20-F

As filed with the Securities and Exchange Commission on April 2, 2012

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

     ¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

     x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

     ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

     ¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-14728

Lan Airlines S.A.

(Exact name of registrant as specified in its charter)

Lan Airlines S.A.

(Translation of registrant’s name into English)

Republic of Chile

(Jurisdiction of incorporation or organization)

Presidente Riesco 5711, 20^th Floor

Las Condes

Santiago, Chile

(Address of principal executive offices)

Gisela Escobar Koch

Tel.: 56-2-565-3944 — E-mail: gisela.escobar@lan.com

Presidente Riesco 5711, 20^th Floor

Las Condes

Santiago, Chile

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:	Name of each exchange on which registered:
American Depositary Shares (as evidenced by American Depositary Receipts), each representing one share of Common Stock, without par value	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 340,319,431.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x  No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes ¨  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer  x                 Accelerated filer  ¨                 Non-Accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board  x Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:  Item 17 ¨  Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No x

TABLE OF CONTENTS

PRESENTATION OF INFORMATION		2
FORWARD-LOOKING STATEMENTS		3
GLOSSARY OF TERMS		5
PART I
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	6
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	6
ITEM 3.	KEY INFORMATION	6
ITEM 4.	INFORMATION ON THE COMPANY	28
ITEM 4A	UNRESOLVED STAFF COMMENTS	117
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	117
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	141
ITEM 7.	CONTROLLING SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	149
ITEM 8.	FINANCIAL INFORMATION	152
ITEM 9.	THE OFFER AND LISTING	154
ITEM 10.	ADDITIONAL INFORMATION	156
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	181
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	186
PART II
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	188
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	188
ITEM 15.	CONTROLS AND PROCEDURES	188
ITEM 16.	RESERVED	189
PART III
ITEM 17.	FINANCIAL STATEMENTS	1
ITEM 18.	FINANCIAL STATEMENTS	1
ITEM 19.	EXHIBITS	1

1

PRESENTATION OF INFORMATION

In this annual report on Form 20-F, unless the context otherwise requires, references to “Lan Airlines” are to Lan Airlines S.A., the unconsolidated operating entity, and references to “LAN,” “we,” “us” or the “Company” are to Lan Airlines S.A. and its consolidated subsidiaries. All references to “Chile” are references to the Republic of Chile.

This annual report contains conversions of certain Chilean peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These conversions should not be construed as representations that the Chilean peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless we specify otherwise, all references to “$,” “US$,” “U.S. dollars” or “dollars” are to United States dollars, references to “pesos,” “Chilean pesos” or “Ch$” are to Chilean pesos and references to “UF” are to Unidades de Fomento, a daily indexed Chilean peso-denominated monetary unit that takes into account the effect of the Chilean inflation rate. Unless we indicate otherwise, the U.S. dollar equivalent for information in Chilean pesos is based on the “dólar observado” or “observed” exchange rate published by Banco Central de Chile (which we refer to as the Central Bank of Chile) on December 31, 2011, which was Ch$519.20=US$1.00. The observed exchange rate on March 23, 2012, was Ch$487.72=US$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. See “Item 3. Key Information—Selected Financial Data—Exchange Rates”.

Lan Airlines and the majority of our subsidiaries (including our main cargo subsidiary Lan Cargo S.A., or Lan Cargo) maintain their accounting records and prepare their financial statements in U.S. dollars. Some of our other subsidiaries, however, maintain their accounting records and prepare their financial statements in Chilean pesos, Argentinean pesos or Colombian pesos. Our audited consolidated financial statements include the results of these subsidiaries translated into U.S. dollars. International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), require assets and liabilities to be translated at period-end exchange rates, revenue and expense accounts at monthly average rates.

Our audited consolidated financial statements for the periods ended December 31, 2009, 2010 and 2011 were prepared in accordance with IFRS. Prior to 2009 our audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in Chile (“Chilean GAAP”). IFRS differs in certain significant respects from Chilean GAAP. As a result, our financial information presented under IFRS as of 2009 is not directly comparable to our financial information presented with respect to previous years under Chilean GAAP. Accordingly, readers should avoid such comparison.

We have rounded percentages and certain U.S. dollar and Chilean peso amounts contained in this annual report for ease of presentation. Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.

This annual report contains certain terms that may be unfamiliar to some readers. You can find a glossary of these terms on page 4 of this annual report.

2

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements, including those relating to our proposed combination with TAM S.A. (“TAM”). See “Item 3. Key Information—Risk Factors—Risks Relating to the Exchange Offer and Mergers” and “Item 4. Information on the Company—History and Development of the Company—Proposed Combination with TAM”. Such statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other similar expressions. Forward-looking statements, including statements about our beliefs and expectations, are not statements of historical facts. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to:

• the factors described in Item 3 under “Risk Factors” generally and with respect to our proposed combination with TAM in particular;

• whether the holders of a sufficient number of TAM’s free float shares accept the exchange offer;

• our ability to service our debt and fund our working capital requirements;

• future demand for passenger and cargo air service in Chile, other countries in Latin America and the rest of the world;

• the maintenance of relationships with customers;

• the state of the Chilean, Latin American and world economies and their impact on the airline industry;

• the effects of competition;

• future terrorist incidents or related activities affecting the airline industry;

• future outbreak of diseases, or spread of already existing diseases, affecting traveling behavior and/or exports;

• natural disasters affecting traveling behavior and/or exports;

• the relative value of the Chilean, Peruvian, Ecuadorian, Colombian, Brazilian, Mexican and Argentine currencies compared to other currencies;

• inflation;

• competitive pressures on pricing;

• our capital expenditure plans;

• changes in labor costs, maintenance costs, and insurance premiums;

• fluctuation of crude oil prices and its effect on fuel costs;

• cyclical and seasonal fluctuations in our operating results;

• defects or mechanical problems with our aircraft;

• our ability to successfully implement our growth strategy;

3

• increases in interest rates; and

• changes in regulations, including regulations related to access to routes in which we operate.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them, whether in light of new information, future events or otherwise. You should also read carefully the risk factors described in “Item 3. Key Information—Risk Factors”.

4

GLOSSARY OF TERMS

The following terms, as used in this annual report, have the meanings set forth below.

Capacity Measurements:
“available seat kilometers” or “ASKs”	The number of seats made available for sale multiplied by the kilometers flown.
“available ton kilometers” or “ATKs”	The number of tons available for the transportation of revenue load (cargo) multiplied by the kilometers flown.
Traffic Measurements:
“revenue passenger kilometers” or “RPKs”	The number of passengers multiplied by the number of kilometers flown.
“revenue ton kilometers” or “RTKs”	The load (cargo) in tons multiplied by the kilometers flown.
“traffic revenue”	Revenue from passenger and cargo operations.
Yield Measurements:
“cargo yield”	Revenue from cargo operations divided by RTKs.
“overall yield”	Revenue from airline operations (passenger and cargo) divided by system RTKs (passenger and cargo).
“passenger yield”	Revenue from passenger operations divided by RPKs.
Load Factors:
“cargo load factor”	RTKs (cargo) expressed as a percentage of ATKs (cargo).
“passenger load factor”	RPKs expressed as a percentage of ASKs.
Other:
“ACMI leases”	A type of aircraft leasing contract, under which the lessor provides the aircraft, crew, maintenance and insurance on a per hour basis. Also referred to as a “wet lease.”
“Airbus A320-Family Aircraft”	The Airbus A318, Airbus A319 and Airbus A320 models of aircraft.
“block hours”	The elapsed time between an aircraft leaving an airport gate and arriving at an airport gate.
“ton”	A metric ton, equivalent to 2,204.6 pounds.
“utilization rates”	The actual number of flight hours per aircraft per operating day.

5

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following table presents our summary financial data. Our audited consolidated financial statements relate to the period ended December 31, 2011, and constitute the third annual audited financial statements prepared in accordance with IFRS.

Our date of transition to IFRS was January 1, 2008. Consequently, we have prepared our opening consolidated statements of financial position under IFRS as of that date. Our date of adoption of IFRS was January 1, 2009.

The summary consolidated annual financial information as of December 31, 2011, 2010 and 2009, and each of the three years ended December 31, 2011, 2010 and 2009 has been prepared in accordance with IFRS and is derived from our audited consolidated annual financial statements included in this annual report or previous annual reports. The summary consolidated annual financial information as of December 31, 2008 and for the year ended December 31, 2008 presented in this annual report is derived from our audited consolidated annual financial statements included in a previous annual report. This financial information has been previously presented in accordance with Chilean GAAP, and has been restated under IFRS only for comparative purpose. You should read the information below in conjunction with our audited consolidated financial statements and the notes thereto, as well as “Presentation of Information” and “Operating and Financial Review and Prospects.”

6

Annual Financial Information

	Year ended December 31,
	2011			2010			2009			2008
	(in US$ millions, except per share and capital stock data)
The Company(1)(3)
Statement of Income Data:
Operating revenues
Passenger		4,008.9			3,109.8			2,623.6			2,820.8
Cargo		1,576.5			1,280.7			895.6			1,319.4
Total operating revenues		5,585.4			4,390.5			3,519.2			4,140.2
Cost of sales		(4,078.6	)		(3,012.7	)		(2,522.8	)		(2,893.9	)
Gross margin		1,506.8			1,377.8			996.4			1,246.3
Other operating income(2)		132.8			132.8			136.4			142.9
Distribution costs		(479.8	)		(383.5	)		(327.0	)		(366.7	)
Administrative expenses		(406	)		(332	)		(270	)		(275	)
Other expenses		(214.4	)		(172.4	)		(100.5	)		(127.9	)
Other gains/(losses)(4)		(33.0	)		5.4			(11.7	)		(135	)
Financial income		14.5			14.9			18.2			18.5
Financial costs		(139.1	)		(155.3	)		(153.1	)		(125.5	)
Equity accounted earnings		0.5			0.1			0.3			0.7
Exchange rate differences		(0.3	)		13.8			(11.2	)		23.4
Result of indexation units		0.1			0.1			(0.6	)		1.2
Income before income taxes		382.4			502.0			277.5			403.4
Income tax		(61.8	)		(81.1	)		(44.5	)		(65.1	)
Net income for the period		320.6			420.9			233.0			338.3
Income attributable to the parent company’s equity holders		320.2			419.7			231.1			336.5
Income attributable to non-controlling interests		0.4			1.2			1.9			1.8
Net income for the period		320.6			420.9			233.0			338.3
Earnings per share
Basic earnings per share (US$)(5)		0.94335			1.23882			0.68221			0.99318
Diluted earnings per share(US$)		0.94260			1.23534			0.68221			0.99318

	At December 31,
	2011		2010		2009		2008
	(in US$ millions, except per share and capital stock data)
Balance Sheet Data:
Cash, and cash equivalents		374.4		631.1		731.5		401.0
Other current assets in operation		964.3		896.5		666.6		665.8
Non- current assets and disposal groups held for sale		4.7		5.5		10.9		10.4
Total current assets		1,343.4		1,533.1		1,409.0		1,077.2
Property and equipment		5,928.0		4,948.4		4,196.6		3,966.1
Other non- current assets		377.3		304.4		166.4		153.6
Total non- current assets		6,305.3		5,252.8		4,363.0		4,119.7
Total assets		7,648.7		6,785.9		5,772.0		5,196.9
Total current liabilities		2,322.1		2,144.0		1,523.3		1,551.5
Total non-current liabilities		3,869.2		3,341.8		3,142.7		2,876.8
Total liabilities		6,191.3		5,485.8		4,666.0		4,428.3
Net equity attributable to the parent company’s equity holders		1,445.3		1,296.8		1,098.8		761.8
Minority interest		12.0		3.2		7.1		6.8
Total net equity		1,457.3		1,300.1		1,105.9		768.6

7

	At December 31,
	2011		2010		2009		2008		2007
Operational Data:
ASKs (million)		48,153.6		42,355.2		38,776.2		35,176.1		31,556.0
RPKs (million)		38,422.9		33,147.5		29,836.2		26,951.7		24,001.2
ATKs (million) (6)		5,192.7		4,628.7		3,848.9		4,071.9		3,636.3
RTKs (million)		3,612.4		3,245.3		2,627.4		2,906.2		2,701.0
System ATKs (million)		10,056.1		8,968.8		7,811.8		7,659.9		6,999.9

(1) For more information on the subsidiaries included in this consolidated account, see Note 1 to our audited consolidated financial statements.

(2) Other income included in this Statement of Income Data is equivalent to the sum of income derived from duty free operations, aircraft leasing, logistics and courier operations, customs and warehousing operations, tours and other miscellaneous income. For more information, see Note 30 to our audited consolidated financial statements.

(3) The addition of the items may differ from the total amount due to rounding.

(4) As of December 31, 2010 the Company recorded a US$14.1 million gain (pre-tax) due to the reversal of a portion of the provision related to the investigation in the cargo business carried out by the European Commission. This was as a result of the fine announced in November 2010, which was lower than the amount provided for. This reversal is recorded in Other gains/(losses). In 2011, at a non-operational level, LAN’s consolidated results were impacted by the settlement agreement totaling US$66.0 million related to the civil class action in the cargo business, partially offset by the US$44.5 million gain from the sale of Blue Express International Servicios de Transporte Limitada and Blue Express S.A. At this level there was also included a one-time charge of UF 116,091 (US$5.0 million) resulting from a settlement agreement with the Chilean airline PAL regarding the pending legal proceeding before the TDLC and their appeal before the Chilean Supreme Court in connection with the combination of LAN and TAM

(5) As of December 31, 2009 and 2010 we had 338,790,909 common shares outstanding, which was equivalent to 338,790,909 American Depositary Shares (“ADSs”). As of December 31, 2011 we had 340,319,431 common shares outstanding, which was equivalent to 340,319,431 ADSs.

(6) In August 2007, the Company implemented a change in its methodology used for calculating cargo ATKs in order to better represent the available capacity in the bellies of passenger aircraft. Cargo RTKs were not affected by this change. Historical data has been modified accordingly for comparison purposes.

Although most of our revenues and expenses are denominated in U.S. dollars, some are denominated in different currencies, such as the Chilean peso. Fluctuations in foreign exchange rates could lead to changes in the value of these items in U.S. dollars. Nevertheless, the impact on our results stemming from any such fluctuations is significantly mitigated by the fact that 78.0% of our revenues and 53.0% of our operating expenses are denominated in U.S. dollars.

In accordance with the Ley sobre Sociedades Anónimas No. 18,046 (Chilean Corporation Act) and Reglamento de Sociedades Anónimas (Regulation to the Chilean Corporation Act) (collectively, the “Chilean Corporation Law”), we must pay annual cash dividends equal to at least 30.0% of our annual consolidated distributable net income each year (calculated in accordance with IFRS), subject to limited exceptions. In 2011, we paid interim dividends related to year 2011 results totaling US$141.6 million, equivalent to 44.2% of the Company’s net income in 2011. The aforementioned dividends were paid as follows: (i) on September 15, 2011, we paid a first interim dividend of US$56.6 million related to results as of June 30, 2011, to the shareholders on record as of September 9, 2011, representing US$0.16677 per share; and (ii) on January 12, 2012, we paid a second interim dividend of US$ 85.0 million related to full year 2011 results, to shareholders on record as of January 6, 2012, representing US$0.24988 per share. The table below sets forth the cash dividends per common share and per ADS, as well as the number of common shares entitled to such dividends, for the years indicated. Dividends per common share amounts have not been adjusted for inflation and reflect common share amounts outstanding immediately prior to the distribution of such dividend. In August 2007, LAN modified the ratio of its common shares to one of its American Depositary Receipts (“ADRs”), from 5:1 to 1:1.

Dividend for year:	Payment date(s)	Total dividend payment		Number of common shares entitled to dividend		Cash dividend per common share		Cash dividend per ADS
		(U.S. dollars)		(in millions)		(U.S. dollars)		(U.S. dollars)
2007	August 23, 2007		90,104,830		338.79		0.26596		0.26596
	January 17, 2008		119,894,715		338.79		0.35389		0.35389
	May 8, 2008		5,827,204		338.79		0.01720		0.01720
2008	August 21, 2008		96,785,787		338.79		0.28568		0.28568
	January 15, 2009		105,001,466		338.79		0.30993		0.30993
2009	August 20, 2009		34,621,043		338.79		0.10219		0.10219
	January 21, 2010		70,000,978		338.79		0.20662		0.20662

8

Dividend for year:	Payment date(s)	Total dividend payment		Number of common shares entitled to dividend		Cash dividend per common share		Cash dividend per ADS
		(U.S. dollars)		(in millions)		(U.S. dollars)		(U.S. dollars)
	May 20, 2010		10,939,558		338.79		0.03229		0.03229
2010	August 19, 2010		74,466,242		338.79		0.21980		0.2198
	January 13, 2011		125,000,294		338.79		0.36896		0.36896
	April 29, 2011		10,386,295		339.31		0.03061		0.03061
2011	September 15, 2011		56,594,769		339.36		0.16677		0.16677
	January 12, 2012		85,000,207		340.16		0.24988		0.24988

Our board of directors has the authority to declare interim dividends. Year-end dividends, if any, are declared by our shareholders at our annual meeting. For a description of our dividend policy, see “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Dividend Policy”.

We declare cash dividends in U.S. dollars, but make dividend payments in Chilean pesos, converted from U.S. dollars at the observed exchange rate two days prior to the day we first make payment to shareholders. Payments of cash dividends to holders of ADRs, if any, are made in Chilean pesos to the custodian, which converts those Chilean pesos into U.S. dollars and delivers U.S. dollars to the depositary for distribution to holders. In the event that the custodian is unable to convert immediately the Chilean currency received as dividends into U.S. dollars, the amount of U.S. dollars payable to holders of ADRs may be adversely affected by a devaluation of the Chilean currency that may occur before such dividends are converted and remitted.

Exchange Rates

The following table sets forth, for the periods indicated, the high, low, average and period-end observed exchange rate for the purchase of U.S. dollars, expressed in Chilean pesos per U.S. dollar. The rates have not been restated in constant currency units.

	Daily Observed Exchange Rate
Year Ended December 31,	High		Low		Average(1)		Period-End
	Ch$ per US$
2007		548.67		493.14		521.95		495.82
2008		676.75		431.22		528.88		629.11
2009		643.87		491.09		553.77		506.43
2010		549.17		468.37		511.20		468.37
2011
September		521.85		460.34		483.69		515.14
October		533.74		492.04		511.74		492.04
November		526.83		490.29		508.44		524.25
December		522.62		508.67		517.17		521.46
End of year		533.74		455.91		483.67		521.46
2012
January		519.20		485.35		501.34		488.99
February		488.75		475.29		481.49		477.41
March(2)		491.57		476.27		484.59		491.57

Source: Central Bank of Chile

(1) For each year, the average of the month-end exchange rates for the relevant year. For each month, the average daily exchange rate for the relevant month.

(2) Through March 23, 2012.

On March 23, 2012 the observed exchange rate was Ch$487.72=US$1.00.

B. Capitalization and Indebtness

Not applicable.

9

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

We wish to caution readers that the following important factors, and those important factors described in other reports submitted to, or filed with, the Securities and Exchange Commission (“SEC”) among other factors, could affect our actual results and could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. In particular, as we are a non-U.S. company, there are risks associated with investing in our ADSs, that are not typical for investments in the shares of U.S. companies. Prior to making an investment decision, you should carefully consider all of the information contained in this document, including the following risk factors.

Risks Relating to the Exchange Offer and Mergers involving TAM S.A.

Both commencement and completion of the exchange offer are subject to many conditions precedent and if these conditions are not satisfied or waived, the proposed combination with TAM S.A. will not be completed

We and TAM S.A., a Brazilian company (“TAM”), are proposing to combine to form the leading Latin American airline group with the largest fleet of aircraft of any airline in Latin America. When the proposed combination is completed, LAN will be the holding company of the combined companies and will change its name to “LATAM Airlines Group S.A.” (“LATAM”). The proposed combination will be implemented through a delisting exchange offer to be made in the United States and in Brazil to acquire all of the outstanding voting common shares of TAM (“TAM common shares”), non-voting preferred shares of TAM (“TAM preferred shares and collectively with the TAM common shares, the “TAM shares”) and American Depositary Shares representing TAM shares (“TAM ADSs”), in each case other than any such shares owned indirectly by the TAM controlling shareholders (as defined below), and other mergers and corporate restructuring transactions described under “Item 4. Information on the Company—History and Development of the Company—Proposed Combination with TAM”, in each case pursuant to the terms and conditions of the implementation agreement and the exchange offer agreement entered into on January 18, 2011 (the “transaction agreements”) by LAN, TAM, the controlling shareholders of LAN under Chilean law (Costa Verde Aeronáutica S.A. and Inversiones Mineras del Cantábrico S.A., which we refer to individually as “Costa Verde Aeronáutica” and “Mineras del Cantábrico,” respectively and collectively as the “LAN controlling shareholders”), the controlling shareholders of TAM under Brazilian law (Noemy Almeida Oliveira Amaro, Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro and João Francisco Amaro, whom we refer to collectively as the “TAM controlling shareholders”), and TAM Empreendimentos e Participações S.A., a company through which the TAM controlling shareholders held their TAM shares (as defined below) at that time ( “TEP”). The commencement of the exchange offer is subject to certain conditions set forth in the transaction agreements as described under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Conditions for the Commencement of the Exchange Offer”, including receipt of all required regulatory approvals (including the required approvals from the Comissão de Valores Mobiliários (“CVM”), the Superintendencia de Valores y Seguros (the Chilean Securities and Insurance Supervisor) (“SVS”), and the SEC. In addition, approval of the proposed combination by our shareholders is subject to the rendering of a final decision by the Chilean Supreme Court on our appeal of the mitigation measures imposed by the Tribunal de Defensa de la Competencia (Chilean Free Competition Defense Court) (“TDLC”) in connection to the proposed combination with TAM. The completion of the exchange offer is also subject to certain conditions set forth in the transaction agreements as described under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Conditions to Completion of the Exchange Offer,” including the following:

Delisting Condition

• The number of qualifying minority shares that are held by “agreeing shareholders” must be more than 66 2/3% of the total number of qualifying minority shares that are held by agreeing shareholders and disagreeing shareholders (this is the minimum threshold required to cause the deregistration of TAM as a public company in Brazil with CVM and the delisting of TAM shares from the BM&FBovespa (“Bovespa”).

10

• A holder will be deemed to be an “agreeing shareholder” with respect to its qualifying minority shares only if such holder:

• validly tenders such qualifying minority shares into the exchange offer through the US exchange agent and does not withdraw such shares from the exchange offer; or

• qualifies such qualifying minority shares for participation in the auction to be held on Bovespa (the “Auction”) and:

• tenders such shares into, and does not withdraw them from, the Auction; and/or

• indicates on the qualification form (a copy of which will be included with the letter of transmittal mailed to holders of TAM shares in connection with the exchange offer) that it agrees with the deregistration of TAM as a public company in Brazil with CVM.

• A holder will be deemed to be a “disagreeing shareholder” with respect to its qualifying minority shares only if such holder:

• validly tenders such qualifying minority shares into the exchange offer through the US exchange agent and subsequently withdraws such shares from the exchange offer; or

• qualifies such qualifying minority shares for participation in the Auction and:

• does not tender such shares in the Auction; and/or

• indicates on the qualification form (a copy of which will be included with the letter of transmittal) that it disagrees with the deregistration of TAM as a public company in Brazil with CVM.

• For purposes of the delisting condition, “qualifying minority shares” mean all outstanding TAM shares not represented by TAM ADSs and all outstanding TAM ADSs, in each case that are not owned by TAM, the TAM controlling shareholders, any of their related persons (“pessoas vinculadas”) or any director or executive officer of TAM.

• The delisting condition will not be waivable under Brazilian law, so if the delisting condition is not satisfied, the exchange offer will terminate and the mergers will not be completed.

Squeeze-Out Condition

• The sum of (i) the number of TAM shares and TAM ADSs validly tendered into, and not withdrawn from, the exchange offer and (ii) the number of TAM shares beneficially owned by the TAM controlling shareholders (which represented approximately 46.63% of the outstanding TAM shares as of March 28, 2012), represents more than 95% of the total number of outstanding TAM shares (including those represented by TAM ADSs) (this is the minimum acquisition threshold required under applicable Brazilian law to give TAM the right to compulsorily redeem any TAM shares (including those represented by TAM ADSs) not owned by LAN or Holdco I S.A. (“Holdco I”) after completion of the exchange offer, the mergers and the other transactions described under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements”); and

11

• The absence of certain actions, events or circumstances that, individually or in the aggregate, have had an adverse effect on the businesses, revenues, operations or financial condition of TAM and its subsidiaries, taken as a whole, in all material respects.

Certain of these conditions may not be waived without written agreement of both LAN and the TAM controlling shareholders, and neither LAN nor the TAM controlling shareholders has any obligation to waive any conditions not satisfied on or prior to the expiration of the exchange offer. Therefore, even if we are willing to waive an unsatisfied condition, we may be unable to complete the exchange offer if the TAM controlling shareholders refuse to waive the condition. In addition, the obligation of the TAM controlling shareholders under the transaction agreements to contribute their TAM shares into the proposed combination prior to the completion of the exchange offer is subject to certain conditions relating to the operations and business of LAN and certain events outside of our control. Payment of such subscriptions is a condition to the completion of the exchange offer. If any of these conditions is not satisfied or waived, the exchange offer and mergers will not be completed.

