings
• Reports
• Telephone communication and electronic mail
INDUSTRY • Press communication
• Channels for complaints, requests and suggestions
AUTHORITIES • LAN.com
• Community investment programs
• Trade union for tourism
• Alliance management
• Periodic meetings
STRATEGIC ALLIES • Written and/or telephone communication
• Electronic mail
33• Written, telephone and electronic communication
• Press communication
The Media • Events
• Awareness sessions
• Reports
COMMUNITY AND • Electronic mail
• Community investment programs
NON-GOVERNMENTAL • Meetings
ORGANIZATIONS • Participation in associations
• Office of external communications
• Reports
RISK APPRAISERS AND
• Electronic mail
MARKET ANALYSERS • The Financial office
LAN has established constant relations and collaboration with different public organizations, unions
or private entities in South America, as they have done in other countries the company operates in.
At the closing of 2011 LAN is a member of the following:
AT CORPORATE LEVEL
International Air Transport Association (IATA)
Latin American and Caribbean Air Transport Association (ALTA)
World Tourism Organization (UNWTO)
Acción RSE
34Argentina
Destino Argentina
Argentinian Chamber of Tourism (CAT)
Argentinian Institute of Entrepreneurial Development (IDEA)
Buenos Aires Convention & Visitors Bureau
Argentinian Institute of Social Responsibility (IARSE)
Chile
Chilean Airline Association (ACHILA)
The Chile-Argentinian Chamber of Commerce
The Chile – Peruvian Chamber of Commerce
The Chile-Canadian Chamber of Commerce
The Santiago Chamber of Commerce (CCS)
The Chile – United States Chamber of Commerce (AMCHAM)
The Official Spanish Chamber of Commerce of Chile
Chilean Institute of Rational Business Administration (ICARE)
The Chilean Manufacturers’ Association (SOFOFA)
The Chamber of Commerce of Arica
35The Chamber of Tourism of Arica
The Chamber of Commerce and Tourism of Antofagasta
The Chamber of Commerce of Calama
The Chamber of Commerce and Tourism of La Serena
The Chamber of Commerce and Tourism of Easter Island/Rapa Nui
Tourism Roundtable for Easter Island/Rapa Nui
The Industrial Association of the Vth Region (ASIVA)
The Corporation for the Regionalization of Biobio (CORBIOBÍO)
The Chamber of Commerce and Production of Concepcion
The Chamber of Commerce and Tourism of Temuco
The Corporation of Tourism and Culture of Puerto Varas
Visit Puerto Varas Convention Bureau
The Chamber of Commerce of Coyhaique
The Chamber of Tourism of Punta Arenas
Colombia
The Colombian Association of Air Transport (ATAC)
Colombian Association of Tourism and Travel Agencies (ANATO)
The Bankers Club
36Ecuador
The Ecuador-Chilean Chamber of Commerce
The Airline Representatives’ Association of Ecuador (ARLAE)
The Chamber of Commerce of Guayaquil
The Ecuadorian – American Chamber of Commerce
The Provincial Chamber of Tourism of Guayas
Peru
The Chamber of Commerce of Arequipa
The Chamber of Commerce and Production of Cajamarca
The Chamber of Commerce and Production of Lambayeque
The Chamber of Commerce, Industry, Service, Tourism and Production of Cusco
The Chamber of Commerce, Industry and Tourism of Loreto
The Chamber of Commerce, Industry and Production of San Román
The Chamber of Commerce of Lima
The Chamber of Commerce and Production of Piura
The Chamber of Commerce and Production of Ucayali
37The Chamber of Commerce of Madre de Dios
The Chamber of Commerce and Production of Puno
The Chamber of Commerce, Industry and Production of Tacna
The Chamber of Commerce and Production of San Martín
The Chamber of Commerce and Production of La Libertad
The Peru – Chilean Chamber of Commerce
The American Chamber of Commerce of Peru (AMCHAM)
The Regional Chamber of Tourism of Cajamarca
The Regional Chamber of Tourism of Cusco
The Regional Chamber of Commerce of Puno
The Regional Chamber of Commerce of Tacna
The International Corporate Association of Air Transport
The Peruvian Association of Corporate Air Transport
The Peruvian Association of Foreign Commerce
The Peruvian Institute of Business Administration
38Creating
Value
39III. Creating Value
GRI EC1 / GRI EC9
Creating value for our public groups of interest is a commitment that, as a
company, we have adhered to from our very beginnings and, in our concern for
them, we have established lines of action for each and every one.
Creating value for our shareholders
Creating value for Tourism
Creating value for South American exporters
Creating value for our people
Creating value for our suppliers
Creating value for our passengers
Creating value for our cargo clients
40Our company always endeavours to create value in every aspect of
sustainability. In this fashion creating value is a product of each of our
businesses, operations and people; this breeds trust in the market and
among our groups of interest.
CREATING VALUE FOR OUR the interruption in air traffic due to the cloud
of volcanic ash caused by the eruption of the
SHAREHOLDERS volcanic chain Puyehue – Cordon Caulle in Chile
and the international increase in fuel prices.
The results of 2011 were due in no small part to
solid demand and high passenger load factor in However, these results are in stark contrast
passenger and cargo operations, reporting net with the significant increase in revenue from
profits of US$320.2 million, 23.7% less than the the main businesses, which is in line with the
reported US$419.7 million in 2010. perennial intent to create greater value for our
shareholders.
The decrease in profits is largely due to the
restructuring process of Colombian operations,
28,9%
Revenues for the
passenger business
US$4.008,9 millones
23,1% Revenues for the
cargo business
US$1.576,5 millones
During this period LAN managed to maintain given said credit rating.
a solid financial position with good balance
If you would like to know more about our financial
indicators as evident in the credit rating
condition we invite you to click here.
“Investment Grade” (BBB), making LAN one
of the few privileged airlines in the world to be
41CREATING VALUE FOR TOURISM.
GRI EC8, EC9
As a company we are aware of the economic, Campaigns to improve South
social and environmental role we play in the America’s global position
communities where we operate. This awareness
has embodied itself in several aspects, In the same lines as mentioned earlier, our
especially in the boost to tourism we have company has made it a concern to improve South
generated in these areas. America’s position in the global sphere, creating
strategies and incentives to attract tourists to
Tourists are an important factor in the social this part of the world, to our culture and our
development of our countries. During their land. 30% of our advertising budget has been
stay, each one makes an important contribution used to position destinations in our region in
to domestic or local economies as they spend other continents. We have also worked with 15
money on local craftsmanship, transport, dine government entities and reached agreements
in local restaurants, even with their choice of allowing us to promote tourism in several
hotel, benefitting a whole range of people in a different areas around the globe, all in an effort
particular location. to promote, educate and communicate the many
Thanks to the many efforts of both public and different destinations people can visit here in
private institutions, new visitors to the cultural South America. Our commercial presence in 30
wealth and bounty of South America have countries around the world is also a platform
increased by 10% according to the information from where we can position the company and
provided by the World Tourism Organization the destinations we offer in South America.
(UNWTO) for 2011.
To make our own contribution to tourism in
the region, we have implemented a series of
initiatives some of which we will now describe.
Significant decrease in airfare and an
increase in the flow of passengers
The growth of our company’s passenger
business has had a profound impact in the
region. Since 2006 it has reached 23%,
surpassing the 12% of passengers flying out
of the region. This is due in large part to the
reduction in airfare which in turn has generated
far more tourist traffic.
42You can also read