If the squeeze-out condition is not satisfied and we waive this condition, we may be unable to fully realize the anticipated benefits of the proposed combination

If the squeeze-out condition is not satisfied and we waive this condition, TAM will not be permitted under Brazilian law to compulsorily redeem any TAM shares (including those represented by TAM ADSs) that were not acquired in the exchange offer and the mergers unless LAN later acquires a sufficient number of TAM shares (including those represented by TAM ADSs) so as to allow TAM to compulsorily redeem the remaining outstanding TAM shares and TAM ADSs pursuant to Brazilian law. Depending on the quantity of minority shareholders remaining after completion of the exchange offer and the mergers, their existence may limit LATAM’s ability to combine the businesses and operations of LAN and TAM, which could adversely affect the combined companies’ ability to realize the potential benefits and cost savings from combining these businesses. Failure to fully realize these potential benefits and any temporary or permanent delay in integrating the businesses and operations of these two companies, could adversely affect the revenues, level of expenses and operating results of the combined companies after the completion of the proposed combination.

The final decision by the Chilean Supreme Court in connection with the mitigation measures imposed by the Chilean Free Competition Defense Court may not be rendered on time

Before the proposed combination of LAN and TAM may be completed, the final decision of the Chilean Supreme Court with respect to the appeal filed by LAN seeking the amendment or elimination of three of the conditions set forth in the decision issued by the TDLC with respect to the proposed combination with TAM, has been rendered. See “Item 4. Information on the Company—History and Development of the Company—Proposed Combination with TAM” and “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Conditions to Commencement of the Exchange Offer”, for a discussion of the status of the Company’s appeal. A final decision by the Chilean Supreme Court with respect to the appeal is expected by the Company in the next month, but there can be no assurance that the decision will be obtained within the expected time frame, or that the decision will not prevent the transaction to go forward. If the final decision of the Chilean Supreme Court is not rendered by the expected time frame, and this situation is not waived by the parties to the transactions agreements, the exchange offer and mergers will not be completed.

Any delay in completing the proposed combination may reduce or eliminate the benefits we expect to be achieved as a result of the proposed combination

The proposed combination is subject to a number of other conditions beyond our control that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict whether or when these other conditions will be satisfied. Any delay in completing the proposed combination could cause the combined companies not to realize some or all of the synergies that we expect to achieve if the proposed combination is successfully completed within its expected time frame.

12

Failure to complete the proposed combination could negatively impact our stock price and future business and financial results

If the proposed combination is not completed, our ongoing businesses may be adversely affected, and we would be subject to several risks, including the following:

• being required to pay a termination fee to TAM of $200 million and reimburse of TAM’s expenses under certain circumstances provided in the transaction agreements;

• having to pay certain costs relating to the proposed combination, such as legal, accounting, financial advisor and printing fees; and

• having had our management focus on the proposed combination instead of pursuing other opportunities that could have been beneficial to us.

If the proposed combination is not completed, we cannot assure our stockholders that these risks will not materialize and will not materially adversely affect our business, financial results and stock price.

The transaction agreements contain provisions that could discourage a potential competing acquirer of LAN

The transaction agreements require our board of directors to recommend that its shareholders approve the proposed combination and does not permit our board of directors to withdraw or adversely modify those recommendations. The transaction agreements also contains “no shop” provisions that prohibit us from soliciting, initiating or encouraging any competing third party proposals, including acquisitions of our equity securities or material assets, and there are no exceptions to these provisions. In addition, if the transaction agreements are terminated under certain circumstances, we may be required to pay to TAM a termination fee of $200 million and to reimburse TAM for expenses incurred by TAM in connection with the transaction agreements and the proposed combination. See “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements” and “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Termination”. These provisions could discourage a potential third-party acquiror that might have an interest in acquiring all or a significant portion of LAN from considering or proposing that acquisition, even if it were prepared to pay consideration with a value per share higher than the benefits LAN shareholders may receive from the proposed combination, or might result in a potential third-party acquiror proposing to pay a lower price to the LAN shareholders than it might otherwise have proposed to pay because of the added expense of the $200 million termination fee and expense reimbursement that may become payable in certain circumstances.

The fairness opinion obtained by our board of directors from our financial advisor will not reflect changes in circumstances between signing the transaction agreements and the completion of the proposed combination

While our board of directors received an initial fairness opinion from J.P. Morgan, our financial advisor, before we entered into the transaction agreements (the “Initial JPM Opinion”), and a supplemental fairness opinion, dated November 11, 2011 (the “Supplemental JPM Opinion”), we have not obtained an updated fairness opinion as of the date of this annual report on Form 20-F. Changes in our operations and prospects and those of TAM, general market and economic conditions and other factors which may be beyond our control and on which the fairness opinions were based may alter the value of LAN or TAM and/or the prices of our common shares and/or the TAM shares by the time the proposed combination is completed. The Initial JPM Opinion and the Supplemental JPM speak only as of the date of such opinions and not as of the time the proposed combination will be completed or as of any other date. Because we do not anticipate asking our financial advisor to further update its fairness opinion, neither the Initial JPM Opinion nor the Supplemental JPM Opinion address the fairness of the exchange ratios in the exchange offer, from a financial point of view, to us at the time the proposed combination will be completed.

13

Resales of LAN shares issued in the mergers may cause the market price of such shares to fall

As of March 28, 2012, 340,977,309 LAN shares were issued and outstanding (of which 33.84% were beneficially owned by the LAN controlling shareholders) and 1,216,251 LAN shares were subject to issuance upon exercise of outstanding options and other rights to purchase such shares. In the mergers, LAN expects to issue a significant amount of LAN shares in the form of LAN American Depositary Shares (“LAN ADSs”) and LAN Brazilian Depositary Shares (“LAN BDSs”) to the holders of TAM shares and TAM ADSs in exchange for their TAM shares or TAM ADSs, although the actual number of LAN shares issued will depend on the extent to which holders of such TAM shares and TAM ADSs elect to tender their TAM shares and/or TAM ADSs into the exchange offer and the number of vested stock options and other rights to acquire TAM shares that are exercised before the completion of the exchange offer and the mergers. If all holders of TAM shares and TAM ADSs, other than the TAM controlling shareholders, validly tender all of their TAM shares and/or TAM ADSs into, and do not withdraw them from, the exchange offer, the TAM controlling shareholders contribute all of their TAM shares into the proposed business combination and no TAM shares (including those represented by TAM ADSs) or LAN shares (including those represented by LAN ADSs and LAN BDSs) are issued after the date of the exchange offer other than the LAN common shares to be issued pursuant to the exchange offer and the mergers which will be represented by LAN ADSs and LAN BDSs, then LAN will issue a total of 140,586,107 LAN common shares in connection with the exchange offer and the mergers and immediately after the effective time of the mergers, the issued and outstanding LAN shares (including those represented by LAN ADSs and LAN BDSs but excluding those reserved under stock option plans) will be owned approximately as follows: 13.62% of such LAN shares will be held by the TAM controlling shareholders, 15.59% of such LAN shares will be held by the holders of TAM shares and TAM ADSs other than the TAM controlling shareholders, 23.97% of such LAN shares will be held by the LAN controlling shareholders and 46.82% of such LAN shares will be held by the holders of LAN shares other than the LAN controlling shareholders. If there are substantial sales of the newly issued LAN shares shortly after the effective time of the mergers, this could adversely affect the market for, and the market price of, the LAN common shares, the LAN ADSs and the LAN BDSs.

Risks Relating to the Combination of LAN and TAM

LAN may be unable to fully realize the anticipated benefits of the proposed combination

After completion of the proposed combination, LAN will change its name to “LATAM Airlines Group S.A.” The proposed combination involves bringing together two large and complex businesses that currently operate as independent public companies. LAN will be required to devote significant management attention and resources to integrating certain aspects of the business practices and operations of LAN and TAM. The success of the proposed combination will depend, in part, on LAN’s ability to realize anticipated revenue synergies, cost savings and growth opportunities by combining the businesses of LAN and TAM. LAN hopes to generate synergies resulting from the consolidation of capabilities, rationalization of operations and headcount, greater efficiencies from increased scale and market integration, new product and service offerings and organic growth. There is a risk, however, that LAN may not be able to combine the businesses of LAN and TAM in a manner that permits LAN to realize these revenue synergies, cost savings and growth opportunities in the time, manner or amounts LAN currently expects or at all. Potential difficulties LAN may encounter as part of the integration process include, among other things:

• the inability to successfully combine the businesses of LAN and TAM in a manner that permits LAN to achieve the full revenue synergies, cost savings and growth opportunities anticipated to result from the proposed combination;

• complexities associated with managing the combined companies;

• the need to implement, integrate and harmonize various business-specific operating procedures and systems, as well as the financial, accounting, information and other systems of LAN and TAM;

• potential loss of key employees as a result of implementing the proposed combination;

• the need to coordinate the existing products and customer bases of LAN and TAM; and

14

• potential unknown liabilities and unforeseen increased expenses or delays associated with the exchange offer, the mergers and the other combination transactions, including one-time cash costs to complete and implement the proposed combination that may exceed the one-time cash costs that LAN currently anticipates.

In addition, LAN and TAM have operated and, until the completion of the exchange offer and the mergers, will continue to operate under their existing separate airline certificates. It is possible that the integration process could result in:

• diversion of management’s attention from their normal areas of responsibility to address integration issues; and

• the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in its standards, controls, procedures and policies,

each of which could adversely affect each company’s ability to maintain good relationships with its customers, suppliers, employees and other constituencies, or to achieve the anticipated benefits of the proposed combination, and could increase costs or reduce each company’s earnings or otherwise adversely affect the businesses, financial condition, results of operations and/or prospects of the combined companies following the completion of the exchange offer and the mergers.

Actual revenue synergies, cost savings, growth opportunities and efficiency and operational benefits that result from the proposed combination may be lower and may take a longer time to achieve than LAN currently expects.

The integration of two large companies also presents significant management challenges. In order to achieve the anticipated benefits of the proposed combination, the operations of the two companies will need to be reorganized and their resources will need to be combined in a timely and flexible manner. There can be no assurance that LAN will be able to implement these steps as anticipated or at all. If LAN fails to achieve the planned restructuring effectively within the time frame that is currently contemplated or to the extent that is currently planned, or if for any other reason the expected revenue synergies, cost savings and growth opportunities fail to materialize, the exchange offer, the mergers and the other combination transactions described in this annual report may not produce the benefits LAN currently anticipates.

LAN has and will continue to incur significant costs and expenses in connection with the proposed combination and integration of the business operations of LAN and TAM

LAN has incurred and will continue to incur substantial expenses in connection with the proposed combination and the integration of LAN and TAM. LAN incurred approximately US$15 million in non-recurring expenses in connection with the proposed combination in 2011, and expects to incur US$25 million in such expenses in 2012. Significant costs and expenses have been and are being incurred related to the exchange offer, the mergers and the other transactions. These costs and expenses include financial advisory, legal, accounting, consulting and other advisory fees and expenses, reorganization and restructuring costs, severance/employee benefit-related expenses, filing fees, printing expenses and other related charges. Some of these costs are payable by LAN and TAM depending on the nature of the expense and regardless of whether the proposed combination is completed. There are also a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the proposed combination. While both LAN and TAM have assumed that a certain level of expenses would be incurred in connection with these transactions, there are many factors beyond LAN’s and TAM’s control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs in connection with the proposed combination that LAN may not recoup. These costs and expenses could, particularly in the near term, exceed the savings that LAN expects to achieve from the elimination of duplicative expenses and the realization of economies of scale, other efficiencies and cost savings. Although LAN expects that these savings will offset these integration and implementation costs over time, this net benefit may not be achieved in the near term or at all.

15

LAN will not control the voting shares or board of directors of TAM

After completion of the exchange offer, the mergers and the other transactions contemplated by the transaction agreements:

• Holdco I will own 100% of the TAM common shares that were:

• contributed by the TAM controlling shareholders, or

• acquired pursuant to the exchange offer,

• LAN will own 100% of the TAM preferred shares that were acquired pursuant to the exchange offer or contributed by the TAM controlling shareholders,

• The TAM controlling shareholders will own at least 80% of the outstanding Holdco I voting shares and LAN will own no more than 20% of the outstanding Holdco I voting shares, due to a Brazilian restriction that prohibits non-Brazilians to own more than 20% of a Brazilian airline, and

• LAN will own 100% of the outstanding Holdco I non-voting shares, which will entitle it to essentially all of the economic rights in respect of the TAM common shares held by Holdco I.

As a result of this ownership structure:

• the TAM controlling shareholders will, by virtue of their control of the voting shares of Holdco I and the boards of directors of each of Holdco I, TAM and each airline subsidiary of TAM, retain voting and board control of TAM and each airline subsidiary of TAM; and

• LAN, by virtue of its ownership of all of the non-voting shares of Holdco I and TAM preferred shares acquired pursuant to the exchange offer and the mergers, will be entitled to virtually all of the economic rights in TAM subject only to the rights of holders of any TAM shares not so acquired.

LAN, the TAM controlling shareholders and other parties have entered into shareholders agreements that establish agreements and restrictions relating to corporate governance in an attempt to balance LAN’s interests, as the owner of substantially all of the economic rights in TAM, and the TAM controlling shareholders, as the continuing controlling shareholders of TAM under Brazilian law, by prohibiting the taking of certain specified material corporate actions and decisions without prior supermajority approval of the shareholders (5/6 of the total of the shareholders) and/or the board of directors of Holdco I or TAM. However, no assurances can be given that LAN and the TAM controlling shareholders will be able to reach an agreement with respect to such supermajority voting or board matters in the future and if they do not, the businesses, financial condition, results of operations and prospects of the combined companies could be adversely affected. In addition, pursuant to these shareholder agreements, neither Holdco I, TAM nor TAM’s subsidiaries may take certain actions without the prior approval of a supermajority of the board of directors and/or the shareholders of Holdco I or TAM. As a result of these supermajority requirements, these actions will effectively require the prior approval of both LAN and TEP Chile S.A. (“TEP Chile”) (which will be wholly owned by the TAM controlling shareholders). Actions requiring supermajority approval by the board of directors of Holdco I or TAM include, among others, entering into acquisitions or business collaborations, amending or approving budgets, business plans, financial statements and accounting policies, incurring indebtedness, encumbering assets, entering into certain agreements, making certain investments, modifying rights or claims, entering into settlements, appointing executives, creating security interests, issuing, redeeming or repurchasing securities and voting on matters as a shareholder of subsidiaries of TAM. Actions requiring supermajority shareholder approval of Holdco I or TAM include, among others, certain changes to the by-laws of Holdco I, TAM or TAM’s subsidiaries or any dissolution/liquidation, corporate reorganization, payment of dividends, issuance of securities, disposal or encumbrance of certain assets, creation of securities interest or entering into guarantees and agreements with related parties.

16

Uncertainties associated with the proposed combination may cause a loss of management personnel and other key employees that could adversely affect LAN, TAM and/or the combined companies

The success of the proposed combination is dependent, in part, on the experience and industry knowledge of their senior management and other key employees of LAN and TAM and their ability to execute their business plans. In order to be successful, LAN, TAM and the combined companies must be able to retain the senior management and other key employees and their ability to attract highly qualified personnel in the future. Current and prospective employees of LAN and TAM may experience uncertainty about their roles within LATAM following completion of the proposed combination, which may have an adverse effect on the ability of LAN, TAM or the combined companies to retain or attract senior management and other key employees. Competition for highly qualified personnel in the various localities and business segments in which LAN and TAM operate, is intense. No assurances can be given that LAN and TAM or, after completion of the proposed combination, the combined companies will be able to retain or attract senior management and other key employees to the same extent that LAN and TAM have previously been able to do so.

The financial results of LATAM will be more exposed to currency exchange rate fluctuations as a result of the proposed combination and the resulting increase in the proportion of assets, liabilities and earnings that are denominated in currencies other than US dollars

LATAM will prepare and present its consolidated financial statements in US dollars. The proposed combination will significantly increase the proportion of LAN’s consolidated net assets, revenues and income in non-US dollar currencies, primarily Chilean pesos and Brazilian real. The consolidated financial condition and results of operations of LATAM will therefore be more sensitive to movements in exchange rates between the US dollar and other currencies. A depreciation of non-US dollar currencies relative to the US dollar could have an adverse impact on the financial condition, results of operations and prospects of LATAM.

LATAM’s future results will suffer if it cannot effectively manage its expanded operations following completion of the proposed combination

Following the completion of the proposed combination, the size of the business of the combined companies will be significantly larger and more complex than the current business of LAN or TAM. LAN’s future success will depend, in part, on LAN’s ability to manage this expanded business, which will pose substantial challenges for management, including those related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that LATAM will be successful or that it will realize the expected operating efficiencies, cost savings, revenue synergies and other benefits currently anticipated by LAN and TAM from the proposed combination.

The proposed combination could cause a downgrade of LAN’s credit ratings, which could have a negative effect on LAN’s business

TAM currently has a lower credit rating and is more leveraged than LAN. As a result of the proposed combination, LAN’s credit rating could be downgraded by one or more credit rating agencies, which could adversely affect the financial condition, results of operations and prospects of the combined companies. If LAN’s credit rating is downgraded, it could affect LAN’s ability to finance future fleet acquisitions and/or increase LAN’s financing costs.

It may take time to combine the frequent flyer programs of LAN and TAM

LAN and TAM each currently run their own frequent flyer programs. While LAN intends to integrate these programs so that passengers can use frequent flyer miles earned with either LAN or TAM interchangeably, there is no guarantee that this integration will be completed in the near term or at all. Even if the integration occurs, the successful integration of these programs will involve some time and expense. Until LAN effectively combines these programs, passengers may prefer frequent flyer programs offered by other airlines, which may adversely affect our business.

17

LATAM will have to withdraw from an existing airline alliance to which LAN or TAM belongs

LAN is currently a member of the oneworld^® airline alliance while TAM is a member of the Star Alliance airline alliance. Although LAN and TAM will continue operating under their existing separate operating certificates after the proposed combination, due to conditions imposed by the Chilean and Brazilian antitrust regulators, LAN and TAM may not participate in more than one airline alliance after the end of the 24-month period following completion of the proposed combination. LAN and TAM are currently evaluating and have not decided yet to which airline alliance they will belong after the completion of the proposed combination with TAM. The withdrawal from one of the alliances after the proposed combination may impede LATAM from providing customers with exactly the same benefits currently provided by LAN and TAM, such as the same travel destinations, combined reservation system, itinerary flexibility, among others. As a result, passengers may prefer alliances offered by LATAM’s competitors, and consequently decide to fly with them, which may adversely affect LATAM’s business.

Risks Related to our Operations and the Airline Industry

Our performance is heavily dependent on economic conditions in the countries in which we do business and negative economic conditions in those countries could have an adverse impact on our business.

Passenger and cargo demand is heavily cyclical and highly dependent on global and local economic growth, economic expectations and foreign exchange rate variations, among other things. In the past, our business has been negatively affected by global economic recessionary conditions, weak economic growth in Chile, recession in Argentina and poor economic performance in certain emerging market countries in which we operate. The occurrence of similar events in the future could adversely affect our business. In fact, starting as of late 2008, and during 2009, many of the countries we serve, including Chile, experienced economic slowdowns or recessions, which translated into a substantial weakening of demand. We plan to continue to expand our operations based in Latin America and our performance will, therefore, continue to depend heavily on economic conditions in the region. Any of the following factors could adversely affect our business, financial condition and results of operations in the countries in which we operate:

• changes in economic or other governmental policies;

• weak economic performance, including, but not limited to, low economic growth, low consumption and/or investment rates, and increased inflation rates; or

• other political or economic developments over which we have no control.

Driven by the severe downturn in the global economy, including in the economies of many of the countries we serve, we began to experience weakening demand in cargo late in 2008, and this weak demand continued into 2009. However, we began to experience a recovery in cargo traffic in late 2009, which continued improving during 2010 and 2011. If the regional economic environment continues its positive performance, demand in cargo may continue to grow during the current year. No assurance can be given that capacity reductions or other steps we may take will be adequate to offset any future reduction in our cargo and/or air travel demand.

The success of our business depends upon key regulatory issues and these issues may adversely affect our business and results of operations.

Our business is highly regulated and depends substantially upon the regulatory environment in the countries in which we operate or intend to operate. For example, price controls on fares may limit our ability to effectively apply customer segmentation profit maximization techniques (“passenger revenue management”) (management techniques utilizing passenger demand forecasting and fare mix optimization techniques to maximize profit for an airline) and adjust prices to reflect cost pressures. High levels of government regulation may limit the scope of our operations and our growth plans, especially in the event of deterioration of the relations between the countries in which we operate or the public perception of foreign companies in local markets. Accordingly, regulatory issues could adversely affect our business and results of operations.

18

Our business, financial condition and results of operations could be adversely affected if we or certain aviation authorities (among them, those from Argentina, Brazil, Chile, Ecuador, Mexico, Peru, Colombia and the United States) fail to maintain the required foreign and domestic governmental authorizations. In order to maintain the necessary authorizations issued by the Chilean Junta Aeronáutica Civil (“JAC”) and technical operative authorizations issued by the Chilean Dirección General de Aeronáutica Civil (“DGAC”), and other corresponding local authorities of the countries in which we operate, we must continue to comply with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

We depend on strategic alliances or commercial relationships in many of the countries in which we operate and our business may suffer if any of our strategic alliances or commercial relationships terminates.

In many of the jurisdictions in which we operate, we have found it in our interest, to maintain a number of alliances and other commercial relationships. These alliances or commercial relationships allow us to enhance our network and, in some cases, to offer our customers services that we could not otherwise offer. If any of our strategic alliances or commercial relationships and, in particular, with American Airlines, Iberia, Qantas or oneworld^® deteriorates, or any of these agreements are terminated, our business, financial condition and results of operations could be negatively affected.

Our business and results of operation may suffer if we fail to obtain and maintain routes, suitable airport access, slots and other operating permits.

Our business depends upon our access to key routes and airports. Our operations could be constrained by any delay or inability to gain access to key routes or airports, including:

• limitations on our ability to process more passengers;

• the imposition of flight capacity restrictions;

• the inability to secure or maintain route rights in local markets or under bilateral agreements; or

• the inability to maintain our existing slots and obtain additional slots.

We operate numerous international routes, subject to bilateral agreements and also internal flights within Chile, Argentina, Peru and other countries, subject to local route and airport access approvals. Bilateral aviation agreements as well as local aviation approvals frequently involve political and other considerations outside of our control. See “Item 4. Information on the Company— Business Overview—Regulation—Route Rights”.

There can be no assurance that existing bilateral agreements between the countries in which our companies are based and permits from foreign governments will continue. A modification, suspension or revocation of one or more bilateral agreements could have a material adverse effect on our business, financial condition and results of operations. The suspension of our permission to operate in certain airports or destinations or the imposition of other sanctions could also have a material adverse effect. We cannot assure that a change in a foreign government’s administration of current laws and regulations or that the adoption of new laws and regulations will not have a material adverse effect on our business, financial condition and results of operations.

If we are unable to obtain favorable take-off and landing authorizations at certain high-density airports, our business, financial condition and results of operations could be adversely affected. There can be no assurance that we will be able to obtain all requested authorizations and slots in the future because, among other factors, government policies regulating the distribution of the authorizations and slots are subject to change.

19

A failure to successfully implement our growth strategy would harm our business and the market value of the ADSs and our common shares.

Our growth strategy involves increasing the frequency of flights to the markets we currently serve and expanding our service to new markets. In order to carry out this strategy, we must be able to identify the appropriate geographic markets upon which to focus and to gain suitable airport access and route approval in these markets. There can be no assurance that the new markets we enter or in which we are seeking to expand our operations will provide passenger and cargo traffic that is sufficient to make our operations in those new markets profitable.

The expansion of our business will also require additional skilled personnel, equipment and facilities. An inability to hire and retain skilled personnel or secure the required equipment and facilities efficiently and cost-effectively may adversely affect our ability to execute our growth strategy. Expansion of our markets and flight frequencies may also strain our existing management resources and operational, financial and management information systems to the point that they may no longer be adequate to support our operations, requiring us to make significant expenditures in these areas.

Our business may be adversely affected by a downturn in the airline industry caused by exogenous events that affect travel behavior or increase costs, such as outbreak of disease, natural disasters, war or terrorist attacks.

Demand for air transportation may be adversely impacted by exogenous events, such as natural disasters, epidemics, terrorist attacks, war or political and social instability. Situations such as these in one or more of the markets in which we operate could have a material impact on our business, financial condition and results of operations. Furthermore, these types of situations could have a prolonged effect on air transportation demand and on certain cost items.

During January 2010, bad weather affected the city of Cuzco in Peru causing important human and material damage and severely affecting this tourist destination. This affected our operations, which led us to decrease our capacity in order to improve load factors. We estimate the net impact of decreased passenger operations to have been approximately US$15.0 million.

In addition, on February 27, 2010, an earthquake struck Chile causing major damages mainly in the southern regions of the country. This earthquake damaged the terminal building at the Santiago International Airport causing the suspension of LAN’s passenger services to and from Chile until March 1, 2010. Lan Cargo’s operations suffered no impact since Lan Cargo has flexibility to redesign itineraries if and when needed. As of March 28, 2010, operations were restored to normal levels and the airport started to operate normally. As of December 31, 2010, we estimate the net impact of decreased passenger operations due to the earthquake to have been approximately US$30 million.

In 2011 the Company was also impacted by the presence of volcanic ash on certain routes which resulted in US$36.6 million losses.

Terrorist attacks may also have a severe adverse impact on the airline industry. For example, the terrorist attacks in the United States on September 11, 2001 substantially affected the airline industry, particularly foreign air carriers operating international service to and from the United States. Throughout South America, passenger traffic also decreased substantially, although the decrease was less severe than that in the United States. The airline industry experienced increased costs following the September 11, 2001 terrorist attacks. Airlines have been required to adopt additional security measures and may be required to comply with more rigorous security guidelines in the future.

In addition, fuel prices and supplies, which constitute a significant cost for us, may increase as a result of any future terrorist attacks, a general increase in hostilities or a reduction in output of fuel, voluntary or otherwise, by oil-producing countries. Such increases may result in both higher airline ticket prices and decreased demand for air travel generally, which could have an adverse effect on our revenues and results of operations. Presently, there is a trend towards increases in jet fuel prices because of the increased demand caused by the 2010 recovery in the global economy coupled with conflicts during 2011 in Egypt and Libya that affected global fuel supply. It is impossible for us to predict if we will be able to fully protect ourselves against the volatility of fuel costs.

20

A significant portion of our cargo revenues comes from relatively few product types and may be impacted by events affecting their production or trade.

Our cargo demand, especially from Latin American exporters, is concentrated in a small number of product categories, such as fish and sea products and produce exports from Chile and Peru, and fresh flowers from Ecuador and Colombia. Events that negatively affect the production or trade of these goods may adversely affect the volume of goods that we transport and may have a significant impact on our results of operations. Some of our cargo products are sensitive to foreign exchange rates and, therefore, traffic volumes could be impacted by the appreciation or depreciation of local currencies.

In mid 2007, there was an outbreak of infectious salmon anemia virus (“ISA Virus”) in Chile, which was temporarily contained during 2008 but has continued to affect exports since then. The outbreak of ISA Virus has caused, and may continue to cause, a significant decline in salmon exports and has had, and may continue to have, an adverse impact on our cargo operations.

Our operations are subject to fluctuations in the supply and cost of jet fuel, which could negatively impact our business.

Higher jet fuel prices or a shortage in the supply of fuel could cause a reduction in our scheduled service and could have a materially negative effect on our business, financial condition and results of operations. Jet fuel costs have historically accounted for a significant amount of our operating expenses, and accounted for approximately 34% of our operating expenses in 2011. Both the cost and availability of fuel are subject to many economic and political factors and events that we can neither control nor predict. We have entered into fuel hedging arrangements, but there can be no assurance that such arrangements will be adequate to protect us from a significant increase in fuel prices in the near future or in the long term. Also, while these hedging arrangements are designed to limit the effect of an increase in fuel prices, some of our hedging methods may also limit our ability to take advantage of any decrease in fuel prices. Although we have implemented measures to pass a portion of incremental fuel costs to our customers, our ability to lessen the impact of any increase using these types of mechanisms may also be limited.

We rely on maintaining a high daily aircraft utilization rate to increase our revenues, which makes us especially vulnerable to delays.

One of the key elements of our business strategy is to maintain a high daily aircraft utilization rate, which measures the number of flight hours we use our aircraft per day. High daily aircraft utilization allows us to maximize the amount of revenue we generate from our aircraft and is achieved, in part, by reducing turnaround times at airports and developing schedules that enable us to increase the average hours flown per day. Our rate of aircraft utilization could be adversely affected by a number of different factors that are beyond our control, including air traffic and airport congestion, adverse weather conditions and delays by third-party service providers relating to matters such as fueling and ground handling.

Furthermore, high aircraft utilization rates increase the risk that, if an aircraft falls behind schedule, it could remain behind schedule for up to two days. Such delays could result in a disruption in our operating performance, leading to customer dissatisfaction due to any resulting delays or missed connections.

We fly and depend upon Airbus and Boeing aircraft, and our business is at risk if we do not receive timely deliveries of aircraft, if aircraft from these companies becomes unavailable or if the public negatively perceives our aircraft.

As our fleet has grown, our reliance on Airbus and Boeing has also grown. As of December 31, 2011, we operated a fleet of 81 Airbus, 54 Boeing and 14 Dash aircraft. These risks include:

• our failure or inability to obtain Airbus or Boeing aircraft, parts or related support services on a timely basis because of high demand or other factors;

21

• the interruption of fleet service as a result of unscheduled or unanticipated maintenance requirements for these aircraft;

• the issuance by Chilean or other aviation authorities of other directives restricting or prohibiting the use of Airbus or Boeing aircraft, or requiring time-consuming inspections and maintenance;

• the adverse public perception of a manufacturer as a result of an accident or other negative publicity; or

• delays between the time we realize the need for new aircraft and the time it takes us to arrange for Airbus and Boeing or from a third-party provider to deliver this aircraft.

The occurrence of any one or more of these factors could restrict our ability to use aircraft to generate profits, respond to increased demands, or could otherwise limit our operations and adversely affect our business.

We are often affected by certain factors beyond our control, including weather conditions, which can affect our operations.

Revenues for airlines depend on the number of passengers carried, the fare paid by each passenger and service factors, such as the timeliness of flight departures and arrivals. During periods of fog, ice, low temperatures, storms or other adverse weather conditions, some or all of our flights may be cancelled or significantly delayed, reducing our revenues.

Losses and liabilities in the event of an accident involving one or more of our aircraft could materially affect our business.

We are exposed to potential catastrophic losses in the event of an aircraft accident, terrorist incident or any other similar event. There can be no assurance that, as a result of an aircraft accident or significant incident:

• we will not need to increase our insurance coverage;

• our insurance premiums will not increase significantly;

• our insurance coverage will fully cover all of our liability; or

• we will not be forced to bear substantial losses.

Substantial claims resulting from an accident or significant incident in excess of our related insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Moreover, any aircraft accident, even if fully insured, could cause the negative public perception that our aircraft are less safe or reliable than those operated by other airlines, which could have a material adverse effect on our business, financial condition and results of operations.

Insurance premiums may also increase due to an accident or incident affecting one of our airline affiliates or alliance partners or affecting other airlines.

High levels of competition in the airline industry may adversely affect our level of operations.

Our business, financial condition and results of operations could be adversely affected by high levels of competition within the industry, particularly the entrance of new competitors into the markets in which we operate. Airlines compete primarily over fare levels, frequency and dependability of service, brand recognition, passenger amenities (such as frequent flyer programs) and the availability and convenience of other passenger or cargo services. New and existing airlines could enter our markets and compete with us on any of these bases. Several of our competitors are larger than us and have greater brand recognition and greater resources than we do. Competing carriers include investor-owned, government-subsidized and national flag carriers of foreign countries as well as low-cost carriers offering discounted fares. The U.S. -Chile and other open skies agreements may subject us to

22

further competition from international carriers. In addition to traditional competition among airline companies, we face competition from companies that provide ground transportation, especially in our domestic cargo and passenger businesses, as well as sea transportation for our cargo business. Competition could reduce our passenger traffic and cargo demand, forcing us to reduce our fare levels, which could have a material adverse effect on our revenues and level of operations.

Chile may open its domestic aviation industry to foreign airlines without restrictions, which may change the competitive landscape of the domestic Chilean aviation sector and affect our business and results of operations

Currently, Chilean laws and regulations permit foreign airlines to operate domestic flights in Chile. Nevertheless, the rules currently prevent foreign-based carriers from flying within Chile without setting up a Chilean subsidiary first. There are currently no foreign airlines participating in the Chilean domestic market. However, on January 18, 2012, both the Secretary of Transportation and the Secretary of Economics of Chile announced steps towards unilaterally opening the Chilean domestic skies in the near term. Chilean Domestic Unilateral Open Skies Rule may change the competitive landscape of the Domestic Chilean Aviation Sector, as it will be easier for foreign companies in the future to freely operate in the Chilean territory, which may subject us to further competition. Competition from international carriers in the Chilean market may affect the competitive dynamics of our industry by reducing our passenger traffic and cargo demands, forcing us to reduce our fare levels, which could have a material adverse effect on our revenues and level of operations.

Some of our competitors may receive external support which could negatively impact our competitive position.

Some of our competitors may receive support from external sources, such as their national governments, which may be unavailable to us. Support may include, among others, subsidies, financial aid or tax waivers. This support could place us at a competitive disadvantage and adversely affect our operations and financial performance.

If we are unable to incorporate leased aircraft into our fleet at acceptable rates and terms in the future, our business could be adversely affected.

A large portion of our aircraft are subject to long-term operating leases. Our operating leases typically run from three to twelve years from the date of delivery. We may face more competition for, or a limited supply of, leased aircraft, making it difficult for us to negotiate on competitive terms upon expiration of our current operating leases or to lease additional capacity required for our targeted level of operations. If we are forced to pay higher lease rates in the future to maintain our capacity and the number of aircraft in our fleet, our profitability could be adversely affected.

We are incorporating various new technologies and equipment and their phase-in may have a negative impact on our service and operating standards.

In recent years we have decided to incorporate a number of new aircraft, equipment and systems. The decision to incorporate these new elements has been based on their potential to enhance customer satisfaction, increase efficiency and/or streamline processes. However, the phase-in of these elements may temporarily result in lower service and operating standards, which could affect how our customers perceive us and have a negative impact on our results of operations.

Our business may be adversely affected if we are unable to meet our significant future financing requirements.

We require significant amounts of financing to meet our aircraft capital requirements and may require additional financing to fund our other business needs. We cannot guarantee that we will have access to or be able to arrange for financing in the future on favorable terms. If we are unable to obtain financing for a significant portion of our capital requirements, our ability to acquire new aircraft or to expand operations could be impaired and our business negatively affected.

23

Our business may be adversely affected by our high degree of debt and aircraft lease obligations compared to our equity capital.

We have a high degree of debt and payment obligations under our aircraft operating leases compared to equity capital. In order to finance our debt, we depend in part on our cash flow from operations. We cannot assure you that in the future we will be able to meet our payment obligations. In addition, the majority of our property and equipment is subject to liens securing our indebtedness. In the event that we fail to make payments on the secured indebtedness, creditors’ enforcement of liens could limit or end our ability to use the affected property and equipment to fulfill our operational needs and thus generate revenue.

Increases in insurance costs and/or significant reductions in coverage could harm our financial condition and results of operations.

Major events affecting the aviation insurance industry (such as terrorist attacks, hijackings or airline crashes) may result in significant increases of the airlines’ insurance premium or in significant decreases of insurance coverage, as it happened after the 9/11 terrorist attacks. Increases in insurance costs and/or significant reductions in coverage could harm our financial condition and results of operations.

Problems with air traffic control systems or other technical failures could interrupt our operations and have a material adverse effect on our business.

Our operations, including our ability to deliver customer service, are dependent on the effective operation of our equipment, including our aircraft, maintenance systems and reservation systems. Our operations are also dependent on the effective operation of domestic and international air traffic control systems and the air traffic control infrastructure in the markets in which we operate. Equipment failures, personnel shortages, air traffic control problems and other factors that could interrupt operations could adversely affect our operations and financial results as well as our reputation.

Our financial success depends on the availability and performance of key personnel, who are not subject to non-competition restrictions.

Our success depends to a significant extent on the ability of our senior management team and key personnel to operate and manage our business effectively. Our employment agreements with key personnel do not contain any non-competition provisions applicable upon termination. Competition for highly qualified personnel is intense. If we lose any executive officer, senior manager or other key employee and are not able to obtain an adequate replacement, or if we are unable to attract and retain new qualified personnel, our business, financial condition and results of operations could be materially adversely affected.

Our business may experience adverse consequences if we are unable to reach satisfactory collective bargaining agreements with our unionized employees.

Approximately 49% of our employees, including administrative personnel, cabin crews, flight attendants, pilots and maintenance technicians are members of unions and have contracts and collective bargaining agreements which expire on a regular basis. Our business, financial condition and results of operations could be materially adversely affected by a failure to reach agreement with any labor union representing such employees or by an agreement with a labor union that contains terms that are not in line with our expectations or that prevent us from competing effectively with other airlines.

Pressure by employees could cause operating disruptions and negatively impact our business.

Certain employee groups such as pilots, flight attendants, mechanics and our airport personnel have highly specialized skills. As a consequence, actions by these groups, such as strikes, walk-outs or stoppages, could severely disrupt our operations and negatively impact our operating and financial performance, as well as how our customers perceive us.

24

For example, during the third quarter of 2001, members of one of our pilot unions implemented a series of actions that disrupted our services prior to the negotiation of their collective bargaining agreement, which had a negative impact on our operations and our profitability.

Increases in our labor costs, which constitute a substantial portion of our total operating costs, could directly impact our earnings.

Labor costs constitute a significant percentage of our total operating costs (19.6% in 2011), and at times in our operating history we have experienced pressure to increase wages and benefits for our employees. A significant increase in our labor costs above the assumed costs could result in a material reduction in our earnings.

We may experience difficulty finding, training and retaining employees.

Our business is labor intensive. We employ a large number of pilots, flight attendants, maintenance technicians and other operating and administrative personnel. The airline industry has, from time to time, experienced a shortage of qualified personnel, specifically pilots and maintenance technicians. In addition, as is common with most of our competitors, we may, from time to time, face considerable turnover of our employees. Should the turnover of employees, particularly pilots and maintenance technicians, sharply increase, our training costs will be significantly higher. We cannot assure you that we will be able to recruit, train and retain the qualified employees that we need to continue our current operations or replace departing employees. A failure to hire and retain qualified employees at a reasonable cost could materially adversely affect our business, financial condition and results of operations.

Failure to comply with applicable environmental regulations could adversely affect our business and reputation.

Our operations are covered by environmental regulations at local, national and international levels. These regulations cover, among other things, emissions to the atmosphere, disposal of solid waste and aqueous effluents, aircraft noise and other activities incident to our business. Future operations and financial results may vary as a result of such regulations. Compliance with these regulations and new or existing regulations that may be applicable to us in the future could increase our cost base and adversely affect our operations and financial results. In addition, failure to comply with these regulations could adversely affect us in a variety of ways, including adverse effects on our reputation.

Risks Related to Chile and Other Emerging Market Countries

Developments in Latin American countries and other emerging market countries may adversely affect the Chilean economy, negatively impact our business and results of operations and cause the market price of our common shares and ADSs to decrease.

We conduct a significant portion of our operations in emerging market countries, particularly in Latin America. As a result, economic and political developments in these countries, including future economic crises and political instability, could impact the Chilean economy or the market value of our securities and have a material adverse effect on our business, financial condition and results of operations. Beginning late 2008, and continuing during 2009, many of the countries we serve, including Chile, experienced economic slowdowns or recessions, which resulted in a substantial weakening of demand. Although economic conditions in other emerging market countries may differ significantly from economic conditions in Chile, we cannot assure that events in other countries, particularly other emerging market countries, will not adversely affect the market value of, or market for, our common shares or ADSs.

Fluctuations in the value of the Chilean peso and other currencies in the countries in which we operate may adversely affect our revenues and profitability.

Changes in the exchange rate between the Chilean peso and the U.S. dollar or other currencies in the countries in which we operate could adversely affect our business, financial condition and results of operations. We operate in numerous countries and face the risk of variation in foreign currency exchange rates against the U.S. dollar or between the currencies of these various countries. Approximately 99% of our indebtedness at December 31, 2011 is

25

denominated in U.S. dollars, 22% of our revenues and 47% of our operating expenses in 2011 were denominated in currencies other than the U.S. dollar, mainly the Chilean peso. If the value of the peso, or of other currencies in which revenues are denominated, declines against the U.S. dollar, we will need more pesos or other local currency to repay the same amount of U.S. dollars. The Chilean peso has experienced volatility in recent years, including an average nominal depreciation of 1.3% against the U.S. dollar in 2008, an average nominal depreciation of 4.7% against the U.S. dollar in 2009 and an average nominal appreciation of 4.6% against the U.S. dollar in 2010. The exchange rate of the Chilean peso and other currencies against the U.S. dollar may fluctuate significantly in the future. Changes in Chilean and other governmental economic policies affecting foreign exchange rates could also adversely affect our business, financial condition, results of operations and the return to our shareholders on their common shares or ADSs.

Exchange controls in Venezuela delay our ability to repatriate cash generated from operations in Venezuela. They also increase our exposure to exchange rate losses due to potential devaluations of the Venezuelan bolivar vis à vis the U.S. dollar during the period of time between the time we are paid in Venezuelan bolivares and the time we are able to repatriate such revenues in U.S. dollars. See “Item 5. Operating and Financial Review and Prospects—Year ended December 31, 2011 compared to year ended December 31, 2010—Cost of Sales” and “—Year ended December 31, 2010 compared to year ended December 31, 2009—Cost of Sales”.

We are not required to disclose as much information to investors as a U.S. issuer is required to disclose and, as a result, you may receive less information about us than you would receive from a comparable U.S. company.

The corporate disclosure requirements that apply to us may not be equivalent to the disclosure requirements that apply to a U.S. company and, as a result, you may receive less information about us than you would receive from a comparable U.S. company. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The disclosure requirements applicable to foreign issuers under the Exchange Act are more limited than the disclosure requirements applicable to U.S. issuers. Publicly available information about issuers of securities listed on Chilean stock exchanges also provides less detail in certain respects than the information regularly published by listed companies in the United States or in certain other countries. Furthermore, there is a lower level of regulation of the Chilean securities markets and of the activities of investors in such markets as compared with the level of regulation of the securities markets in the United States and in certain other developed countries.

Risks Related to our Common Shares and ADSs

Our controlling shareholders may have interests that differ from those of our other shareholders.

As of January 31, 2012 our controlling shareholders, beneficially owned 33.9% of our voting common shares. Controlling shareholders are in a position to elect four of the nine members of our board of directors and are in a position to direct our management. In addition, under the terms of the deposit agreement governing the ADSs, if holders of ADSs do not provide JP Morgan Chase Bank, N.A., in its capacity as depositary for the ADSs, with timely instructions on the voting of the common shares underlying their ADRs, the depositary will be deemed to have been instructed to give a person designated by the board of directors the right to vote those common shares.

Trading of our ADSs and common shares in the securities markets is limited and could experience further illiquidity and price volatility.

Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. In addition, Chilean securities markets may be materially affected by developments in other emerging markets, particularly other countries in Latin America. Accordingly, although you are entitled to withdraw the common shares underlying the ADSs from the depositary at any time, your ability to sell the common shares underlying ADSs in the amount and at the price and time that you wish to do so may be substantially limited. This limited trading market may also increase the price volatility of the ADSs or the common shares underlying the ADSs.

26

Holders of ADSs may be adversely affected by currency devaluations and foreign exchange fluctuations.

If the peso exchange rate falls relative to the U.S. dollar, the value of the ADSs and any distributions made thereon from the depositary could be adversely affected. Cash distributions made in respect of the ADSs are received by the depositary (represented by the custodian bank in Chile) in pesos, converted by the custodian bank into U.S. dollars at the then prevailing exchange rate and distributed by the depositary to the holders of the ADRs evidencing those ADSs. In addition, the depositary will incur foreign currency conversion costs (to be borne by the holders of the ADRs) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to the ADSs.

Future changes in Chilean foreign investment controls and withholding taxes could negatively affect non-Chilean residents that invest in our shares.

Equity investments in Chile by non-Chilean residents have been subject in the past to various exchange control regulations that govern investment repatriation and earnings thereon. Although not currently in effect, regulations of the Central Bank of Chile have in the past required, and could again require, foreign investors acquiring securities in the secondary market in Chile to maintain a cash reserve or to pay a fee upon conversion of foreign currency to purchase such securities. Further, future changes in withholding taxes could negatively affect non-Chilean residents that invest in our shares.

When we established our ADS facility as part of our initial public offering in 1997, there were foreign exchange controls in Chile. At that time, in order to allow the depositary and investors to be able to enter into foreign exchange transactions to repatriate from Chile amounts they received in connection with the deposited shares of common stock (including dividends and proceeds from the sale in Chile of the underlying shares of common stock and any rights with respect thereto), we entered into a foreign investment contract (the “Foreign Investment Contract”) with the Central Bank and the depositary. The Foreign Investment Contract guaranteed ADS investors and the depositary access to the Formal Exchange Market to convert amounts from Chilean pesos into U.S. dollars and to repatriate such amounts.

In 2001, a new Compendium of Foreign Exchange Regulations (the “New Compendium”) removed exchange controls and many other barriers to investment. However, even though there are no longer foreign exchange controls in Chile, all foreign investment contracts (including the Foreign Investment Contract), continue to remain in full force.

We cannot assure that additional Chilean restrictions applicable to the holders of ADRs, the disposition of the common shares underlying ADSs or the repatriation of the proceeds from an acquisition, a disposition or a dividend payment, will not be imposed or required in the future, nor could we make an assessment as to the duration or impact, were any such restrictions to be imposed or required. For further information, see “Item 10. Additional Information—Foreign Investment and Exchange Controls in Chile”.

Our ADS holders may not be able to exercise preemptive rights in certain circumstances.

The Chilean Corporation Law, provides that preemptive rights shall be granted to all shareholders whenever a company issues new shares for cash, giving such holders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. We will not be able to offer shares to holders of ADSs and shareholders located in the United States pursuant to the preemptive rights granted to shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, (the “Securities Act”), is effective with respect to such rights and shares, or an exemption from the registration requirements of the Securities Act is available. At the time of any rights offering, we will evaluate the potential costs and liabilities associated with any such registration statement in light of any indirect benefit to us of enabling U.S. holders of ADRs evidencing ADSs and shareholders located in the United States to exercise preemptive rights, as well as any other factors that may be considered appropriate at that time, and we will then make a decision as to whether we will file a registration statement. We cannot assure that we will decide to file a registration statement or that such rights will be available to ADS holders and shareholders located in the United States.

27

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

General

Lan Airlines is a publicly-held stock corporation (sociedad anónima abierta) incorporated under the laws of Chile, with unlimited duration. Lan Airlines is a company primarily involved in the transportation of passengers and cargo.

The Chilean government founded Lan Airlines (formerly Lan Chile S.A.) in 1929. Lan Airlines was a government-owned company from 1929 until its incorporation in 1983. We began international service to Buenos Aires, Argentina in 1946, to the United States in 1958 and to Europe in 1970. In 1989, the Chilean government sold 51.0% of Lan Airlines’s capital stock to Chilean investors and to Scandinavian Airlines System. In 1994, our controlling shareholders together with other major shareholders acquired 98.7% of Lan Airlines’s stock, including the remaining stock held by the Chilean government, in a series of transactions. As of February 29, 2012, our controlling shareholders held 33.9% of our capital stock. For more information about our controlling shareholders, see “Item 7. Controlling Shareholders and Related Party Transactions—Controlling Shareholders” and “Item 7. Controlling Shareholders and Related Party Transactions—Related Party Transactions”. In 1997, Lan Airlines was listed on the New York Stock Exchange, becoming the first Latin American airline to trade its ADRs on this financial market.

Since this acquisition of our capital stock in 1994 and the appointment of our current management, we have grown our revenue base and maintained our profitability every year despite significant challenges. Additionally, we have created a comprehensive network across the region by forming, together with local partners, or acquiring, passenger affiliates in Peru, Ecuador, Argentina and Colombia, and cargo affiliates in Brazil, Mexico and Colombia. In early 2004, we changed our corporate image and started using the “LAN” brand in order to better reflect the common values and attributes present in all the companies forming our network. We have complemented our own network with a set of bilateral alliances with carriers such as American Airlines, Iberia and Qantas, and have been a member of the oneworld^® alliance since 2000.

Our principal executive offices are located at Presidente Riesco 5711, 20^th floor, Las Condes, Santiago, Chile and our general telephone number at this location is (56-2) 565-2525. We have designated LAN Airlines as our agent in the United States, located at 970 South Dixie Highway, Miami, Florida 33156. Our website address is www.lan.com. Information obtained on, or accessible through, this website is not incorporated by reference herein and shall not be considered part of this annual report. For more information contact Gisela Escobar, Director of Investor Relations at gisela.escobar@lan.com.

Capital Expenditures

For a description of our capital expenditures, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures”.

Proposed Combination with TAM

On August 13, 2010, we jointly announced with TAM that we had entered into a non-binding Memorandum of Understanding relating to the proposed all-stock transaction that would combine the holdings of LAN and TAM under a single parent entity.

On January 18, 2011, we and the LAN controlling shareholders entered into the transaction agreements with TAM, TEP and the TAM controlling shareholders, which set forth the terms and conditions of a proposed business combination of LAN and TAM. For a discussion of how the proposed combination will be implemented and the terms of the transaction agreements, see “—The Transaction Agreements” below.

28

The Transaction Agreements

This section describes the material terms of the transaction agreements. The rights and obligations of the parties to the transaction agreements are governed by the express terms and conditions of the transaction agreements and not by this summary or any other information contained in this annual report on Form 20-F. The description in this section and elsewhere in this annual report on Form 20-F is qualified in its entirety by reference to the complete text of the transaction agreements, as amended, which are incorporated by reference into this annual report on Form 20-F. This summary does not purport to be complete and may not contain all of the information about the transaction agreements that is important to you. We encourage you to read the transaction agreements carefully and in their entirety.

Explanatory Note Regarding the Transaction Agreements

The following summary is included to provide you with information regarding the terms of the transaction agreements. This section is not intended to provide you with any factual information about either TAM or LAN. Such information can be found elsewhere in this annual report on Form 20-F, in the public filings TAM and LAN make with the SEC, and other relevant documents filed or that will be filed with the SEC in connection with the proposed business combination of LAN and TAM. Factual disclosures about TAM or LAN contained in this annual report on Form 20-F or in LAN’s or TAM’s respective public reports filed with the SEC may supplement, update or modify the factual disclosures about TAM and LAN contained in the transaction agreements. The representations, warranties and covenants made in the transaction agreements by TAM and LAN were qualified and subject to important limitations agreed to by TAM and LAN in connection with negotiating the terms of the transaction agreements. In particular, in your review of the representations and warranties contained in the transaction agreements and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the transaction agreements may have the right not to commence the exchange offer if the representations and warranties of the other party proved to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the transaction agreements, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders and reports and documents filed with the SEC and in some cases were qualified by the matters contained in the disclosure schedules that TAM and LAN delivered in connection with the transaction agreements, which disclosures were not reflected in the transaction agreements. Therefore, the representations and warranties and other provisions in the transaction agreements should not be read alone but instead together with the information provided elsewhere in this annual report on Form 20-F and in the documents incorporated by reference into this annual report on Form 20-F. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this annual report on Form 20-F, may have changed since the date of the transaction agreements and subsequent developments or new information qualifying a representation or warranty may have been included in this annual report on Form 20-F. In this annual report on Form 20-F, we refer to January 18, 2011, the date that the parties entered into the transaction agreements as the “signing date.”

Overview

To help you better understand the proposed combination and its component steps, set forth below is a description of those steps together with organizational charts that illustrate how the transaction will affect the ownership of LAN and TAM.

29

Current Ownership of TAM

As of March 28, 2012, TAM’s current authorized share capital was R$1,200,000,000, which consisted of 55,816,683 TAM common shares and 100,390,098 TAM preferred shares. The TAM controlling shareholders owned approximately 85.37% of the TAM common shares and 25.09% of the TAM preferred shares as of March 28, 2012 and the remaining TAM shares were held by TAM’s minority shareholders.

Current Ownership of LAN

As of March 28, 2012 LAN’s current authorized share capital was 341,000,000 common shares, which consisted of 340,977,309 LAN common shares. The LAN controlling shareholders owned approximately 33.84% of the LAN common shares as of March 5, 2012. For a description of the rights attached to LAN common shares, see “Item 10. Additional Information—Memorandum and Articles of Association.”

On the terms and subject to the conditions set forth in the transaction agreements, all or substantially all of the outstanding TAM common shares will be acquired by Holdco I and substantially all of the outstanding TAM preferred shares will be acquired by LAN through a series of transactions and corporate restructurings described below.

Subject to the terms and conditions of the transaction agreements, the proposed combination will be effected as described below:

• In June 2011, the TAM controlling shareholders formed four new Chilean companies:

• TEP Chile, a new Chilean corporation formed in June 2011,

• Holdco I, a new Chilean corporation formed in June 2011,

30

• Holdco II S.A., a new Chilean corporation formed in June 2011 (“Holdco II”), and

• Sister Holdco S.A., a new Chilean corporation formed in June 2011 (“Sister Holdco”).

• The current ownership of these four new companies is as follows:

• the TAM controlling shareholders own 100% of the outstanding shares of TEP Chile,

• TEP Chile owns 100% of the voting shares of Holdco I (“Holdco I voting shares”), which class of shares is entitled to essentially all of the voting rights but none of the economic rights in Holdco I,

• LAN owns 100% the non-voting shares of Holdco I (“Holdco I non-voting shares”), which class of shares is entitled to essentially all of the economic rights but none of the voting rights in Holdco I,

• Holdco I and LAN each own one common share of Holdco II (“Holdco II share”), which collectively represent 100% of the outstanding Holdco II shares, and

• TEP Chile and its nominee each own one common share of Sister Holdco (“Sister Holdco share”), which collectively represent 100% of the outstanding Sister Holdco shares.

• Holdco II will make an exchange offer in the United States and in Brazil to acquire all of the issued and outstanding:

• TAM common shares,

• TAM preferred shares, and

• TAM ADSs,

in each case that are not owned by the TAM controlling shareholders in exchange for the same number of Holdco II shares.

• Immediately before Holdco II accepts for exchange the TAM shares and TAM ADSs tendered into, and not withdrawn from, the exchange offer:

• the TAM controlling shareholders will contribute to TEP Chile all of their TAM common shares and all of their TAM preferred shares and will receive additional shares of TEP Chile,

• TEP Chile will contribute to Holdco I all of the TAM common shares that it received from the TAM controlling shareholders and will receive Holdco I non-voting shares, and

• TEP Chile will contribute to Sister Holdco:

• all of the TAM preferred shares that TEP Chile received from the TAM controlling shareholders,

• all of the Holdco I non-voting shares that TEP Chile received from Holdco I, and

• 6.2% of the outstanding Holdco I voting shares,

and will receive a number of Sister Holdco shares equal to the total number of TAM common shares and TAM preferred shares that the TAM controlling shareholders contributed to TEP Chile.

31

After completion of the steps described in the immediately preceding bullet point, the ownership of TAM will be as follows:

After Holdco II accepts for exchange the TAM ADSs and TAM shares tendered into, and not withdrawn from, the exchange offer and immediately before the settlement of the exchange offer, each of Holdco II and Sister Holdco will merge with and into LAN as a result of which:

• LAN will be the surviving company of both mergers,

• Holdco II and Sister Holdco will cease to exist, and

• each Holdco II share (including those that would otherwise have been delivered at the settlement of the exchange offer) and each Sister Holdco share will be converted into 0.90 of a LAN common share.

Promptly after settlement of the exchange offer, LAN will:

• contribute to Holdco I any TAM common shares acquired in the exchange offer in exchange for the same number of Holdco I non-voting shares, and

• increase its ownership percentage of the outstanding Holdco I voting shares by converting some of its Holdco I non-voting shares into Holdco I voting shares to the percentage that will cause the product of (i) TEP Chile’s ownership percentage of the outstanding Holdco I voting shares and (ii) Holdco I’s ownership percentage of the outstanding TAM common shares to be equal to 80%.

32

As a result of the foregoing transactions:

Holdco I will own 100% of the TAM common shares that were:

• contributed by the TAM controlling shareholders or

• acquired pursuant to the exchange offer.

If the transactions described above are successfully completed, then immediately following the completion of these transactions the ownership of the issued and outstanding shares of LAN and TAM will be approximately as shown below. The ownership percentages shown in the chart below were calculated assuming that all holders of TAM shares and TAM ADSs other than the TAM controlling shareholders validly tender their TAM shares and TAM ADSs into, and do not withdraw them from, the exchange offer, that no TAM shares (including those represented by TAM ADSs) or LAN shares (including those represented by LAN ADSs and LAN BDSs) are issued after the date of the exchange offer prospectus other than the LAN shares (including those represented by LAN ADSs and LAN BDSs) to be issued pursuant to the exchange offer and the mergers and the TAM controlling shareholders make and pay the TEP Chile subscription by contributing to TEP Chile all TAM shares beneficially owned by them, and TEP Chile pays for the subscriptions of Holdco I shares and Sister Holdco shares by contributing to Holdco I and Sister Holdco all of the TAM shares contributed to it by the TAM controlling shareholders.

As a result of the Holdco II merger, each Holdco II share (including those shares to be issued pursuant to the exchange offer) will be converted into 0.90 of a LAN common share. Because the Holdco II merger will occur immediately before the settlement of the exchange offer, holders of TAM shares and TAM ADSs acquired in the exchange offer will receive 0.90 of a LAN common share for each TAM share or TAM ADS so acquired. Holders of TAM shares and TAM ADSs who tender into the exchange offer through the US exchange agent will receive such LAN common shares in the form of LAN ADSs, which will be evidenced by LAN ADRs. Holders of TAM shares who tender their TAM shares in the Auction on Bovespa will receive such LAN common shares in the form of LAN BDSs, which will be evidenced by Brazilian Depositary Receipts (“LAN BDRs”).

33

As a result of the Sister Holdco merger, each Sister Holdco share will be converted into 0.90 of a LAN common share. Because all of the Sister Holdco shares will be owned by the TAM controlling shareholders indirectly through TEP Chile immediately prior to the Sister Holdco Merger, they will receive LAN common shares for the TAM shares they contributed to TEP Chile at the same exchange ratio as the holders of TAM shares and TAM ADSs acquired in the exchange offer.

If permitted by Brazilian law, TAM will compulsorily redeem all TAM shares (including those represented by TAM ADSs) that were not acquired in the exchange offer.

If the exchange offer is completed, the TAM shares will be delisted automatically from Bovespa. If the TAM ADSs are no longer eligible for listing on the New York Stock Exchange (“NYSE”) and the NYSE does not delist them, then TAM intends to request, as it is required to do so by the transaction agreements, that the TAM ADSs be delisted from the NYSE as soon as is reasonably practicable following the effective time of the mergers if permitted by the rules of the NYSE. At the effective time, the LAN BDSs will be listed in Brazil on Bovespa, the LAN common shares will continue to be listed in Chile on the Bolsa de Comercio de Santiago (Santiago Stock Exchange) (“SSE”) and in the United States on the NYSE in the form of LAN ADSs, and LAN’s name will be changed to “LATAM Airlines Group S.A.”

TAM Shareholders’ Meeting

At a duly called shareholders’ meeting held on January 3, 2012 (at which the requisite quorum of the qualifying minority shares was present), the holders of qualifying minority shares had the option to select, by vote of a majority of the votes cast at that meeting, one of three recommended appraisal firms or to select Bradesco as the appraiser (the “Appraiser”) and to adopt as the Appraisal Report the appraisal report prepared by Bradesco valuing each of LAN and TAM as of November 23, 2011, in accordance with CVM 361/2002, which was presented at that meeting. At this meeting, the holders of qualifying minority shares unanimously approved Bradesco as the Appraiser and the appraisal report prepared by Bradesco as the Appraisal Report. If the holders of qualifying minority shares had exercised their right under Brazilian law to request that TAM call a special meeting of the shareholders of TAM to vote upon whether or not to request a new appraisal report and to appoint a new appraiser, then TAM would have been required to take all action necessary to establish a record date for, duly call, give notice of, convene and hold such a special meeting no later than 45 days after the request for such special meeting. As discussed below under “—Transaction Agreements—Conditions to Completion of the Exchange Offer” it is a condition to the completion of the exchange offer that, since the commencement date, no appraisal event has occurred, the holders of the qualifying minority shares shall have not requested a new appraisal report and a new appraiser in accordance with Brazilian law and the holders of the qualifying minority shares shall no longer have the right to request a new appraisal report or a new appraiser. The period during which the holders of qualifying minority shares had the right to request a new appraisal report and a new appraiser under Brazilian law has expired, so the holders of qualifying minority shares no longer have the right to exercise these rights.

TAM Representations and Warranties

TAM made customary representations and warranties that are subject, in some cases, to specified exceptions and qualifications and the matters contained in the disclosure schedule delivered by TAM to LAN pursuant to the exchange offer agreement. These representations and warranties relate to, among other things:

• due organization, existence, good standing and authority to carry on the businesses of TAM and its subsidiaries;

• market capitalization;

• ownership and the absence of encumbrances on ownership of the equity interests of its subsidiaries;

34

• the absence of preemptive or other similar rights or any debt securities that give their holders the right to vote with its shareholders;

• its corporate power and authority to enter into, and complete the transactions under, the transaction agreements and the shareholders agreements, provided that certain shareholder approvals are obtained, and the enforceability of such agreements against it;

• the absence of violations of, or conflicts with, its governing documents, applicable law and certain agreements as a result of entering into and performing under the transaction agreements and the shareholders agreements;

• the required governmental consents, approvals, notices and filings;

• its SEC filings since December 31, 2006 and the financial statements included therein;

• compliance with the Sarbanes-Oxley Act of 2002 and the listing and corporate governance rules and regulations of the NYSE;

• its disclosure controls and procedures and internal controls over financial reporting;

• the absence of a TAM material adverse effect (as defined below in this section) and the absence of certain other changes or events since December 31, 2009 through the signing date;

• the conduct of business in accordance with the ordinary course consistent with past practice since December 31, 2009 through the signing date;

• the absence of legal proceedings, investigations and governmental orders against it or its subsidiaries;

• the absence of certain undisclosed liabilities;

• employee benefit plans;

• certain employment and labor matters;

• compliance with applicable laws and regulations, governmental orders and all applicable operating certificates, air carrier obligations, airworthiness directives, aviation regulations and other similar rules and regulations, of any airline regulator applicable to it, its rights or other assets or its businesses or operations;

• aircraft owned, leased and/or operated by TAM and its subsidiaries;

• takeoff and landing slots, authorizations and similar rights of TAM and its subsidiaries;

• environmental matters;

• tax matters;

• intellectual property;

• the receipt of a fairness opinion from BTG Pactual;

• transactions with affiliates;

• information provided for inclusion in the US offering documents and Brazilian offering documents;

35

• the absence of any undisclosed broker’s or finder’s fees; and

• material contracts and the absence of any default under any material contract.

Many of TAM’s representations and warranties are qualified by, among other things, exceptions relating to the absence of a “TAM material adverse effect,” which means any change, effect, occurrence or circumstance which, individually or in the aggregate, (i) has had or would reasonably be expected to have a material adverse effect on the business, financial condition, results of operations, assets or liabilities of TAM and its subsidiaries, taken as a whole, other than (x) any such change, effect, occurrence or circumstance to the extent resulting from (A) any changes after the signing date in general economic or financial market conditions, (B) any changes after the signing date generally affecting the industries in which TAM and its subsidiaries operate, (C) changes after the signing date in IFRS or the interpretation thereof, (D) geopolitical conditions, the outbreak of a pandemic or other widespread health crisis, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the signing date or (E) any hurricane, tornado, flood, earthquake, volcanic eruption or natural disaster; provided, however, that the foregoing clauses (A), (B), (D) and (E) shall not apply to the extent that any such change, effect, occurrence or circumstance disproportionately impacts TAM and/or its subsidiaries compared to other participants in the industries in which TAM and its subsidiaries participate, or (y) any failure, in and of itself, of TAM to meet any internal or analyst projections, forecasts or estimates of revenue or earnings or any decrease in the market price or trading volume of the TAM preferred shares (but the exception in this clause (y) will not apply to the underlying causes of any such failure or decrease or prevent any of such underlying causes from being taken into account in determining whether a TAM material adverse effect has occurred); or (ii) impairs or would reasonably be expected to impair in any material respect the ability of TAM to complete the transactions contemplated by the transaction agreements or to perform its obligations under those agreements on a timely basis.

LAN Shareholders’ Meeting

At a meeting held on January 18, 2011, our board of directors approved the transaction agreements and agreed to recommend that our shareholders vote to approve the proposed combination with TAM.

At an Extraordinary General Shareholders’ Meeting held on December 21, 2011, LAN shareholders approved the proposed combination with TAM, subject to (i) the terms and conditions of the transaction agreements; and (ii) the rendering of a final decision by the Chilean Supreme Court with respect to the appeal filed by LAN seeking the amendment or elimination of three of the conditions set forth in the decision issued by the Chilean TDLC with respect to the consultation procedure initiated by Conadecus, a Chilean consumer association (“Conadecus”).

LAN shareholders approved the proposed combination with TAM on the proposed conditions by a broad majority, with over 99.99% of shares present at the meeting. The Shareholders Meeting also approved a change to the Company’s corporate name to “LATAM Airlines Group S.A.” or “LATAM”, and other necessary transactions contemplated in the transaction agreements.

LAN Representations and Warranties

LAN made customary representations and warranties that are subject, in some cases, to specified exceptions and qualifications and the matters contained in the disclosure schedule delivered by LAN to TAM pursuant to the exchange after agreement. These representations and warranties relate to, among other things:

• due organization, existence, good standing and authority to carry on the business of LAN and its subsidiaries;

• market capitalization;

• ownership and the absence of encumbrances on ownership of the equity interests of its subsidiaries;

36

• the absence of preemptive or other similar rights or any debt securities that give their holders the right to vote with its shareholders;

• its corporate power and authority to enter into, and complete the transactions under the transaction agreements and the shareholders agreements, provided that the holders of at least two-thirds of the outstanding LAN common shares vote to approve the mergers and the other transactions contemplated by the transaction agreements at a duly called and held meeting of the shareholders of LAN, and the enforceability of such agreements against it;

• the absence of violations of, or conflicts with, its governing documents, applicable law and certain agreements as a result of entering into and performing under the transaction agreements and the shareholders agreements;

• the required governmental consents, approvals, notices and filings;

• its SEC filings since December 31, 2006 and the financial statements included therein;

• compliance with the Sarbanes-Oxley Act of 2002 and the listing and corporate governance rules and regulations of the NYSE;

• its disclosure controls and procedures and internal controls over financial reporting;

• the absence of a LAN material adverse effect (as defined below) and the absence of certain other changes or events since December 31, 2009 through the signing date;

• the conduct of business in accordance with the ordinary course consistent with past practice since December 31, 2009 through the signing date;

• the absence of legal proceedings, investigations and governmental orders against it or its subsidiaries;

• the absence of certain undisclosed liabilities;

• employee benefit plans;

• certain employment and labor matters;

• compliance with applicable laws and regulations, governmental orders and all applicable operating certificates, air carrier obligations, airworthiness directives, aviation regulations and other rules and regulations, any airline regulator applicable to it, its similar rights or other assets or its businesses or operations;

• aircraft owned, leased and/or operated by LAN and its subsidiaries;

• takeoff and landing slots, authorizations and similar rights of LAN and its subsidiaries;

• environmental matters;

• tax matters;

• intellectual property;

• the receipt of a fairness opinion from J.P. Morgan Securities LLC;

• transaction with affiliates;

37

• information provided for inclusion in the US offering documents and Brazilian offering documents;

• the absence of any undisclosed broker’s or finder’s fees; and

• material contracts and the absence of any default under any material contract.

Many of LAN’s representations and warranties are qualified by, among other things, exceptions relating to the absence of a “LAN material adverse effect,” which means any change, effect, occurrence or circumstance which, individually or in the aggregate, (i) has had, or would reasonably be expected to have, a material adverse effect on the business, financial condition, results of operations, assets or liabilities of LAN and its subsidiaries, taken as a whole, other than (x) any such change, effect, occurrence or circumstance to the extent resulting from (A) any changes after the signing date in general economic or financial market conditions, (B) any changes after the signing date generally affecting the industries in which LAN and its subsidiaries operate, (C) changes after the signing date in IFRS or the interpretation thereof, (D) geopolitical conditions, the outbreak of a pandemic or other widespread health crisis, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the signing date or (E) any hurricane, tornado, flood, earthquake, volcanic eruption or natural disaster; provided, however, that the foregoing clauses (A), (B), (D) and (E) shall not apply to the extent that any such change, effect, occurrence or circumstance disproportionately impacts LAN and/or its subsidiaries compared to other participants in the industries in which LAN and its subsidiaries participate, or (y) any failure, in and of itself, of LAN to meet any internal or analyst projections, forecasts or estimates of revenue or earnings or any decrease in the market price or trading volume of LAN common shares (but the exception in this clause (y) will not apply to the underlying causes of any such failure or decrease or prevent any of such underlying causes from being taken into account in determining whether a LAN material adverse effect has occurred); or (ii) impairs or would reasonably be expected to impair in any material respect the ability of LAN to complete the transactions contemplated by the transaction agreements or to perform its obligations under those agreements on a timely basis.

Controlling Shareholder Representations and Warranties

The LAN controlling shareholders, the TEP and the TAM controlling shareholders made customary representations and warranties to the other parties pursuant to the exchange offer agreement. These representations and warranties relate to, among other things:

• due organization, existence, good standing and authority to carry on their businesses, as applicable;

• ownership and absence of encumbrances on their direct or indirect ownership of equity interests of TAM or LAN, as applicable;

• its corporate power and authority to enter into, and complete the transactions under, the transaction agreements and shareholders agreements to which they are a party, and the enforceability of such agreements against them, in the case of the TAM controlling shareholder and the LAN controlling shareholders only;

• the absence of violations of, or conflicts with, its governing documents, applicable law and certain agreements as a result of it entering into and performing under such agreements;

• the required governmental consents, approvals, notices and filings;

• the absence of legal proceedings and investigations against it; and

• the absence of successor liability resulting from the TEP Chile subscription.

38

Conduct of Business Pending the Combination

Under the implementation agreement, both we and TAM have agreed that, subject to certain exceptions set forth in the implementation agreement or as required by applicable law, unless the other party gives its prior written approval between the signing date and the effective time, each of us and our subsidiaries and each of TAM and its subsidiaries will use our commercially reasonable efforts to preserve our business organizations intact and all licenses necessary for us and our respective subsidiaries to own, lease or operate our respective properties, rights and other assets and to carry on our respective business and operations conducted at the signing date and maintain, and keep available the services of our respective current officers, employees and consultants and existing relationships and goodwill with our respective customers, suppliers, employees, strategic partners and other persons with whom we conduct business.

Subject to certain exceptions set forth in the implementation agreement or as required by law, neither we nor TAM will, or will permit our subsidiaries to, take any of the following actions without the other’s written approval:

• make, declare or pay any dividend, or make any other distribution, on or in respect of any of its equity securities, other than (A) dividends or distributions paid or made to such party by its wholly owned subsidiary or to another wholly owned subsidiary of such party and (B) regular dividends paid to such party’s shareholders in accordance with the dividend policy approved at the last regular meeting of its shareholders in an amount not to exceed 50% (in the case of LAN) and 25% (in the case of TAM) of such party’s net income for the year in respect of which the dividends are paid;

• adjust, split, combine, subdivide or reclassify any of its equity securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its equity securities;

• purchase, redeem or otherwise acquire any equity securities or convertible securities of such party or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, subject to customary exceptions;

• issue, deliver, sell, grant, pledge or otherwise encumber or subject to any lien any equity securities or convertible securities of such party or any of its subsidiaries, or any “phantom” stock, “phantom” stock rights, stock option, stock purchase or appreciation rights or stock-based performance units relating to or permitting the purchase of any such equity securities or convertible securities, subject to customary exceptions;

• except as otherwise expressly contemplated in the implementation agreement, amend the by-laws of it or its subsidiaries in any way that is or would reasonably be expected to be materially adverse to such party and its subsidiaries, taken as a whole;

• other than in the ordinary course of business consistent with past practice, directly or indirectly make, or agree to directly or indirectly make, any acquisition or investment or make any capital expenditures, other than (i) capital expenditures disclosed in such party’s capital plans for 2010 and 2011, (ii) acquisitions of properties or assets that are not material to such party and its subsidiaries, taken as a whole, and (iii) certain other customary exceptions;

• sell, lease, assign, license, grant, extend, amend, subject to liens, waive or modify any material rights in or to, cancel, abandon or allow to lapse, or otherwise transfer or dispose of, or agree to take or permit any such action, all or any part of its assets, rights or properties which are material, individually or in the aggregate, to such party and its subsidiaries, taken as a whole, subject to certain exceptions;

• incur any indebtedness or guarantee indebtedness of another person, other than (i) indebtedness incurred in the ordinary course of business consistent with past practice, (ii) indebtedness that does not exceed US$10 million in the aggregate and (iii) certain other exceptions;

39

• settle or compromise any claim or action where the amount paid exceeds the amount set forth in such party’s disclosure schedule;

• other than in the ordinary course of business, enter into any material contract, terminate or amend in any material respect any material contract or waive, encumber or otherwise transfer any material rights or claims thereunder;

• make any material changes to the policies or work rules applicable to any group of employees or labor union;

• except as required by applicable law or its existing benefit plans, adopt or enter into, terminate, amend or grant any waiver or consent under any material benefit plan, or other than with respect to the hiring of any person whose annual compensation does not exceed US$500,000, any contract, plan or policy involving any current or former employee, independent consultant, officers, or directors of such party or any of its subsidiaries, except in the ordinary course of business consistent with past practice with respect to employees who are not key personnel; grant any severance or termination payment or increase compensation or benefits of any employee (except for increases in compensation of employees who are not key personnel made in the ordinary course of business consistent with past practice); remove any existing restrictions in any benefit plans; take any action to fund or secure the payment of, or accelerate the vesting or payment of, any compensation or benefits under any benefit plan; except as required by any existing benefit plan and except for normal payments and increases in the ordinary course of business consistent with past practice, increase in any manner the compensation or fringe benefits of any employee or pay any amount or benefit; or grant any retention or similar bonuses, payments or rights to any employee;

• except as required by applicable law, the IFRS or regulatory guidelines, make any material change in its accounting methods or principles; make or change any material tax election; settle any material tax liability; amend any material tax return; enter into any material closing agreement with respect to any tax or surrender any right to claim a material tax refund; or change its current independent auditors;

• enter into any new line of business that is material to such party and its subsidiaries, taken as a whole, or any related party agreement;

• authorize or adopt a plan of complete or partial liquidation or any restructuring, recapitalization or reorganization;

• enter into or amend any contract that would restrict or limit the ability of LAN, TAM or any of their respective subsidiaries to engage in any business, that would reasonably be expected to prevent or materially impede the commencement or the completion the exchange offer, the mergers or the other transactions contemplated in the implementation agreement or to adversely affect in a material respect the expected benefits (taken as a whole) of the exchange offer and the mergers or if the completion of those transactions would conflict with, result in any breach or default or in any termination or modification of or acceleration under, or any change in any right or obligation under, or result in any lien on any property or asset of such party or any of its subsidiaries under any provisions of such contract;

• take or fail to take any action to prevent or delay, or that would reasonably be expected to prevent or delay, the satisfaction of any of the conditions to the commencement or completion of the exchange offer, the mergers or the other transactions contemplated by the implementation agreement;

• cancel, terminate or amend any binding financing commitment to fund the acquisition of an aircraft unless it is replaced by another financing agreement with substantially equivalent terms or such party and/or its subsidiaries receives equivalent value from the manufacturer of the applicable aircraft;

• enter into or materially amend any aircraft purchase agreement, engine purchase agreement or engine maintenance agreement that involves or is reasonably expected to involve aggregate payments in excess of US$25 million in any twelve-month period;

40

• enter into, amend or terminate any alliance or brand alliance agreement, code-sharing agreement, frequent flyer participation agreement, capacity purchase or similar agreement, cooperation, joint venture, profit or revenue sharing agreement, special prorate agreement or interlining agreement with any person; or

• authorize any of, or commit, resolve, propose or agree to take any of, the foregoing actions.

Holdco Shareholders’ Meetings

The TAM controlling shareholders were required to cause Holdco II to (i) take all action necessary to establish a record date for, duly call, give notice of, convene and hold a special meeting of the shareholders of Holdco II (“Holdco II shareholders’ meeting”) for the purpose of voting to approve (i) the Holdco II merger and the other transactions contemplated by the implementation agreement, (ii) the relevant audited financial statements and appraisal report and (iii) the by-laws of the surviving corporation of the Holdco II merger (collectively, “Holdco II merger matters”). Under Chilean law and Holdco II’s by-laws, the Holdco II merger matters must be approved by the holders of at least two-thirds of the outstanding shares of Holdco II stock (“requisite Holdco II shareholder approval”). The requisite Holdco II shareholder approval will be expressly conditioned upon, and will become effective only upon, the completion of the mergers.

The TAM controlling shareholders were also required to cause Sister Holdco to (i) take all action necessary to establish a record date for, duly call, give notice of, convene and hold a special meeting of the shareholders of Sister Holdco (“Sister Holdco shareholders meeting”) for the purpose of voting to approve (i) the Sister Holdco merger and the other transactions contemplated by the implementation agreement, (ii) the relevant audited financial statements and appraisal report and (iii) the by-laws of the surviving corporation of the Sister Holdco merger (collectively, the “Sister Holdco merger matters”). Under Chilean Law and Sister Holdco’s by-laws, the Sister Holdco merger matters must be approved by the holders of at least two-thirds of the outstanding shares of Sister Holdco stock (“requisite Sister Holdco shareholder approval”). The requisite Sister Holdco shareholder approval will be expressly conditioned upon, and will become effective only upon, the completion of the mergers.

Both Holdco II and Sister Holdco shareholders’ meetings were held on December 21, 2011.

Further Actions; Notification

We and TAM have agreed to cooperate with each other and use (and cause our respective affiliates to use) our respective reasonable best efforts to take or cause to be taken all actions and to do or cause to be done all things reasonably necessary, proper or advisable under the transaction agreements and applicable law to satisfy the conditions to the commencement and completion of the exchange offer described below under “Item 4. Information on the Company—The Transaction Agreements—Conditions for the Commencement of the Exchange Offer” and “Item 4. Information on the Company—The Transaction Agreements—Conditions to the Completion of the Exchange Offer” (collectively, the “exchange offer conditions”) and to complete as soon as reasonably practicable the exchange offer, the mergers and the other transactions contemplated by the transaction agreements in accordance with the terms of the transaction agreements. If any action or proceeding is instituted (or threatened to be instituted) by any person challenging any such transaction, each party is required to cooperate in all respects with the other parties and use its respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts completion of such transaction so as to permit such completion by the fifth business day before June 30, 2012. In addition, each party is required to, at its own cost and expense, defend any such actions or proceedings against it or its affiliates in connection with the transactions contemplated by the transaction agreements.

Neither we nor TAM nor any of our respective affiliates will be required to sell, transfer, dispose of, or otherwise encumber, or to hold separate pending any such action, or propose, commit or agree to any of the foregoing or to hold separate, either before or after the effective time, any assets, licenses, operations, rights, product lines, businesses or interest of either of us or any of our affiliates or to take or agree to take any other action, or agree or consent to any limitations or restrictions on freedom of actions with respect to, or our ability to own, retain or make changes in, any assets, licenses, operations, rights, product lines, businesses or interests of either of us or

41

any of our affiliates or our ability to receive and exercise full voting, economic and ownership rights with respect to our interests in Holdco I, TAM and its subsidiaries, subject only to the rights of the TAM controlling shareholders in respect of its voting shares of Holdco I and under the shareholders agreements.

Each of the parties is required to promptly advise the other parties orally and in writing if it fails to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under the transaction agreements, if any of the exchange offer conditions or the TAM controlling shareholders subscription conditions (as defined under “—Conditions to the Subscriptions”) fail or cease to be satisfied or if an appraisal event (as defined under—Conditions for the Commencement of the Exchange Offer”) occurs.

No Solicitation

Each of the parties has agreed to cease and immediately terminate all existing activities and discussions with any person conducted prior to the signing date with respect to an alternative proposal concerning its relevant parent entity. In this annual report on Form 20-F, we refer to LAN as the relevant parent entity of LAN and the LAN controlling shareholders, and TAM as the relevant parent entity of TAM and the TAM controlling shareholders, and we refer to any of the following actions or any proposal or exchange offer (including any proposal or exchange offer to or from any representative of any party) with respect to any relevant parent entity by any person or group relating to, or that could reasonably be expected to lead to, any of the following as an “alternative proposal”: (i) any direct or indirect acquisition, lease, license or outsourcing, in one transaction or a series of related transactions, of any assets, services or businesses of such relevant parent entity or any of its subsidiaries collectively representing more than 25% of the fair market value of the total assets of such relevant parent entity or collectively generating or contributing 25% or more of the total consolidated revenues or operating income of such person during the last fiscal year, (ii) any tender exchange offer or exchange offer that, if completed, would result in any person or group beneficially owning any equity securities of such relevant parent entity, or (iii) any business combination, recapitalization, issuance or amendment of securities, liquidation, dissolution, joint venture, share exchange or similar transaction involving such relevant parent entity or any of its subsidiaries.

The parties have agreed not to, and to cause their respective directors, officers, employees, affiliates, financial advisors, attorneys, accountants or other advisors, agents and other representatives and each of the individuals who ultimately beneficially own it, which we refer to collectively as the “representatives” of a party, not to, directly or indirectly, (i) solicit, initiate or encourage any inquiries or the making or completion of any proposal or exchange offer that constitutes, or is reasonably likely to lead to, an alternative proposal with respect to its relevant parent entity, (ii) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide to any person any non-public information or data in connection with, or otherwise cooperate in any way with, any such alternative proposal, (iii) waive, terminate, modify or fail to enforce any provision of any “standstill” or similar obligation of any person, (iv) enter into any binding or non-binding contract with respect to any such alternative proposal, or (v) otherwise knowingly facilitate any effort or attempt to make any such alternative proposal.

The parties have also agreed to:

• as promptly as practicable (and in any event within 24 hours after receipt) advise the other parties orally and in writing of the receipt of any alternative proposal relating to its relevant parent entity, the material terms and conditions of such alternative proposal (including any changes thereto) and the identity of the person making such alternative proposal;

• keep the other parties fully informed in all material respects of the status and details (including any changes to the terms) of such alternative proposal; and

• provide to the other parties as soon as practicable after receipt or delivery thereof copies of all correspondence and other written material sent or provided to it, such relevant parent entity or any of their respective representatives from any person that describes any of the terms or conditions of such alternative proposal.

42

Stockholder Actions

Both we and TAM have agreed to give the other the opportunity to participate in the defense or settlement of any stockholder action or proceeding against us and/or our directors or officers relating to the transactions contemplated by the implementation agreement and not to agree to settlement of any such action without the other party’s prior written consent.

Controlling Shareholder Covenants

Voting Agreements

The TAM controlling shareholders have agreed to adhere to the following until the termination of the transaction agreements or the effective time of the mergers, whichever event occurs sooner:

• cause the TAM common shares and TAM preferred shares beneficially owned by them to be voted against any alternative proposal relating to LAN and any transaction that would reasonably be expected to result in a breach by LAN of the transaction agreements; and

• not to transfer the TAM common shares and TAM preferred shares beneficially owned by them, except for certain permitted transfers to affiliates and only if the transferor continues to be, and the transferee agrees to become, bound by the terms of the transaction agreements.

The LAN controlling shareholders have agreed to adhere to the following until the termination of the transaction agreements or the effective time of the mergers, whichever event occurs sooner:

• vote their LAN common shares in favor of the approval of the mergers, the name change and the other transactions contemplated by the transaction agreements;

• vote their LAN common shares against any alternative proposal relating to LAN and any transaction that would reasonably be expected to result in a breach by LAN of the transaction agreements; and

• not to transfer their LAN common shares, except for certain permitted transfers to affiliates and only if the transferor continues to be, and the transferee agrees to become, bound by the terms of the transaction agreements.

In addition, each of the LAN controlling shareholders and the TAM controlling shareholders have agreed that it has not entered into any voting agreement, voting trust or any other agreement, arrangement or obligations (whether or not legally binding) with respect to any of the shares of capital stock of LAN, TAM, the TAM controlling shareholders, Holdco I, Holdco II or Sister Holdco that it beneficially owns and has not granted a proxy, a consent or power of attorney with respect to any such shares and will not take any such actions while the exchange offer agreement remains in effect.

Conditions for the Commencement of the Exchange Offer

Mutual Conditions for the Commencement of the Exchange Offer

The transaction agreements contain conditions for the commencement of the exchange offer in favor of both LAN and the TAM controlling shareholders. Consequently, Holdco II is not permitted to commence the exchange offer unless all of the following conditions are satisfied or waived by both LAN and TAM controlling shareholders as of the date of commencement of the exchange offer:

• the requisite LAN shareholder approval has been obtained.

This approval was obtained at LAN’s Extraordinary Shareholders Meeting held on December 21, 2011. Consequently, this condition has been satisfied. For more information about LAN’s Extraordinary

43

Shareholders Meeting see “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Lan Shareholders’ Meeting”. However, this approval is subject to satisfaction of the conditions set forth in the transaction agreements and a final ruling for LAN from the Chilean Supreme Court on LAN’s appeal with respect to three conditions set forth in the decision of the TDLC with respect to the consultation procedure initiated on January 28, 2011 by Conadecus, a Chilean consumer association in connection with the proposed combination.

• the requisite TAM shareholder approval has been obtained.

This approval was obtained at TAM’s Shareholders Meeting held on December 21, 2011. Consequently, this condition has been satisfied. For more information about TAM Shareholders’ Meeting see “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—TAM Shareholders’ Meeting”.

• all required approvals from Conselho Administrativo de Defesa Econômica (Brazil’s Council for Economic Defence) (“CADE”), Fiscalía Nacional Económica (the Chilean antitrust prosecution agency) (“FNE”), TDLC, the applicable antitrust authorities in Italy, Spain and Germany or any other governmental authorities whose consent is required in connection with the transactions contemplated by the transaction agreements (other than those which the failure to obtain, individually or in the aggregate, would not reasonably be expected to have a TAM material adverse effect or a LAN material adverse effect or to result in criminal or civil sanctions against any party to the transaction agreements, its affiliates or any directors or employees of it (collectively, the “required regulatory approvals”) have been obtained.

As of March 12, 2012, no further required regulatory approvals are needed to complete the exchange offer and the mergers. All the required regulatory approvals have been obtained, as follows:

Chile

On September 21, 2011, the Chilean TDLC issued its decision (“Decision”) with respect to the consultation procedure initiated on January 28, 2011 by Conadecus in connection with the proposed combination with TAM. The persons and entities that were accepted as intervening parties in the consultation procedure, among others, are the following: Conadecus, as consultant, FNE, Sky Airline, Aerolínea Principal de Chile S.A. (“PAL”), ACHET (a Chilean travel agents association), LAN, LAN Cargo and TAM. The Decision of the TDLC approved the proposed combination with TAM with fourteen mitigating measures.

On October 3, 2011, PAL filed an appeal in order to have the Chilean Supreme Court revoke the Decision issued by the TDLC approving the proposed combination subject to certain conditions. On October 25, 2011 LAN reached an extrajudicial agreement with PAL pursuant to which (i) PAL abandoned the appeal before the Chilean Supreme Court and undertook to terminate all actions or proceedings that it initiated, as well as to desist from initiating new proceedings, aimed at blocking the proposed combination between LAN and TAM, and (ii) LAN paid PAL US$5 million.

On October 3, 2011, LAN also filed an appeal seeking the amendment or elimination, as applicable, of the following three conditions set forth in the Decision:

• amendment of the seventh condition regarding mandatory prior consultation with the TDLC for the execution of certain codeshare agreements in order to eliminate the obligation to submit such agreements to the prior approval of the TDLC, replacing it with the obligation to notify the FNE of any such agreements.

• elimination of the eighth condition regarding the abandonment of certain traffic frequencies and limitation on acquiring certain air traffic frequencies; and

44

• amendment of the fourteenth condition regarding the independent consultant in order to limit and modify the intrusive and inspection powers granted to both the FNE and the consultant with respect to LAN and TAM.

Likewise, on the same date TAM L.A. filed an appeal seeking the amendment of the seventh condition of the Decision. It is expected that the Chilean Supreme Court will render a final decision with respect to the above-mentioned appeals within the next month.

If the seventh condition is not amended, LATAM’s passengers to and from Chile would be denied the benefit of the increased connectivity that would be provided by the codeshare agreements that would require prior approval of the TDLC unless and until such approval was obtained. LATAM’s ability to negotiate existing codeshares and to adapt to changes in the markets in which it has to compete could also be adversely affected because the time required to obtain the prior approval of the TDLC to amendments to those agreements could take longer than is required to adequately react to new conditions.

If the eighth condition is not eliminated, LATAM will be required to cancel or re-route certain flights out of Lima that could adversely impact connectivity of some passengers.

If the fourteenth condition is not amended, the independent consultant and the FNE will have certain inspection powers that in LAN’s opinion could increase administrative burdens and impose additional costs that would not be shared by the other airlines with which LATAM needs to compete. In addition, in LAN’s opinion this condition would undermine LAN’s constitutional rights to equality under the law, due process and protection of mail and document privacy because it would give the independent consultant and FNE intrusive and disproportionate powers solely with respect to LAN and subject LAN to a supervisory regime that would not apply to any other competitor or industry in Chile.

Brazil

On September 3, 2010, LAN and TAM submitted a merger filing before the Brazilian Antitrust System, composed of CADE, the Secretaria de Direito Econômico (Ministry of Justice) (“SDE”) and the Secretaria de Acompanhamento Econômico (Ministry of Finance) (“SEAE”). The filing was made based on the Memorandum of Understanding, executed by the parties on August 13, 2010. As per the request of the parties, the SEAE suspended its analysis of the merger filing until the parties had taken more definitive steps with respect to the proposed combination. On October 21, 2010, the parties informed SEAE of the execution of the Instrumento Particular de Ratificação de Entendimento by the parties on October 12, 2010, pursuant to which the parties agreed on a transaction structure for the proposed combination and requested that SEAE resume its analysis of the merger filing. As part of its analysis, SEAE sent a series of information requests to LAN and TAM (Official Letter Nos. 11.143/2010; 12.203/2010; 6.566/2011; 6.607/2011; 7.218/2011; 7.555/2011; and 7.866/2011) requesting information on the markets affected by the proposed combination. All of these Official Letters were duly answered by LAN and TAM. SEAE also sent information requests to the parties’ competitors, suppliers and clients. SEAE issued its report approving the merger filing without any restrictions on August 11, 2011. The case was then further examined by CADE’s Reporting Commissioner, Olavo Chinaglia, for an additional four months. CADE sent information requests to LAN and TAM (Official Letter Nos. 1830/2011; 1945/2011; 2410/2011; and 2493/2011) to complement SEAE’s analysis. On December 14, 2011, the case was adjudicated in a Plenary Session, where the board of CADE approved the transaction with the following conditions: (i) LAN and TAM cannot be members of more than one global airline alliance; (ii) LAN and TAM must swap two pairs of slots in the International Airport of Guarulhos (São Paulo/Brazil) (“Guarulhos Airport”) with one or more companies that is willing to operate non-stop flights on the São Paulo-Santiago route, granting the swapping companies the necessary infrastructure in the Guarulhos Airport; and (iii) LAN and TAM must publish the contents of the decision in newspapers widely sold in Brazil, and send letters to carriers that operate commercial flights from Guarulhos Airport, informing them of the decision. On December 30, 2011, LAN and TAM submitted a motion to clarify the decision, in which they requested that CADE clarify certain points of the decision. The motion to clarify was partially accepted

45

by CADE’s Plenary Board, on February 8, 2012, to establish that LAN will not be required to implement the measures imposed by CADE until the exchange offer has been completed. LAN and TAM are permitted to proceed with the implementation of the transaction, regardless of the decision on the remaining points under the motion to clarify.

Argentina

Under Argentine Law No. 25,156, notification of the exchange offer and the mergers must be filed with the Comisión Nacional de Defensa de la Competencia (the national antitrust commission of Argentina) (“CNDC”) (i) prior to the perfection or closing of the transaction, or (ii) within one week after the date (a) on which the transaction is closed, (b) the announcement of the commencement of a tender or exchange offer, or (c) the acquisition of a controlling stake, whichever event occurs sooner. The notification to the CNDC is not required in order to complete the exchange offer or the mergers.

On April 4, 2011, the CNDC initiated an investigation to determine whether the transaction would require a filing with the CNDC. LAN filed its response on May 18, 2011, enclosing the information and documentation requested by the CNDC. In its response, LAN stated that none of the conditions for filing the notification as set forth by the Argentinian antitrust regulations were met as of that time, and thus LAN would send the notification to the CNDC at the time required by those regulations.

Argentine law does not prohibit the consummation of the exchange offer or the mergers before the CNDC has granted its approval of the exchange offer and the mergers.

E.U.

LAN and TAM conduct business in a number of countries outside Latin America. In connection with the proposed combination, LAN and TAM identified two jurisdictions in the European Union, Germany and Spain, where a merger control filing is required and where clearance is needed prior to completion of the exchange offer. Filings have been made and unconditional clearances have been secured in Germany in July 2011, and Spain in October 2011. A merger control filing was also made in Italy, and unconditional approval of the Italian competition authority has been obtained in August 2011, although such approval is not required in order to complete the exchange offer and the mergers.

• no court or other governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any law or order or taken any other action that (i) makes illegal, restrains or otherwise prohibits the commencement of the exchange offer or the completion of the transactions contemplated by the transaction agreement on the terms contemplated by the transaction agreements, or (ii) limits or impairs the ability of the parties to jointly own and operate all or a material portion of TAM and its subsidiaries or exercise full ownership of their equity interests in Holdco I, TAM and its subsidiaries consistent with the terms of the shareholders agreements (the “restraining orders”).

As of March 12, 2012, no restraining orders have been issued.

• no action seeking a restraining order or to limit or impair the ability of the parties to jointly own and operate all or a material portion of TAM and its subsidiaries or exercise full ownership of each of Holdco I, TAM and its subsidiaries consistent with the terms of the shareholders agreements (other than any action by a person other than a governmental entity that could not reasonably be expected to succeed on its merits) (“adverse actions”).

As of March 12, 2012, no adverse actions have been commenced.

• CVM has granted the registrations of LAN and the LAN BDRs representing the LAN common shares to be issued in the mergers on the Bovespa.

46

As of March 12, 2012, CVM has not yet granted the registrations of LAN and the LAN BDRs representing the LAN common shares to be issued in the mergers on the Bovespa.

• the approval for listing the LAN BDRs representing the LAN common shares to be issued in the mergers on the Bovespa, (ii) the approval for listing the LAN ADRs representing LAN common shares to be issued in the mergers on the NYSE, subject to notice of issuance, (iii) the approval for listing the LAN common shares to be issued in the mergers on the SSE and (iv) approvals for any other listings required by governmental entities has been obtained (which we refer to as collectively as the “required listings”) and such listings will become effective no later than the effective time of the mergers.

As of March 12, 2012, we have not yet obtained all of the required listings.

• the registration statement on Form F-4 filed in connection with the exchange offer has been declared effective by the SEC under the Securities Act. No stop order suspending the effectiveness of the Form F-4 has been issued by the SEC, and no proceeding for that purpose has been initiated or threatened by the SEC.

On November 15, 2011, the Company filed a registration statement on Form F-4 with the SEC in connection with the exchange offer as part of the proposed combination with TAM. On December 12, 2011, the Company received comments on the Form F-4 in a letter from the staff of the SEC (the “Staff”) to which the Company responded by filing a response letter and Amendment No. 1 to the Form F-4 on February 9, 2012. On February 28, 2012, the Company received additional comments in a second letter from the Staff to which the Company responded by filing a second response letter and Amendment No. 2 to the Form F-4 on March 12, 2012. As of March 13, 2012 the aforementioned registration statement has not been declared effective.

• each of the formation and restructuring transactions described and all corporate actions required under applicable law and the terms of the transaction agreements to be taken by LAN and TAM in order to commence the exchange offer and to complete the exchange offer and the mergers has been taken.

As of March 12, 2012, each of the formation and restructuring transactions and all corporate actions required under applicable law and the terms of the transaction agreements have been completed with the exception of the restructuring of TEP.

• the product of 0.9 and the high end of the range of economic value of LAN per LAN common share most recently determined by the appraiser approved by the shareholders of TAM is greater than or equal to the low end of the range of economic value of TAM per share of TAM stock as determined by the appraiser at such time, which we refer to as an “appraisal event,” and if the determination was in an appraisal report, the appraisal report has not been replaced by a new appraisal report by a new appraiser at the request of the holders of the outstanding free float shares in accordance with Brazilian law.

As of March 12, 2012, no appraisal events have occurred and the rights of shareholders of TAM under Brazilian law to request a new appraiser or a new appraisal report have expired.

LAN intends to commence the exchange offer immediately after the conditions for the commencement of the exchange offer have been satisfied. The Company expects that to happen within the next month.

LAN Conditions for the Commencement of the Exchange Offer

The transaction agreements contain conditions for the commencement of the exchange offer in favor of LAN. Consequently, Holdco II is not permitted to commence the exchange offer unless all of the following conditions are satisfied by TAM controlling shareholders or waived by LAN as of the date of commencement of the exchange offer:

• accuracy in all material respects of the representations and warranties of TAM and the TAM controlling shareholders in the transaction agreements when made and as of the commencement date.

47

• performance in all material respects by TAM and the TAM controlling shareholders of all of their covenants in the transaction agreements required to be performed prior to the commencement date.

• absence of a TAM material adverse effect (as defined under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—TAM Representation and Warranties”.

• absence of specified market disruptions since the date of the transaction agreements.

• approval by the CVM of the exchange offer conditions.

• receipt of all shareholder approvals other than those required from the shareholders of LAN or TAM.

At Extraordinary General Shareholders’ Meetings held on December 21, 2011, the shareholders of Holdco II and Sister Holdco approved the merger of Holdco II and Sister Holdco, respectively, with LAN. No further shareholder approvals are required. As a result, this condition has been satisfied.

• The holders of not more than 2.5% of the outstanding shares of LAN have excercised their appraisal rights (derecho de retiro) under Chilean law in connection with the approval of the mergers.

On January 23, 2012, the Company announced that shareholders representing 7,237 LAN common shares exercised their appraisal rights as a result of the agreements reached at the December 21, 2011 Extraordinary General Shareholders’ Meeting. As of February 29, 2012, this represented only 0.00212% of LAN shareholders. As a result, this condition has been satisfied.

• Entry into the shareholders agreements described under “Item 4. Information on the Company—History and Development of the Company—Shareholders Agreements” by TAM, the TAM controlling shareholders, and the LAN controlling shareholders

On January 25, 2012, TAM, the TAM controlling shareholders, the LAN controlling shareholders and Holdco I, as applicable, entered into the shareholders agreements. As a result, this condition has been satisfied.

TAM Controlling Shareholders Conditions for the Commencement of the Exchange Offer

The transaction agreements contain conditions for the commencement of the exchange offer in favor of TAM controlling shareholders. Consequently, Holdco II is not permitted to commence the exchange offer unless all of the following conditions are satisfied by LAN or waived by TAM controlling shareholders as of the date of commencement of the exchange offer:

• accuracy in all material respects of the representations and warranties of LAN and the LAN controlling shareholders in the transaction agreements when made and as of the commencement date.

• performance in all material respects by LAN and the LAN controlling shareholders of all of their covenants in the transaction agreements required to be performed prior to the commencement date.

• absence of a LAN material adverse effect (as defined under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—LAN Representation and Warranties” since December 31, 2009.

• absence of specified market disruptions since the date of the transaction agreements.

48

• entry into the shareholders agreements described under “Item 4. Information on the Company—History and Development of the Company—Shareholders Agreements” by LAN and LAN controlling shareholders and the LAN controlling shareholders

On January 25, 2012, TAM, the TAM controlling shareholders, the LAN controlling shareholders and Holdco I, as applicable, entered into the shareholders agreements. As a result, this condition has been satisfied.

• satisfaction of all the conditions to the obligations of the TAM controlling shareholders to subscribe for shares of Holdco I and Sister Holdco in exchange for their TAM shares described under “Item 4. Information on the Company—History and Development of the Company—The Transaction Agreements—Conditions to the Subscriptions”.

Conditions to Completion of the Exchange Offer

The only conditions to the completion of the exchange offer are the exchange offer conditions set forth below:

Mutual Conditions to the Completion of the Exchange Offer

Holdco II is not permitted to complete the exchange offer unless all of the following conditions are satisfied or waived by LAN (in the case of LAN’s conditions) or both LAN and the TAM controlling shareholders (in the case of the mutual conditions):

• since the commencement date, none of the required listings have been revoked and the required listings shall become effective no later than the effective time;

• the number of qualifying minority shares that are held by “agreeing shareholders” must be more than 66 2/3% of the total number of qualifying minority shares that are held by agreeing shareholders and disagreeing shareholders (this is the minimum threshold required to cause to the deregistration of TAM as a public company in Brazil with CVM and the delisting of the shares of TAM from Bovespa);

• A holder will be deemed to be an “agreeing shareholder” with respect to its qualifying minority shares only if such holder:

• validly tenders such qualifying minority shares into the exchange offer through the US exchange agent and does not withdraw such shares from the exchange offer; or

• qualifies such qualifying minority shares for participation in the Auction and:

• tenders such shares into, and does not withdraw them from, the Auction; and/or

• indicates on the qualification form (a copy of which will be included with the letter of transmittal) that it agrees with the deregistration of TAM as a public company in Brazil with CVM.

• A holder will be deemed to be an “disagreeing shareholder” with respect to its qualifying minority shares only if such holder:

• validly tenders such qualifying minority shares into the exchange offer through the US exchange agent and subsequently withdraws such shares from the exchange offer; or

• qualifies such qualifying minority shares for participation in the Auction and:

• does not tender such shares in the Auction; and/or

49

• indicates on the qualification form (a copy of which will be included with the letter of transmittal) that it disagrees with the deregistration of TAM as a public company in Brazil with CVM.

• For purposes of the delisting condition, “qualifying minority shares” mean all outstanding TAM shares not represented by TAM ADSs and all outstanding TAM ADSs, in each case that are not owned by TAM, the TAM controlling shareholders, any of their related persons (“pessoas vinculadas”) or any director or executive officer of TAM.

• The delisting condition is not waivable under Brazilian law, so if the delisting condition is not satisfied, the exchange offer will terminate and the mergers will not be completed.

• The absence of certain actions, events or circumstances that, individually or in the aggregate, have had an adverse effect on the businesses, revenues, operations or financial condition of TAM and its subsidiaries, taken as a whole, in all material respects.

• since the commencement date, no stop order suspending the effectiveness of the Form F-4 has been issued by the SEC and no proceeding for that purpose has been initiated or threatened by the SEC.

• since the commencement date, there has not been an appraisal event, the holders of the qualifying minority shares shall not have requested a new appraisal report and a new Appraiser in accordance with Brazilian law and the holders of the qualifying minority shares shall no longer have the right to select a new Appraiser and to cause the Appraisal Report to be replaced with a new appraisal report.

• The period during which the holders of qualifying minority shares had the right to request a new appraisal report and a new appraiser under Brazilian law has expired, so the holders of qualifying minority shares no longer have the right to exercise these rights.

LAN Conditions to the Completion of the Exchange Offer

Holdco II is not obligated to, and will not, purchase or pay for any of the TAM shares or TAM ADSs validly tendered and not withdrawn pursuant to the exchange offer unless all of such conditions are satisfied or waived by LAN:

• since the commencement date, none of the required approvals shall have been revoked or amended, modified or supplemented in any way that could reasonably be expected to materially impede or interfere with, delay, postpone or materially and adversely affect the completion of the transactions contemplated by the transaction agreements;

• the sum of (i) the number of TAM shares and TAM ADSs validly tendered into, and not withdrawn from, the exchange offer and (ii) the number of TAM shares beneficially owned by the TAM controlling shareholders (which represented approximately 46.63% of the outstanding TAM shares as of March 28, 2012) represents more than 95% of the total number of outstanding TAM shares (including those represented by TAM ADSs) and the TAM controlling shareholders shall have stated in writing to LAN that all of the subscription conditions (as defined under —Conditions to the Subscriptions below), have been satisfied or waived;

• since the commencement date, no court or other governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any restraining order;

• no adverse action commenced since the commencement date shall remain pending;

• none of the TAM adverse events has occurred since the commencement date which, individually or in the aggregate, has had a material adverse effect on the business, revenues, operations or financial condition of TAM and its subsidiaries in any respect;

50

• since the commencement date, no default in the performance or breach, or any event that with notice, lapse of time or both would result in such a default or breach, by any TAM Company under any of their relevant agreements has occurred that continues to exist, in each case after giving effect to any waivers granted by any other party to such contract and regardless of whether or not any event of default, acceleration or other enforcement action shall have been declared or taken by any such other party;

• since the commencement date, no market disruption that could reasonably be expected to have a TAM material adverse effect has occurred; and

• the subscriptions have been fully paid, in each case in accordance with the exchange offer agreement.

Conditions to the Subscriptions

The obligations of the TAM controlling shareholders to make and pay the TEP Chile subscription and for TEP Chile to pay the Holdco subscriptions are subject to the following conditions (the “subscription conditions”):

• since the commencement date, none of the required approvals have been revoked or amended, modified or supplemented in any way that could reasonably be expected to materially impede or interfere with, delay, postpone or materially and adversely affect the completion of the transactions contemplated by the transaction agreements;

• since the commencement date, no court or other governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any restraining order;

• no adverse action commenced since the commencement date shall remain pending;

• none of the following actions, events or circumstances has occurred with respect to LAN and its subsidiaries since the commencement date (or prior to that date if no executive officer of TAM had actual knowledge of such event as of the commencement date) that, individually or in the aggregate, have had an adverse effect on the businesses, revenues, operations or financial condition of LAN and its subsidiaries, in any material respect: (a) changes or termination of licenses used to conduct cargo or passenger transport services or threats of any such change or termination; (b) any loss of 10% or more of the total takeoff and landing scheduled operations of LAN and its subsidiaries at certain specified airports; (c) any loss of 15% or more of the permits or air traffic rights that are required to operate in the United States; (d) termination or expiration of any aeronautical insurance policy covering LAN and its subsidiaries unless replaced by a substantially equivalent policy within 24 hours; (e) initiations of inquiries or investigations of LAN and its subsidiaries by an airline regulatory entity relating to safety issues that could be expected to result in the revocation of any license or to be detrimental to LAN’s public image; (f) any event that prevents LAN and its subsidiaries from operating at a certain level out of certain airports; (g) the inability of Chile or Peru to safely control its airspace which prevents normal operations of LAN and its subsidiaries for any certain period of time; (h) aircraft accidents that result in loss of life or total loss of aircraft; (i) issuances of laws or orders that fix or regulate international passenger airline fares affecting 15% or more of the revenues of the international operations of LAN and its subsidiaries, impair the completion of the exchange offer or the mergers or the ability of the parties to exercise their rights and receive the benefits of their interests in Holdco I, TAM and its subsidiaries, provide for the expropriation or confiscation of LAN assets, or limit the ability to dispose of assets, suspend or limit foreign currency transactions or transfer of funds in and out of Chile, and change the current regulations applicable to capital markets in Brazil or Chile or an increase in taxes or tax rates that adversely impacts the shareholders of TAM who enter into the exchange offer; (j) any natural disaster or similar event that causes damage to infrastructure or airspace used by or any industry affecting LAN and its subsidiaries or any assets of LAN and its subsidiaries used in the ordinary course; and (k) any other event that prevents LAN and its subsidiaries from operating at least 50% of their regular flights during a 30-day period;

• since the commencement date, no default in the performance or breach, or any event that with notice, lapse of time or both would result in such a default or breach, by LAN or any of its subsidiaries of any covenant

51

or agreement contained in any contract to which any of them is a party under which the aggregate consideration provided or received, or to be provided or received, is greater than US$10 million has occurred that continues to exist, in each case after giving effect to any waivers granted by any other party to such contract and regardless of whether or not any event of default, acceleration or other enforcement action shall have been declared or taken by any such other party; and

• since the commencement date, no market disruption that could reasonably be expected to have a LAN material adverse effect has occurred.

Pre-Commencement Closing; Commencement of the Exchange Offer

The parties will attend a meeting (the “pre-commencement closing”) on the first business day (“pre-commencement closing date”) following the first day on which all of the commencement conditions are satisfied or waived in accordance with the exchange offer agreement (other than any such conditions that by their nature are to be satisfied at the pre-commencement closing, but subject to the satisfaction or waiver of those conditions) (the “condition date”). Holdco II is required to commence the exchange offer as promptly as practicable on the first business day after the pre-commencement closing date by publishing the Edital relating to the exchange offer (the “Edital”) in Brazil in accordance with Brazilian law. We refer to the date and time at which such publication occurs as the “commencement date.”

Actions on the Auction Date; Completion of the Exchange Offer

The Auction will be held on the Bovespa in Brazil in which the holders of TAM shares who decide to tender into the exchange offer will tender their TAM shares and receive such LAN common shares in the form of LAN BDSs (each of which represents one LAN common share), which will be evidenced by LAN BDRs.

The exchange offer and withdrawal rights for tenders of TAM ADSs and TAM shares will expire at 5:00 p.m. Eastern time (6:00 p.m. São Paulo time) (the “expiration time”) on the date (the “expiration date”) immediately preceding the date on which the auction on Bovespa will occur (the “Auction date”).

The transaction agreements describe the schedule of events to occur after the expiration time on the expiration date as follows:

• no later than the Tender Certification Time (which is 6:00 a.m. Eastern time (8:00 a.m. São Paulo time)) on the Auction date, Itaú will certify to Bovespa, Holdco II, LAN and the TAM controlling shareholders the total number of TAM shares (including those represented by TAM ADSs) that the US exchange agent has certified to Itaú have been validly tendered into the exchange offer through the US exchange agent and not withdrawn from the exchange offer as of the expiration time;

• at 8:00 a.m. Eastern time (9:00 a.m. São Paulo time) on the Auction date, Bovespa will inform LAN, Holdco II and the TAM controlling shareholders whether or not the minimum conditions (taking into account the TAM shares and TAM ADSs tendered through the US exchange agent) have been satisfied;

• promptly after receiving that notice (but no later than 8:10 a.m. Eastern time (9:10 a.m. São Paulo time) on the Auction date), LAN will notify the TAM controlling shareholders in writing as to whether or not all of the exchange offer conditions waivable by LAN (other than the condition relating to the TEP Chile subscription and the Holdco subscriptions) have been satisfied or irrevocably waived by LAN;

• if the LAN condition notice states that all exchange offer conditions have been satisfied or waived, then promptly after receiving LAN’s notice (but no later than 8:20 a.m. Eastern time (9:20 a.m. São Paulo time) on the Auction date), the TAM controlling shareholders will inform LAN in writing whether or not all of the exchange offer conditions waivable by them and the subscription conditions have been satisfied or irrevocably waived by them, and if all such conditions have been satisfied or waived by them, then promptly after sending that notice (but no later than 8:30 a.m. Eastern time (9:30 a.m. São Paulo time) on the Auction date), the TAM controlling shareholders will subscribe and pay for a number of shares of TEP

52

Chile, which, when added to the shares of TEP Chile held by the controlling shareholders of TAM at that time, would equal 100% of the shares of TEP Chile in exchange for all of the TAM common shares and TAM preferred shares held by them (which we refer to as the “TEP Chile subscription”). The transaction agreements require that, as a result of the TEP Chile subscription, each of the TAM controlling shareholders will have the same ownership in TEP Chile as he or she had in TEP;

• before the date of this annual report on Form 20-F, TEP Chile subscribed for non-voting shares of Holdco I in exchange for all of the TAM common shares to be contributed by the TAM controlling shareholders to TEP Chile and subscribed for Sister Holdco shares in exchange for all of the non-voting shares of Holdco I, 6.2% of the voting shares of Holdco I and all of the TAM preferred shares to be contributed by the TAM controlling shareholders to TEP Chile. Immediately after subscription and payment of the TEP Chile subscription, TEP Chile will pay for these subscriptions by paying Holdco I with all of the TAM common shares contributed to it by the TAM controlling shareholders and pay Sister Holdco with all of the non-voting shares of Holdco I, 6.2% of the voting shares of Holdco I and all of the TAM preferred shares contributed to it by the TAM controlling shareholders (which we refer to as the “Holdco subscriptions” and the “Sister Holdco Subscriptions,” respectively, and which we refer to collectively with the TEP Chile subscriptions as the “subscriptions”);

• promptly after payment of the subscriptions (but no later than 8:40 a.m. Eastern time (9:40 a.m. São Paulo time) on the Auction date), LAN and the TAM controlling shareholders will issue a press release announcing that all of the exchange offer conditions have been satisfied or irrevocably waived; and

• if all the exchange offer conditions are so satisfied or waived, the auction (which we refer to as the “Auction”) will commence at the Auction time, which is 9:00 a.m. Eastern time (10:00 a.m. São Paulo time) (or such other time as Bovespa may determine) on the Auction date, and the TAM controlling shareholders will cause Holdco II to complete the exchange offer on the Auction date by accepting for exchange and exchanging (with LAN ADSs and LAN BDSs issuable in the mergers) all TAM shares validly tendered into, and not withdrawn from, the exchange offer through the Auction and all TAM shares and TAM ADSs validly tendered, and not withdrawn from, the exchange offer through the US exchange agent that Holdco II is obligated to acquire for exchange pursuant to the terms of the exchange offer. The completion of the exchange offer will be deemed to be the acquisitions of TAM shares tendered pursuant to the Auction and the acquisitions of TAM shares and TAM ADSs tendered through the US exchange agent, and such purchases will be settled on the third business day following the Auction date in accordance with the applicable procedures of Bovespa and the SEC.

However, if (x) either LAN or the TAM controlling shareholders do not state that all of the conditions described above have been satisfied or irrevocably waived or (y) the subscriptions or any of the payments required pursuant to the subscriptions are not made in full when required by the transaction agreements, then the Auction will not occur and the exchange offer will expire without the purchase of any TAM shares or TAM ADSs.

Notwithstanding the foregoing, if the Auction commences at any time other than 9:00 a.m. Eastern time (10:00 a.m. São Paulo time) on the Auction date, then each of the times specified above (except for the last time that a withdrawal may be made) will be adjusted by the same amount that the actual time of the commencement of the Auction differs from 9:00 a.m. Eastern time (10:00 a.m. São Paulo time).

Extensions and Amendments

The exchange offer will initially expire on the date provided in the Edital. However, if all of the exchange offer conditions are not satisfied at, or waived by the parties prior to, the scheduled expiration time for the exchange offer, then LAN or the TAM controlling shareholders (if they are entitled to the benefit of the unsatisfied condition) may cause Holdco II to request permission from the CVM to extend the expiration time for the exchange offer in maximum increments of three days to no later than 28 days after the commencement date. If both LAN and the TAM controlling shareholders agree to request a modification to the terms and conditions of the exchange offer or revocation of the exchange offer, the TAM controlling shareholders are required to cause Holdco II to request permission from the CVM to modify the terms and conditions of the exchange offer or to revoke the exchange offer. LAN and the TAM controlling shareholders have agreed to cause Holdco II to request permission from the CVM to revoke the exchange offer if the transaction agreements terminate in accordance with their terms.

53

Delistings

Each of the TAM controlling shareholders and TAM are required to use its or their commercially reasonable efforts to cause (i) the TAM shares to be delisted from Bovespa if the delisting condition is satisfied with respect to either class of TAM stock and (ii) the TAM ADSs to be delisted from the NYSE as soon as practicable after the effective time.

Completion Board Meeting

LAN is required to convene a special meeting of the LAN board of directors prior to the settlement of the acquisitions to be made pursuant to the exchange offer to give effect to the delivery of the required LAN common shares issuable pursuant to the mergers as soon as practicable, but not later than two business days following, the completion of the exchange offer.

The Mergers; Directors and Officers; By-laws

Holdco II Merger

The implementation agreement provides for the merger of Holdco II with and into LAN after the completion of the exchange offer and prior to the settlement of the purchases made pursuant to the exchange offer. As the surviving corporation, we will continue to exist following the Holdco II merger. Pursuant to the Holdco II merger, each share of Holdco II stock (including those issuable pursuant to the settlement of the purchases made pursuant to the Auction) will be converted into a LAN common share at a ratio of 0.9 of a LAN common share per share of Holdco II stock (the “Holdco II exchange ratio”). Holders of TAM preferred shares (including those represented by TAM ADSs) will receive, by virtue of the Holdco II merger, LAN common shares in the following form in exchange for their TAM shares or TAM ADSs tendered and accepted for exchange in the exchange offer, depending on the form of TAM preferred shares tendered in the exchange offer:

• holders of TAM ADSs that are tendered and accepted for exchange in the exchange offer will receive LAN ADRs issued pursuant to the deposit agreement, dated as of October 28, 2011, among LAN, the LAN depositary, and the record holders and beneficial owners of LAN ADRs from time to time;

• holders of TAM shares registered under Resolution No. 2,689/00 of January 26, 2000 enacted by the CMN that are tendered and accepted for exchange in the exchange offer will receive LAN common shares in the form of LAN BDRs or LAN ADRs, as permitted by applicable law; and

• holders of all other TAM shares tendered and accepted for exchange in the exchange offer will receive LAN common shares in the form of BDRs representing such shares to be issued pursuant to a deposit agreement in customary form among LAN, a depositary agent to be selected by LAN and reasonably acceptable to TAM and the holders of LAN BDRs from time to time.

We are required to pay or cause to be paid all deposit fees and other expenses payable in connection with the issuance of such LAN ADRs and LAN BDRs.

Immediately after the completion of the Holdco II merger, we will contribute any TAM common shares beneficially owned by Holdco II immediately prior to such merger to Holdco I in exchange for new non-voting shares of Holdco I on a one-for-one basis. After this contribution, we will increase our ownership percentage of the outstanding voting shares of Holdco I by converting our non-voting shares of Holdco I into voting shares of Holdco I to (A) 100% minus (B) 80% divided by the percentage of the outstanding TAM common shares owned by Holdco I determined on a primary basis after giving effect to such contribution.

54

Voting shares of Holdco I have the exclusive right to vote on, approve or consent to all matters that are subject to any vote of or approval by the shareholders of Holdco I under the applicable law of Chile or otherwise (other than the limited voting rights of the non-voting shares of Holdco I) and have no economic rights other than the right to receive a nominal dividend (we refer to these rights as the “dividend rights”). Non-voting shares of Holdco I have the exclusive right to receive all dividends, distributions or other amounts payable by Holdco I in respect of any shares of its capital stock other than the dividend rights and have no right to vote on or approve any matter that is subject to any vote of or approval by the shareholders of Holdco I under applicable law of Chile or otherwise other than the rights to vote on and approve the matters requiring the approval of the holders of such shares under the applicable law of Chile or otherwise.

Sister Holdco Mergers

The implementation agreement also provides for the merger of Sister Holdco with and into LAN after the completion of the exchange offer and prior to the settlement of the purchases made pursuant to the exchange offer. As the surviving corporation, LAN will continue to exist following the Sister Holdco merger. We refer to the time that the mergers become effective as the “effective time.”

Pursuant to the Sister Holdco merger, each share of Sister Holdco stock will be converted into 0.90 of a LAN common share at a ratio of 0.9 of a LAN common share per share of Sister Holdco stock (the “Sister Holdco exchange ratio”). We will pay or cause to be paid all deposit fees and other expenses payable in connection with the issuance of such LAN common shares.

By-Laws

The parties are required to take all necessary action so that immediately following the effective time of the mergers the by-laws of Holdco I, Sister Holdco and Holdco II shall be in the forms attached to the exchange offer agreement.

Directors

We and the TAM controlling shareholders are required to discuss in good faith and agree upon the individuals who will be directors of LAN, Holdco I, TAM and their subsidiaries as of the effective time and to take all necessary action to ensure that immediately following, and on the same day as, the effective time of the mergers, the individuals selected for election to the board of directors of LAN, Holdco I, TAM and their subsidiaries by each of us and TEP Chile pursuant to the Holdco I shareholders agreement, by each of us and TEP Chile pursuant to the TAM shareholders agreement and by each of the LAN controlling shareholders and TEP Chile pursuant to the control group shareholders agreement shall be the directors of LAN, Holdco I, TAM and their subsidiaries. For a discussion of the parties rights to elect the directors of LAN, Holdco I, TAM and their subsidiaries, see the “Item 4. Information on the Company—History and Development of the Company—Shareholders Agreements—Voting Agreements.”

Effects of the Mergers

Capital Increase

When the shareholders of LAN approved the mergers, the share capital of LAN was increased by an aggregate amount equal to the sum of the share capital of Holdco II and the share capital of Sister Holdco at such time which amounts to US$ 1,417.6 million (the “initial capital increase”). After the completion of the mergers, the share capital of LAN will be increased a second time by the amount by which the net asset value of the TAM shares contributed pursuant to the subscriptions exceeds, or will be decreased by the amount by which such net asset value is less than, the initial capital increase (which we refer to as the “second capital increase”). The second capital increase of LAN will not change the number of issued and outstanding LAN common shares (including those represented by LAN ADSs and LAN BDSs).

55

Treatment of Holdco II and Sister Holdco Stock

At the effective time, each share of Holdco II stock issued and outstanding immediately prior to the effective time will be exchanged for 0.90 of a validly issued, fully paid and nonassessable LAN common share, which is the Holdco II exchange ratio less applicable withholding tax. Each share of Sister Holdco stock issued and outstanding immediately prior to the effective time will be exchanged for 0.90 of a validly issued, fully paid and nonassessable LAN common share, which is the Sister Holdco exchange ratio less applicable withholding tax.

TAM Options

TAM and the TAM board of directors, as applicable, were required prior to the commencement of the exchange offer to adopt any resolutions and take any actions necessary to ensure that (a) from and after the effective time of the mergers each TAM stock option outstanding immediately prior to the effective time, whether vested or unvested, will be exercisable only when vested and only for an amount in cash equal to the product of (i) the total number of shares of TAM stock in respect of which such TAM stock option is exercisable, and (ii) the amount (if any) by which (x) the product of the Holdco II exchange ratio and the closing price of the LAN common shares on the SSE on the last business day prior to the date on which such TAM stock option was exercised exceeds (y) the exercise price per share of TAM stock under such TAM stock option, less any applicable taxes required to be withheld with respect to such payment, and (b) none of execution, delivery or performance of the implementation agreement or the completion of the mergers or any other transactions contemplated by implementation agreement will, directly or indirectly, cause or result in any acceleration of the vesting of any TAM stock options, whether prior to, on or after the effective time.

Exchange Fund

Prior to the effective time, we will deposit or cause to be deposited with the US exchange agent, for the benefit of the holders of Holdco II stock and Sister Holdco stock, certificates or, at our option, evidence of shares in book-entry form, representing LAN common shares, including any cash to be paid in lieu of fractional LAN common shares, as discussed below in this section. We refer to such certificates or evidence of book-entry form, as the case may be, for LAN common shares and such cash paid in lieu of fractional shares collectively as the “exchange fund.” Any interest or income produced from investments of the exchange fund by the US exchange agent will not be deemed part of the exchange fund and will be payable to us.

Fractional Shares

No certificates or scrip representing fractional LAN common shares will be issued in the mergers or pursuant to the statutory squeeze-out and such fractional shares will not entitle the owner thereof to vote or to any rights of a shareholder of LAN. In lieu of fractional shares, we will pay each holder of a fractional LAN common share an amount in cash in US dollars equal to the product of (a) the fractional LAN common shares to which such holder would otherwise be entitled after taking into account all shares of Holdco II Stock or Sister Holdco stock owned of record by such holder immediately prior to the effective time, and (b) the closing price of the LAN common shares on the SSE on the last trading day immediately preceding the date on which the Auction on Bovespa occurs (the “Auction date”) (as reported in www.bolsadesantiago.com or, if not reported therein, by another authoritative source), converted into US dollars using the “dólar observado” or “observed” exchange rate applicable on the Auction date as published by the Banco Central de Chile (“Central Bank of Chile”). This exchange rate (the “Chilean observed exchange rate”) is the average exchange rate of the previous business day’s transactions in the Formal Exchange Market (banks and other entities authorized by the Central Bank of Chile) and is published in the Diario Oficial (Official Gazette) by the Central Bank of Chile pursuant to number 6 of Chapter I of its Compendium of Foreign Exchange Rules on the date it applies, and is also made available at www.bcentral.cl at or around 6:00 P.M. (Santiago time) on the preceding day.

Statutory Squeeze-Out

After the completion of the exchange offer, if permitted under applicable Brazilian law, TAM will compulsorily redeem any TAM shares (including those represented as TAM ADSs) that did not accept the exchange offer, other

56

than those beneficially owned by the TAM controlling shareholders (the “non-tendered shares”). In this redemption, the holders of non-tendered shares will have the right to receive cash in an amount equal to the product of (i) the number of LAN ADSs or LAN BDSs that they would have received pursuant to the exchange offer in respect of its non-tendered shares (assuming they could have received fractional LAN common shares), and (ii) the closing price of the LAN common shares on the SSE on the last trading day immediately preceding the Auction date (as reported on the SSE’s website, www.bolsadesantiago.com or, if unavailable, as reported by another authoritative source), as converted into US dollars using the Chilean observed exchange rate applicable on the Auction date as published by the Central Bank of Chile, duly adjusted by the Central Bank of Brazil’s overnight lending rate. After TAM redeems all remaining TAM shares (including those represented by TAM ADSs), LAN will (i) contribute all voting ordinary shares of TAM acquired in the exchange offer to Holdco I in exchange for non-voting shares of Holdco I, and (ii) increase its ownership percentage of the outstanding voting shares of Holdco I to 20% by converting its non-voting shares of Holdco I into voting shares of Holdco I.

Delistings

Each of the TAM controlling shareholder and TAM are required to use its or their commercially reasonable efforts to cause (i) the TAM preferred shares to be delisted from the Bovespa if the delisting condition is satisfied with respect to such class of TAM stock and (ii) the TAM ADSs to be delisted from the NYSE as soon as practicable after the effective time.

Termination

The transaction agreements will terminate automatically if and when (i) the exchange offer expires in accordance with its terms or is revoked with the permission of CVM without the purchase of any TAM shares or (ii) if the product of 0.90 and the high end of the range of economic value of LAN per LAN common share as determined by the Appraiser at any time is less than the low end of the range of economic value of TAM per TAM share of stock as determined by the Appraiser at such time. In addition, LAN and the TAM controlling shareholders may terminate the transaction agreements by mutual written consent.

The transaction agreements may also be terminated and the exchange offer and the mergers may be abandoned at any time prior to the commencement of the exchange offer as follows, whether before or after receipt of any requisite shareholder approvals:

• by either LAN or the TAM controlling shareholders:

• if the exchange offer has not commenced by June 30, 2012 (the “outside date”);

• if any governmental entity of competent jurisdiction refuses to grant any required approval (other than any approval required from CVM with respect to the inclusion in the Edital of any of the LAN’s conditions to the completion of the exchange offer) and such refusal has become final and nonappealable or any governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any restraining order that has become final and non-appealable, and such event would give rise to the failure of the condition relating to receipt of all required approvals or absence of restraining order;

however, none of the termination rights described in the preceding bullet points will be available to any party whose material breach of a representation, warranty or covenant in any transaction agreement has been a principal cause of the failure of the exchange offer to commence by the outside date or the failure of the condition giving rise to such termination right, as applicable.

• by LAN:

• if TAM, TEP or the TAM controlling shareholders has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the transaction agreements or any of such representations and warranties becomes untrue as of any date after the signing date, which breach

57

or failure to perform or untruth (i) would give rise to the failure of the condition relating to accuracy of the representations and warranties of TAM, the TAM controlling shareholder and the Amaro family or compliance by any of them with their obligations under the transaction agreements and (ii) is not capable of being cured or, if capable of being cured, is not cured by TAM, the TAM controlling shareholder or the Amaro family, as applicable, by the earlier of (A) the day before the outside date and (B) the 30th calendar day following receipt of written notice of such breach or failure to perform from LAN;

• prior to the commencement of the exchange offer if CVM has refused to grant its approval to the inclusion in the Edital of any of the LAN’s conditions to the completion of the exchange offer; or

• if (i) the TAM board of directors or any committee thereof (x) withholds, withdraws or modifies or qualifies in any manner adverse to LAN either of the recommendations of the board of directors of TAM in support of the proposed combination, (y) approves, adopts, or recommends any alternative proposal, or (z) makes, causes to be made or resolves to make or cause to be made any public statement proposing or announcing an intention to take any of the preceding actions (which we refer to as a “TAM board recommendation change”); or (iii) in any such case all of the directors designated for election to the TAM board of directors by the TAM controlling shareholder and/or the Amaro family do not vote against the TAM board recommendation change;

• by the TAM controlling shareholders:

• if LAN or the LAN controlling shareholders has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the transaction agreements or any of such representations and warranties becomes untrue as of any date after the signing date, which breach or failure to perform or untruth (i) would give rise to the failure of the condition relating to accuracy of the representations and warranties of LAN and the LAN controlling shareholders or compliance by any of them with their obligations under the transaction agreements and (ii) is not capable of being cured or, if capable of being cured, is not cured by LAN or the LAN controlling shareholders, as applicable, by the earlier of (A) the day before the outside date and (B) the 30th calendar day following receipt of written notice of such breach or failure to perform from TAM; or

• if (i) the LAN board of directors or any committee thereof (x) withholds, withdraws or modifies or qualifies in any manner adverse to TAM either of the LAN board recommendations in support of the proposed combination, (y) approves, adopts, or recommends any alternative proposal, or (z) makes, causes to be made or resolves to make or cause to be made any public statement proposing or announcing an intention to take any of the preceding actions (which we refer to collectively as, a “LAN board recommendation change”) or (iii) in either such case all of the directors designated for election to the LAN board of directors by the LAN controlling shareholders did not vote against the LAN board recommendation change.

Termination Fees

TAM is required to pay us a fee equal to US$200 million (“TAM termination fee”) and reimburse LAN for all documented out-of-pocket expenses incurred by it or any of its subsidiaries in connection with the transaction agreements and the transactions contemplated by the transaction agreements up to a maximum amount of $25 million (no later than the second business day after TAM receives documentation for reimbursement) if:

• LAN terminates the transaction agreements because the board of directors of TAM or any committee thereof (x) withholds, withdraws or modifies or qualifies in any manner adverse to LAN either of the recommendations of the board of directors of TAM in support of the proposed combination, (y) approves, adopts, or recommends any alternative proposal, or (z) makes, causes to be made or resolves to make or cause to be made any public statement proposing or announcing an intention to take any of the foregoing actions; or within 12 months after the date that a competing proposal termination occurs, TAM or any of its subsidiaries completes any transaction that constitutes a competing proposal with the person that made the

58

competing proposal or any of its affiliates, enters into any binding or non-binding agreement with such person or any of its affiliates providing for a transaction that constitutes a competing proposal or the board of directors of TAM approves or recommends to its shareholders or does not oppose any competing proposal made by such person or any of its affiliates (in each case regardless of whether such competing proposal was made or announced or became publicly known before or after termination of the transaction agreements and in any such case the TAM termination fee is payable on the date that is the first to occur of the event(s) referred to in this paragraph).

A “competing proposal termination” occurs if:

(A) any person makes an alternative proposal with respect to TAM or LAN, or a “competing proposal,” to any party or its representatives,

(B) a competing proposal by any person becomes publicly known, or

(C) any person publicly announces an intention (whether or not conditional) to make a competing proposal; and

In each case, the transaction agreements automatically terminate solely because either of the minimum conditions is not satisfied or because an appraisal event occurs.

We are required to pay TAM a fee equal to $200 million (“LAN termination fee”) and reimburse TAM for all documented out-of-pocket expenses incurred by it or any of its subsidiaries in connection with the transaction agreements and the transactions contemplated by the transaction agreements up to a maximum amount of $25 million (no later than the second business day after we receive documentation for reimbursement) if:

• the TAM controlling shareholders terminate the transaction agreements because the board of directors of LAN or any committee thereof (x) withholds, withdraws or modifies or qualifies in any manner adverse to TAM either of the recommendations of the board of directors of LAN in support of the proposed combination, (y) approves, adopts, or recommends any alternative proposal, or (z) makes, causes to be made or resolves to make or cause to be made any public statement proposing or announcing an intention to take any of the foregoing actions; or within 12 months after the date that a competing proposal termination occurs, LAN or any of its subsidiaries complete any transaction that constitutes a competing proposal with the person that made the competing proposal or any of its affiliates, enter into any binding or non-binding agreement with such person or any of its affiliates providing for a transaction that constitutes a competing proposal or LAN’s board of directors approves or recommends to its shareholders or does not oppose any competing proposal made by such person or any of its affiliates (in each case regardless of whether such competing proposal was made or announced or became publicly known before or after termination of the transaction agreements and in any such case the LAN termination fee is payable on the date that is the first to occur of the event(s) referred to in this paragraph).

Remedies

If either we or TAM fails promptly to pay the amount due to the other party as a result of the termination of the transaction agreements under certain circumstances and, in order to obtain such payment, the other party commences a suit that results in a judgment against us or TAM for all or a portion of the TAM termination fee or the LAN termination fee, as applicable, such party is required to pay to the other party its costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amount of the TAM termination fee or the LAN termination fee, as applicable, accruing from the date such payment was required to be made pursuant to the implementation agreement until the date of payment at the six-month LIBOR rate in effect on the date such payment was required to be made plus 3%. The right to receive the fees and expenses payable described above under “—Termination Fees” will be in addition to, and not in lieu of, any other remedies a party may have at law or in equity with respect to breaches of the implementation agreement by the other party.

59

Indemnification

Indemnification by LAN

We are required to indemnify, defend and hold the TAM controlling shareholders, its affiliates and their respective directors, officers, employees and shareholders harmless from and against any and all damages, losses, charges, liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, taxes, interest, penalties, and costs and expenses (including reasonable attorneys’ fees and disbursement), which we refer to collectively as “indemnifiable losses,” incurred by any of them (whether or not involving a claim by any third party) arising out of or resulting from (i) the failure of the exchange offer to be completed solely as a result of any failure by LAN to confirm in writing to the controlling shareholders of TAM on the expiration date that any exchange offer condition waivable only by LAN (other than the squeeze-out condition) was satisfied if (but only if) such condition was in fact satisfied or (ii) any failure of the exchange offer to be completed after the controlling shareholders of TAM has paid for the TEP Chile subscription.

Indemnification by the TAM Controlling Shareholders

The controlling shareholders of TAM, jointly and severally, are required to indemnify, defend and hold us, our affiliates and our respective directors, officers, employees and shareholders harmless from and against any and all indemnifiable losses incurred by any of us (whether or not involving a claim by a third party) arising out of or resulting from any failure by the controlling shareholders of TAM to confirm in writing to us on the expiration date that any of the subscription conditions was satisfied if (but only if) such condition was in fact satisfied.

Access

Subject to certain exceptions, both we and TAM will, upon reasonable prior written notice, afford the other and its authorized representatives reasonable access to it and furnish the other information concerning its business, properties and personnel as may reasonably be requested until the completion of the exchange offer or termination of the transaction agreements, whichever occurs sooner.

Amendment

The parties are not permitted to amend transaction agreements after the commencement of the exchange offer.

Expenses

Except for the termination fees described above, each party is required to pay its own fees and expenses that it incurs in connection with the transaction agreements, the mergers and the other transactions contemplated by the transaction agreements, regardless of whether the exchange offer is commenced or the exchange offer and the mergers are completed, except that expenses incurred in connection with the printing and mailing of the exchange offer prospectus and the filing fee for the Form F-4 will be shared equally by LAN, on the one hand, and TAM controlling shareholders, on the other hand.

Choice of Law and Jurisdiction

The transaction agreements are governed by New York law with regard to all matters other than the authorization and execution of the transaction agreements, which are governed by the laws of each party’s jurisdiction of incorporation.

Shareholders Agreements

As discussed above under the section “—The Transaction Agreements”, following the combination of LAN and TAM, TAM will continue to exist as a subsidiary of Holdco I (and as an affiliate of LAN) and our name will be changed to “LATAM Airlines Group S.A.” or “LATAM.” On January 25, 2012 we and the LAN controlling shareholders entered into several shareholders agreements with TAM, Holdco I and TEP Chile to set forth our

60

agreement with respect to the governance, management and operation of LAN, Holdco I, TAM and their respective subsidiaries (collectively, the “LATAM Group.”) following the effective time. The shareholders agreements set forth an extensive set of principles that will apply to the corporate governance and organization of the LATAM Group following the effective time, which are summarized below. Pursuant to their terms, the shareholders agreements will become effective only if and at the time that Holdco I becomes a holder of at least 80% of the outstanding TAM common shares.

Governance and Management of LATAM Group

The control group shareholders agreement and the LAN-TEP shareholders agreement set forth the parties’ agreement on the governance and management of the LATAM Group following the effective time. We refer to the shareholders agreement among the LAN controlling shareholders and TEP Chile, which sets forth the parties’ agreement concerning the governance, management and operation of the LATAM Group, and voting and transfer of their respective LAN common shares and TEP Chile’s voting shares of Holdco I, following the effective time as the “control group shareholders agreement.” We refer to the shareholders agreement between us and TEP Chile, which sets forth our agreement concerning the governance, management and operation of the LATAM Group following the effective time as the “LAN-TEP shareholders agreement.”

This section describes the key provisions of the control group shareholders agreement and the LAN-TEP shareholders agreement. The rights and obligations of the parties to the control group shareholders agreement and the LAN-TEP shareholders agreement are governed by the express terms and conditions of the aforementioned shareholders agreements and not by this summary or any other information contained in this annual report on Form 20-F. The description of these control group shareholders agreement and the LAN-TEP shareholders agreement summarized below and elsewhere in this annual report on Form 20-F are qualified in their entirety by reference to the full text of the aforementioned shareholders agreements, which are incorporated by reference into this annual report on Form 20-F. For a full understanding of these agreements, we advise you to read these agreements carefully and in their entirety.

Composition of the LATAM Board

LAN expects that Mr. Maurício Rolim Amaro and Maria Cláudia Oliveira Amaro will be elected to the LATAM board of directors at a special meeting of the shareholders of LATAM to be held after the effective time in which the entire LATAM board of directors will be replaced. Mr. Maurício Rolim Amaro will be the chairman of LATAM’s board of directors for the first two years following the effective time. If Mr. Amaro vacates this position for any reason within that two-year period, TEP Chile has the right to select a replacement to complete his term. Thereafter, LATAM’s board of directors will appoint any of its members as the chairman of LATAM’s board of directors, from time to time, in accordance with LATAM’s by-laws.

LATAM Board Committees

Promptly after the effective time, our board of directors will establish four committees to review, discuss and make recommendations to our board of directors. These include a Strategy Committee, a Leadership Committee, a Finance Committee and a Brand, Product and Frequent Flyer Program Committee. The Strategy Committee will focus on the corporate strategy, current strategic issues and the three-year plans and budgets for the main business units and functional areas and high-level competitive strategy reviews. The Leadership Committee will focus on, among other things, group culture, high-level organizational structure, appointment of the chief executive officer (Vice Presidente Ejecutivo), LATAM CEO of the LATAM Group (“LATAM CEO”) and his or her other reports, corporate compensation philosophy, compensation structures and levels for the LATAM CEO and other key executives, succession or contingency planning for the LATAM CEO and performance assessment of the LATAM CEO. The Finance Committee will be responsible for financial policies and strategy, capital structure, monitoring policy compliance, tax optimization strategy and the quality and reliability of financial information. Finally, the Brand and Frequent Flyer Program Committee will be responsible for brand strategies and brand building initiatives for the corporate and main business unit brands, the main characteristics of products and services for each of the main business units, frequent flyer program strategy and key program features and regular audit of brand performance.

61

Management of the LATAM Group

Enrique Cueto Plaza, currently our CEO, will be the LATAM CEO following the effective time. The LATAM CEO will be the highest ranked officer of the LATAM Group and will report directly to the LATAM board of directors. The LATAM CEO will be charged with the general supervision, direction and control of the business of the LATAM Group and certain other responsibilities set forth in the LAN-TEP shareholders agreement. After any departure of the LATAM CEO, our board of directors will select his or her successor after receiving the recommendation of the Leadership Committee.

Ignacio Cueto Plaza, currently our president and chief operating officer (Gerente General), or the “COO”, will be the COO of LATAM, or the “LATAM COO,” following the effective time. The LATAM COO will report directly to the LATAM CEO and will have general supervision, direction and control of the passenger and cargo operations of the LATAM Group, excluding those conducted by Holdco I, TAM and its subsidiaries, and the international passenger business of the LATAM Group. The LATAM COO, together with the TAM Group CEO, will recommend a candidate to the LATAM CEO to serve as the head of the international passenger business of the LATAM Group (including both long haul and regional operations), who shall report jointly to the LATAM COO and the TAM Group CEO. The key executives of the LATAM Group (other than the LATAM CEO and those in the TAM Group) will be appointed by, and will report, directly or indirectly, to the LATAM CEO.

The head office of the LATAM Group will continue to be located in Santiago, Chile following the effective time.

Governance and Management of Holdco I and TAM

The Holdco I shareholders agreement and the TAM shareholders agreement set forth the parties’ agreement on the governance and management of Holdco I, TAM and its subsidiaries (collectively, the “TAM Group”) following the effective time. We refer to the shareholders agreement between us, Holdco I and TEP Chile, which sets forth our agreement concerning the governance, management and operation of Holdco I, and voting and transfer of voting shares of Holdco I, following the effective time as the “Holdco I shareholders agreement” and to the shareholders agreement between us, Holdco I, TAM and TEP Chile, which sets forth our agreement concerning the governance, management and operation of TAM and its subsidiaries following the effective time as the “TAM shareholders agreement.”

This section describes the key provisions of the Holdco I shareholders agreement and the TAM shareholders agreement. The rights and obligations of the parties to the Holdco I shareholders agreement and the TAM shareholders agreement are governed by the express terms and conditions of the aforementioned shareholders agreements and not by this summary or any other information contained in this annual report on Form 20-F. The description of these Holdco I shareholders agreement and the TAM shareholders agreement summarized below and elsewhere in this annual report on Form 20-F are qualified in their entirety by reference to the full text of the aforementioned shareholders agreements, which are incorporated by reference into this annual report on Form 20-F. For a full understanding of these agreements, we advise you to read these agreements carefully and in their entirety.

Composition of the Holdco I and TAM Boards

The Holdco I shareholders agreement and TAM shareholders agreement generally provide for identical boards of directors and the same chief executive officer at Holdco I and TAM, with us appointing two directors and TEP Chile appointing four directors (including the chairman of the board of directors). For the first two years after the effective time, the chairman of the Holdco I and TAM boards of directors will be Maria Cláudia Oliveira Amaro.

The control group shareholders agreement provides that the persons elected by or on behalf of the LAN controlling shareholders or the controlling shareholder of TAM to our board of directors must also serve on the boards of directors of both Holdco I and TAM.

62

Management of Holdco I and TAM

The day-to-day business and affairs of Holdco I will be managed by the TAM Group CEO under the oversight of the board of directors of Holdco I. The day-to-day business and affairs of TAM will be managed by the TAM Diretoria under the oversight of the board of directors of TAM. The “TAM Diretoria” will be comprised of the TAM Group CEO, the TAM CFO, the TAM COO and the TAM CCO. Marco Bologna, currently the CEO of TAM, will be the initial CEO of Holdco I and TAM, or the “TAM Group CEO” and any successor CEO will be selected by us from three candidates proposed by TEP Chile. The TAM Group CEO will have general supervision, direction and control of the business and operations of the TAM Group (other than the international passenger business of the LATAM Group) and will carry out all orders and resolutions of the board of directors of TAM. The initial chief financial officer of TAM, or the “TAM CFO,” will be jointly selected by us and TEP Chile and any successor CFO will be selected by TEP Chile from three candidates proposed by us. The chief operating officer of TAM, or the “TAM COO,” and chief commercial officer of TAM, or the “TAM CCO,” will be jointly selected and recommended to the TAM board of directors by the TAM Group CEO and TAM CFO and approved by the TAM board of directors. These shareholders agreements also regulate the composition of the boards of directors of subsidiaries of TAM.

TAM will continue to be headquartered in São Paulo, Brazil following the effective time of the mergers.

Supermajority Actions

Certain actions by Holdco I or TAM require supermajority approval by the board of directors or the shareholders of Holdco I or TAM which effectively require the approval of both us and TEP Chile before the specified actions can be taken. Actions that require supermajority approval of the Holdco I board of directors or the TAM board of directors include, as applicable:

• to approve the annual budget and business plan and the multi-year business (which we refer to collectively as the “approved plans”), as well as any amendments to these plans;

• to take or agree to take any action which causes, or will reasonably cause, individually, or in the aggregate, any capital, operating or other expense of any TAM Company and its subsidiaries to be greater than (i) the lesser of 1% of revenue or 10% of profit under the approved plans, with respect to actions affecting the profit and loss statement, or (ii) the lesser of 2% of assets or 10% of cash and cash equivalents (as defined by IFRS) as set forth in the approved plan then in effect , with respect to actions affecting the cash flow statement;

• to create, dispose of or admit new shareholders to any subsidiary of the relevant company, except to the extent expressly contemplated in the approved plans;

• to approve the acquisition, disposal, modification or encumbrance by any TAM company of any asset greater than $15 million or of any equity securities or securities convertible into equity securities of any TAM Company or other company, except to the extent expressly contemplated in the approved plans;

• to approve any investment in assets not related to the corporate purpose of any TAM Company, except to the extent expressly contemplated in the approved plans;

• to enter into any agreement in an amount greater than $15 million, except to the extent expressly contemplated in the approved plans;

• to enter into any agreement related to profit sharing, joint ventures, business collaborations, alliance memberships, code sharing arrangements, except as approved by the business plans and budget then in effect, except to the extent expressly contemplated in the approved plans;

63

• to terminate, modify or waive any rights or claims of a relevant company or its subsidiaries under any arrangement in any amount greater than $15 million, except to the extent expressly contemplated in the approved plans;

• to commence, participate in, compromise or settle any material action with respect to any litigation or proceeding in an amount greater than $15 million, relating to the relevant company, except to the extent expressly permitted in the approved plans;

• to approve the execution, amendment, termination or ratification of agreements with related parties, except to the extent expressly contemplated in the approved plans;

• to approve any financial statements, amendments, or to any accounting, dividend or tax policy of the relevant company;

• to approve the grant of any security interest or guarantee to secure obligations of third parties;

• to appoint executives other than the Holdco I CEO or the TAM Diretoria or to re-elect the then current TAM CEO or TAM CFO; and

• to approve any vote to be cast by the relevant company or its subsidiaries in its capacity as a shareholder.

Actions requiring supermajority shareholder approval include:

• to approve any amendments to the by-laws of any relevant company or its subsidiaries in respect to the following matters: (i) corporate purpose, (ii) corporate capital; (iii) the rights inherent to each class of shares and its shareholders; (iv) the attributions of shareholder regular meetings or limitations to attributions of the board of directors; (v) changes in the number of directors or officers; (vi) the term; (vii) the change in the corporate headquarters of a relevant company; (viii) the composition, attributions and liabilities of management of any relevant company; and (ix) dividends and other distributions;

• to approve the dissolution, liquidation, winding up of a relevant company;

• to approve the transformation, merger, spin-up or any kind of corporate re-organization of a relevant company;

• to pay or distribute dividends or any other kind of distribution to the shareholders;

• to approve the issuance, redemption or amortization of any debt securities, equity securities or convertible securities;

• to approve a plan or the disposal by sale, encumbrance or otherwise of 50% or more of the assets, as determined by the balance sheet of the previous year, of Holdco I;

• to approve the disposal by sale, encumbrance of otherwise of 50% or more of the assets of a subsidiary of Holdco I representing at least 20% of Holdco I or to approve the sale, encumbrance or disposition of equity securities such that Holdco I loses control;

• to approve the grant of any security interest or guarantee to secure obligations in excess of 50% of the assets of the relevant company; and

• to approve the execution, amendment, termination or ratification of acts or agreement with related parties but only if applicable law requires approval of such matters.

64

Voting Agreements, Transfers and Other Arrangements

Voting Agreements

The LAN controlling shareholders and TEP Chile have agreed in the control group shareholders agreement to vote their respective LAN common shares as follows after the effective time:

• until such time as TEP Chile sells any of its LAN common shares (other than the exempted shares as defined below held by TEP Chile), the LAN controlling shareholders will vote their LAN common shares to elect to the LATAM board of directors any individual designated by TEP Chile unless TEP Chile beneficially owns enough LAN common shares to directly elect two directors to the LATAM board of directors;

• the parties agree to vote their LAN common shares to assist the other parties in removing and replacing the directors such other parties elected to the LATAM board of directors;

• the parties agree to consult with one another and use their good faith efforts to reach an agreement and act jointly on all actions (other than actions requiring supermajority approval under Chilean law) to be taken by the LATAM board of directors or the LAN shareholders;

• the parties agree to maintain the size of the LATAM board of directors at a total of nine directors and to maintain the quorum required for action by the LATAM board of directors at a majority of the total number of directors of the LATAM board of directors; and

• if, after good faith efforts to reach an agreement with respect to any action that requires supermajority approval under Chilean law and a mediation period, the parties do not reach such an agreement then TEP Chile has agreed to vote its shares on such supermajority matter as directed by the LAN controlling shareholders, which we refer to as a “directed vote.”

The number of “exempted shares” of TEP Chile means that number of LAN common shares which TEP Chile owns immediately after the effective time in excess of 12.5% of the outstanding LAN common shares at such time as determined on a fully diluted basis.

The parties to the Holdco I shareholders agreement and TAM shareholders agreement have agreed to vote their voting shares of Holdco I and shares of TAM so as to give effect to the agreements with respect to representation on the TAM board of directors discussed above.

Transfer Restrictions

Pursuant to the control group shareholders agreement, the LAN controlling shareholders and TEP Chile are subject to certain restrictions on sales, transfers and pledges of the LAN common shares and (in the case of TEP Chile only) the voting shares of Holdco I beneficially owned by them. Except for a limited amount of LAN common shares, neither the LAN controlling shareholders nor TEP Chile may sell any of its LAN common shares, and TEP Chile may not sell its voting shares of Holdco I, until the third anniversary of the effective time. Thereafter, sales of LAN common shares by either party are permitted, subject to (i) certain limitations on the volume and frequency of such sales and (ii) in the case of TEP Chile only, TEP Chile satisfying certain minimum ownership requirements. After the tenth anniversary of the effective time, TEP Chile may sell all of its LAN common shares and voting shares of Holdco I as a block, subject to (x) approval of the transferee by the LATAM board of directors, (y) the condition that the sale not have an adverse effect and (z) a right of first offer in favor of the LAN controlling shareholders, which we refer to collectively as “block sale provisions.” An “adverse effect” is defined in the control group shareholders agreement to mean a material adverse effect on our and Holdco I’s ability to own or receive the full benefits of ownership of TAM and its subsidiaries or the ability of TAM and its subsidiaries to operate their airline businesses worldwide. The LAN controlling shareholders have agreed to transfer any voting shares of Holdco I acquired pursuant to such right of first offer to us for the same consideration paid for such shares.

65

In addition, TEP Chile may sell all LAN common shares and voting shares of Holdco I beneficially owned by it as a block, subject to satisfaction of the block sale provisions, after the third anniversary of the effective time if a release event (as described below) occurs or if TEP Chile is required to make two or more directed votes during any 24-month period at two meetings (consecutive or not) of the shareholders of LAN held at least 12 months apart and LAN has not yet fully exercised its conversion option described below. A “release event” will occur if (i) a capital increase of LATAM occurs, (ii) TEP Chile does not fully exercise the preemptive rights granted to it under applicable law in Chile with respect to such capital increase in respect of all of its restricted LAN common shares, and (iii) after such capital increase is completed, the individual designated by TEP Chile for election to the board of directors of LATAM with the assistance of the LAN controlling shareholders is not elected to the board of directors of LATAM.

In addition, after the tenth anniversary of the effective time and after the occurrence of the full ownership trigger date (as described below under the “—Conversion Option” section), TEP Chile may sell all or any portion of its LAN common shares, subject to (x) a right of first offer in favor of the LAN controlling shareholders and (y) the restrictions on sales of LAN common shares more than once in a 12-month period.

The control group shareholders agreement provides certain exceptions to these restrictions on transfer for certain pledges of LAN common shares made by the parties and for transfers to affiliates, in each case under certain limited circumstances.

In addition, TEP Chile agreed in the Holdco I shareholders agreement not to vote its voting shares of Holdco I, or to take any other action, in support of any transfer by Holdco I of any equity securities or convertible securities issued by it or by any of TAM or its subsidiaries without our prior written consent.

Restriction on transfer of TAM shares

We agreed in the Holdco I shareholders agreement not to sell or transfer any shares of TAM stock to any person (other than our affiliates) at any time when TEP Chile owns any voting shares of Holdco I. However, we will have the right to effect such a sale or transfer if, at the same time as such sale or transfer, we (or our assignee) acquires all the voting shares of Holdco I beneficially owned by TEP Chile for an amount equal to TEP Chile’s then current tax basis in such shares and any costs TEP Chile is required to incur to effect such sale or transfer. TEP Chile has irrevocably granted us the assignable right to purchase all of the voting shares of Holdco I beneficially owned by TEP Chile in connection with any such sale.

Conversion Option

Pursuant to the control group shareholders agreement and the Holdco I shareholders agreement, we have the unilateral right to convert our shares of non-voting stock of Holdco I into shares of voting stock of Holdco I to the maximum extent allowed under law and to increase our representation on the TAM and Holdco I boards of directors if and when permitted in accordance with foreign ownership control laws in Brazil and other applicable laws if the conversion would not have an adverse effect (as defined above under the “—Transfer Restrictions” section).

On or after the tenth anniversary of the effective time and after we have fully converted all of our shares of non-voting stock of Holdco I into shares of voting stock of Holdco I as permitted by Brazilian law and other applicable laws, we will have the right to purchase all of the voting shares of Holdco I held by the controlling shareholders of TAM for an amount equal to their then current tax basis in such shares and any costs incurred by them to effect such sale, which amount we refer to as the “sale consideration.” If we do not timely exercise our right to purchase these shares or if, after the tenth anniversary of the effective time, we have the right under applicable law in Brazil and other applicable law to fully convert all the shares of non-voting stock of Holdco I beneficially owned by us into shares of voting stock of Holdco I and such conversion would not have an adverse effect but we have not fully exercised such right within a specified period, then the controlling shareholders of TAM will have the right to put their shares of voting stock of Holdco I to us for an amount equal to the sale consideration.

66

Acquisitions of TAM Stock

The parties have agreed that all acquisitions of TAM common shares by any member of the LATAM Group from and after the effective time will be made by Holdco I.

B. BUSINESS OVERVIEW

General

We are one of the leading passenger airlines in Latin America and the main air cargo operator in the region. We currently provide domestic and international passenger services in Chile, Peru, Ecuador, Argentina and Colombia. We carry out our cargo operations through the use of belly space on our passenger flights and dedicated cargo operations using freighter aircraft through our cargo airlines in Chile, Brazil, Colombia and Mexico. In 2007, we initiated a strategy for stimulating demand for air travel in our domestic markets by offering lower-fare options to travelers, lowering our costs and increasing the aircraft utilization rates and efficiency of operations. For more information about our short-haul operations see “—Business of the Company—Passenger Operations—Business Model for Domestic Operations” below.

As of February 29, 2012, we serviced 15 destinations in Chile, 14 destinations in Peru, 4 destinations in Ecuador, 17 destinations in Argentina, 23 destinations in Colombia, 15 destinations in other Latin American countries and the Caribbean, 5 destinations in the United States, 2 destinations in Europe and 4 destinations in the South Pacific. In addition, as of February 29, 2012, through our various code-share agreements, we offer service to 29 additional destinations in North America, 17 additional destinations in Europe, 29 additional destinations in Latin America and the Caribbean (including Mexico) and 2 destinations in Asia. We provide cargo service to all our passenger destinations and to approximately 20 additional destinations served only by freighter aircraft. We also offer other services, such as ground handling, courier, logistics, and maintenance.

Competitive Strengths

Our strategy is to maximize shareholder value by increasing revenues and profitability through leveraging the operational efficiencies between our cargo and passenger divisions, thoroughly planning for our expansion efforts and carefully controlling costs. We plan to accomplish these goals by both focusing on our existing competitive strengths and implementing new strategies to fuel our future growth. We believe our most important competitive strengths are:

Leading Presence in Key South American Markets

We are one of the main international and domestic passenger airlines in Latin America, as well as the largest cargo operator in Chile and most of the South American markets that we serve. We hold the largest market share of passenger traffic to and from Chile, Peru and Ecuador, as well as the largest market share of domestic passenger traffic in both Chile and Peru. More recently, we have also achieved a solid and growing position in the Argentine domestic market through Lan Argentina and in the Argentine international market through Lan Argentina and our other passenger airlines. We are also strengthening our presence in the Ecuadorian market, where we began domestic passenger operations on April 6, 2009. We entered the Colombian domestic and international market through the acquisition of Aires on November 26, 2010. During 2011 we worked on restructuring the company in order to achieve LAN’s standards. As a result, at the end 2011, we rebranded the company to Lan Colombia. We are also the leading air cargo operator within, to and from South America, and we are consolidating our leadership through new cargo operations in Colombia and in the Brazilian domestic market, as well as through an increased presence in routes between South America and Europe. Our international and domestic passenger and cargo operations have increased substantially over the past five years in terms of capacity, traffic and revenue. Between 2005 and 2011, our passenger capacity grew 82.8% and our cargo capacity grew 50.0%.

67

Diversified Revenue Base from both Passenger and Cargo Operations

We believe that one of our distinct competitive advantages is our ability to profitably integrate our scheduled passenger and cargo operations. We take into account potential cargo services when planning passenger routes, and also serve certain dedicated cargo routes using our freight aircraft, when needed. By adding cargo revenues to our existing passenger service, we are able to increase the productivity of our assets and maximize revenue, which has historically covered fixed operating expenses per flight, lowered break-even load factors and enhanced per flight profitability. Additionally, this revenue diversification helps offset seasonal revenue fluctuations and reduces the volatility of our business over time. As of December 2011, passenger revenues accounted for 70.1% of total revenues and cargo revenues accounted for 27.6% of total revenues.

Attractive Cost Structure with High Utilization of our Assets and Productive Personnel

We believe that we have a highly competitive cost structure with a cost per ATK of 51.4 cents in 2011. Our cost advantage arises mainly from our productive and committed employees, high aircraft utilization, modern and fuel-efficient fleet and cost-conscious culture. Our wages and labor costs accounted for approximately 19.6% of total costs in 2011, which we believe is a lower percentage than that of many other U.S. and European carriers.

Furthermore, our itineraries and aircraft rotations are designed to maximize aircraft utilization. During 2011, our long-haul aircraft (Boeing 767-300 passenger and Airbus A340-300s) operated an average of approximately thirteen hours per day. We also implemented a new business model for short-haul operations in 2007; as a result, by the end of 2011 we increased the utilization of our narrow body aircraft to reach 9.5 hours per day. In May 2008, we completed the phase-out of the Boeing B737-200 from our fleet. Our short haul fleet is now entirely composed of Airbus A320-Family Aircraft with the exception of Lan Colombia’s fleet.

In addition, during 2009 we continued with the implementation of LEAN, a system that seeks to improve our processes by eliminating activities that do not add value (thus increasing the value of each activity and suppressing those that are superfluous), which reduces costs, improves efficiency and increases customer satisfaction. The adoption of this system constituted a redesigning of processes that permits solving problems that may occur during the execution of any process, such as aircraft maintenance. The foregoing renders the daily tasks and processes carried out within the Company more efficient. Due to its implementation, during 2011 we achieved a 40% decrease in maintenance delays and a 40% reduction in the turn-around time in certain checks in Chile and Peru. LEAN also allowed us in 2011 to support the Company’s high growth, by streamlining the pilot training process, which resulted in more pilots trained during that year. Finally, it allowed the Company to reduce CO2 emissions, by redesigning processes in various areas that result in a decrease of more than 10 million gallons of fuel consumption. In addition, by establishing clear roles, challenges and achievements, the implementation of LEAN has had an important benefit in terms of employee motivation. See “Item 4. Information on the Company—Business of the Company—Maintenance.”

Strong Brand Teamed with Key Global Strategic Alliances

In March 2004 we launched the “LAN” brand, under which we operate all of our international passenger airlines. Brand uniformity enables our customers to better identify us with the high standards of service and safety that are common to all of our airlines. This corporate image has also improved the cost effectiveness and efficiency of our marketing efforts as we continue to expand in our existing and new markets. Additionally, LAN and our entire passenger affiliates (with the exception of Lan Colombia) are a member of the oneworld^® alliance. We have also entered into bilateral agreements with strategic partners such as American Airlines, Iberia and Qantas, among others, whose leading presence in their respective markets creates a truly global reach for our passengers. Our passenger alliances and commercial agreements provide our customers with approximately 800 travel destinations, a combined reservations system, itinerary flexibility and various other benefits, which substantially enhance our competitive position within the Latin American market.

68

Optimized Fleet Strategy

We make optimal use of our fleet structure through a combination of minimal aircraft types, modern aircraft and staggered lease maturities. We carefully select our aircraft based on their ability to effectively and efficiently serve our short- and long-haul flight needs, while still striving to minimize the number of aircraft types we operate. For short-haul flights we operate the Airbus A320-Family Aircraft and the recently acquired Lan Colombia’s fleet in the Colombian market. As of May 18, 2008, we stopped using Boeing 737-200 aircraft in our Chilean domestic operations. For long-haul passenger flights we operate the Boeing 767-300 passenger aircraft and for long-haul cargo flights we operate the Boeing 767-300 freighters. For ultra long-haul service, such as between Santiago and Madrid and between Santiago and Auckland, we use the Airbus A340-300 aircraft. Having a fleet with minimal aircraft types reduces inventory costs, as fewer spare parts are required, and reduces the need to train our pilots to operate different types of aircraft. LAN’s strategic fleet renewal plan involves the sale of five Airbus A318 aircraft that took place in 2011, plus the sale of other five in 2012 and five in 2013.

The average age of our fleet as of February 29, 2012 was 6.1 years (6.9 years including Lan Colombia’s fleet), making our fleet one of the most modern in Latin America. The phasing out of our Boeing 737-200s, our oldest aircraft, which was completed in May 2008, contributed to reducing the average age of our fleet. Additionally, we expect that our purchase of additional aircraft, to be delivered between 2012 and 2018 will further reduce the average age of our fleet. Having a younger fleet makes us more cost competitive because it reduces fuel consumption and maintenance costs, and enables us to enjoy a high degree of performance reliability. In addition, a modern and fuel efficient fleet reflects our strong commitment to the environment as new aircraft incorporate the industry’s latest technology, allowing for a substantial reduction in emissions, while also decreasing noise levels.

Additionally, our leased fleet is structured with staggered lease maturities over time to create the strategic flexibility to expand or reduce capacity according to market conditions. We believe that our aircraft and the flexibility of our fleet allow us to maximize aircraft utilization by adapting rapidly to changes in passenger and cargo demand in the markets that we serve.

Strong Financial Position with Track Record of Growth and Profitability

We have historically managed our business to maintain financial flexibility and a strong balance sheet in order to accommodate our growth objectives while being able to respond to changing market conditions. We are one of the few investment-grade rated airlines in the world and we maintained this status during 2011. We have built our strong financial position by preserving our financial liquidity and continuing to structure long-term financing for newly acquired aircraft. Our financial flexibility has allowed us to secure large aircraft orders, including an important part of our current re-fleeting program at attractive financing rates. We also monitor and seek opportunities to reduce financial risks associated with currency, interest rate and jet fuel price fluctuations. Over the last five years, while much of the airline industry has faced significant competitive and liquidity crises, we have remained consistently profitable.

Business Strategy

The principal areas in which we plan to focus our efforts going forward are as follows:

Continue to Grow Both our Passenger and Cargo Networks

We currently intend to continue to expand our capacity over the next several years to accommodate robust long-term growth in both passenger and cargo demand in the markets we target. We plan on expanding our operations not only in the markets we currently serve but also into new South American markets where we believe demand exists for our combination of passenger and cargo services. To meet this growth, as of February 29, 2012, we had an order book of 89 latest generation Airbus A320-Family Aircraft to be delivered between 2012 and 2018 and 13 Boeing 767-300 wide body passenger aircraft to be delivered between 2012 and 2013; as of February 29, 2012, we had orders for two Boeing 777-200 freighter aircraft to be delivered in 2012; and as of February 29, 2012 we also have outstanding orders for 32 Boeing 787 Dreamliner passenger aircraft, currently expected to start to be delivered in 2012.

69

We will continue to leverage the benefits of combining our passenger and cargo operations. Our passenger and cargo operations are equally important aspects of our business, and we dedicate the necessary resources, employees, facilities, management and fleet to enable both operations to provide high-quality service and to compete effectively in their respective markets.

Enhance the Profitability of our Short-Haul Operations

We plan to continue implementing the business model launched in 2007 to increase the efficiency of our domestic and short-haul operations, specifically in the domestic markets in Chile and Peru. This model is also being applied in the domestic markets in Ecuador and Argentina, as well as in our recently acquired passenger operations in Colombia. In Argentina, the implementation of the model is subject to certain regulatory restrictions as a result of the fare bands in place in the Argentinean domestic market. In addition, we are evaluating the application of these initiatives on certain regional routes within Latin America. A key objective of this program has been to increase the utilization of our fleet through modified itineraries that include more point-to-point and overnight flights and faster turnaround times. Our Boeing 737-200 fleet was completely phased out in May 2008 in favor of the new Airbus A320-Family Aircraft, which we currently operate on all domestic and regional routes except those served by Lan Colombia. These initiatives have increased efficiency and improved the margins of our short-haul operations. In addition, our modern fleet allows for lower unscheduled maintenance costs, lower fuel consumption, and operational and cost efficiencies achieved through operating fewer fleet types. Other key objectives of this business model include a reduction in sales and distribution costs through increased Internet penetration, reduced agency commissions, and increased self check-in service through web check-in and airport kiosks. We expect that these initiatives, together with simplifications in back-office and support functions, will continue to help us expand operations while controlling fixed costs, spurring a reduction in overhead costs per ASK. We have begun to pass on a portion of these operating efficiencies to consumers through fare reductions, which has stimulated additional demand and enhanced our overall profitability.

Maintain Excellent Customer Satisfaction

In both our passenger and cargo businesses, we focus on delivering high quality services that are valued by our customers. In our passenger businesses we strive to achieve high on-time performance, world-class on-board service on long-haul flights, attractive and convenient pricing and quick check-in for short-haul flights, and the comfort afforded by a modern fleet. During the first half of 2009 we completed the reconfiguration of the cabins of all our long-haul aircraft, including both the Boeing 767 and the Airbus A340 passenger aircraft, in order to incorporate our new Premium Business Class including full-flat seats, as well as improvements in economy class which include a state-of-the-art on-board entertainment system. Our frequent flyer program, LANPASS, provides travel benefits and rewards to almost 5.8 million loyal customers in Chile, Argentina, Peru and Ecuador as well as in other countries where we operate. In the cargo business, we focus on providing reliable service, taking advantage of our ability to handle different types of cargo as well as significant cargo volumes, and leveraging our facilities in key gateways, such as Miami, to ensure optimal handling of our customers’ needs. We continually assess opportunities to incorporate service improvements in order to respond effectively to our customers’ needs.

Continued Emphasis on Safety

Our top priority is safety, and we have structured our operations and maintenance to focus on safe flying. Our main maintenance facilities are certified by the Federal Aviation Administration (“FAA”), DGAC and other civil aviation authorities. Our flight and maintenance safety procedures are certified under ISO 9001-2000 standards. We have programs in place to train our crews and mechanics to world-class standards both at facilities abroad or at our training centers, which we have developed in association with high-quality partners.

Focus on Efficiency and Sustainability

We are increasingly concerned with improving efficiency through a series of fleet initiatives that seek to reduce fuel consumption. The most significant is our ongoing fleet renewal and growth plan, through which we expect to incorporate 136 new aircraft between 2012 and 2018. As an example, we estimate that the Boeing 787 Dreamliner operates with costs per ASK that are approximately 12% lower than other long haul passenger aircraft, while the new Boeing 777 freighter operates with costs per ASK that are approximately 17% lower than the Boeing 767

70

freighter. In addition, we continue with the installation of winglets on all of our Boeing 767 aircraft, achieving fuel efficiencies of approximately 5% per aircraft. In order to mitigate the environmental impact of our operations we seek to operate in a sustainable manner by reducing our fuel consumption and related emissions. We also continue to focus on adjusting the configuration of our aircraft to market demand by, for example, adjusting the configuration of four Boeing 767s that operate on long-haul routes from Ecuador by reducing the number of Premium Business seats and increasing the number of Economy class seats. Other long-term projects that aim at improving our cost structure include implementing the LEAN operating processes in our maintenance operations, as well as investing in new inventory and reservations systems provided by Sabre.

Airline Operations and Route Network

We are one of the main air transport operators in Latin America. As of February 29, 2012, we operated passenger airlines in Chile, Peru, Ecuador, Argentina and Colombia. We are also the largest air cargo operator in the region.

The following table sets forth our operating revenues by activity for the periods indicated:

	Year ended December 31,
	2011		2010		2009
	(in US$ millions)
The Company(1)
Total passenger revenues		4,008.9		3,109.8		2,623.6
Total cargo revenues		1,576.5		1,280.7		895.6
Total traffic revenues		5,585.4		4,390.5		3,519.2

⁽¹⁾  Consolidated information for the Company.

Passenger Operations

General

As of February 29, 2012, our passenger operations were performed through airlines in Chile, Peru, Ecuador, Argentina and Colombia where we operate both domestic and international services.

As of February 29, 2012, our network consisted of 15 destinations in Chile, 14 destinations in Peru, five destinations in Ecuador, 17 destinations in Argentina, 23 destinations in Colombia, 14 destinations in other Latin American countries and the Caribbean, five destinations in the United States, two destinations in Europe and four destinations in the South Pacific. Within Latin America, we have routes to and from Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, the Dominican Republic, Ecuador, Mexico, Peru, Uruguay and Venezuela. We also fly to a variety of international destinations outside Latin America, including Auckland, Fort Lauderdale, Frankfurt, Los Angeles, Madrid, Miami, New York, Papeete (Tahiti), San Francisco, and Sydney. In addition, as of February 29, 2012, through our various code-share agreements, we offer service to 29 additional destinations in North America, 17 additional destinations in Europe, 29 additional destinations in Latin America and the Caribbean (including Mexico), and two destinations in Asia.

The following table sets forth certain of our passenger operating statistics for international and domestic routes for the periods indicated.

	Year ended December 31,
	2011		2010		2009
The Company(1) (2)
ASKs (million)
International		32,086.7		29,582.8		26,797.10
Domestic		16,052.9		12,772.4		11,979.10
Total		48,139.6		42,355.2		38,776.20

71

	Year ended December 31,
	2011			2010			2009
RPKs (million)
International		25,935.6			23,226.4			20,861.20
Domestic		12,487.3			9,921.1			8,975.00
Total		38,422.9			33,147.5			29,836.20
Passengers (thousands)
International		7,076.2			6,302			5,676
Domestic		15,514.7			10,991			9,730
Total		22,509.9			17,293			15,406
Passenger yield (passenger revenues/RPKs, in US cents)
International	US¢	9.5		US¢	8.7		US¢	8.0
Domestic	US¢	12.3		US¢	10.8		US¢	10.4
Combined yield(3)	US¢	10.4		US¢	9.4		US¢	8.8
Passenger load factor (%)
International		80.8	%		78.5	%		77.8	%
Domestic		77.8	%		77.7	%		74.9	%
Combined load factor(4)		79.8	%		78.3	%		76.9	%

(1) Information provided for the Company as of December 31, 2009 and December 31, 2010 includes domestic operations in Chile, Peru, Argentina and Ecuador. These figures do not include operating statistics from Lan Colombia. Information provided for the Company as of December 31, 2011 consolidates Lan Ecuador, Lan Argentina, Lan Perú and Lan Colombia.

(2) Domestic passenger operations as of December 31, 2009 and December 31, 2010 include domestic operations in Chile, Peru, Argentina and Ecuador. These figures do not include operating statistics from Lan Colombia. Figures as of December 31, 2011 include domestic passenger operations in Chile, Peru, Argentina, Ecuador and Colombia.

(3) Aggregate international and domestic passenger yield.

(4) Aggregate international and domestic passenger load factor.

International Passenger Operations

As of February 29, 2012, we operated scheduled international services from Chile, Peru, Ecuador, Argentina and Colombia through Lan Airlines; Lan Express in Chile; Lan Peru in Peru; Lan Ecuador in Ecuador; Lan Argentina in Argentina and Lan Colombia in Colombia. International passenger traffic has grown significantly in the past couple of years due to demand growth, market share gains, increased connecting traffic to and from other Latin American countries, the launch of new routes and additional frequencies on existing routes, and expansion into new markets.

Our international network combines our Chilean, Peruvian, Ecuadorian, Argentinean and Colombian affiliates. We have operated international services out of Chile since 1946, and we greatly expanded our flights out of Peru with the creation of Lan Peru in 1999 and out of Ecuador through Lan Ecuador in 2003. In August 2006, we expanded our international operations through Lan Argentina, which until then had only been offering domestic flights. The international operations of Lan Colombia, however, are being reduced since its acquisition in 2010. This strategy to generally expand our international network is aimed at enhancing our value proposition by offering customers more destinations and routing alternatives, maximizing aircraft utilization, increasing load factors, leveraging complementary seasonal patterns, and optimizing our commercial efforts. We provide long-haul services out of our five main hubs in Santiago, Lima, Guayaquil, Buenos Aires and Bogota. We also provide regional services from Chile, Peru, Ecuador, Argentina and Colombia. Since 2004, we have grown our intra-Latin American operations out of Lima to position it as our main regional hub.

72

The following table sets forth the destinations served from each of the aforementioned countries as of February 29, 2012:

Country of Origin	Destination	Number of Destinations
Chile	Argentina	4
	Bolivia	2
	Brazil	2
	Colombia	1
	Ecuador	1
	Peru	1
	Uruguay	1
	Venezuela	1
	Dominican Republic	1
	Mexico	2
	United States	3
	Spain	1
	Germany	1
	New Zealand	1
	Falkland Islands	1
	French Polynesia	1
	Australia	1
Peru	Argentina	2
	Bolivia	2
	Brazil	2
	Chile	1
	Colombia	3
	Ecuador	2
	Venezuela	1
	Mexico	2
	United States	4
	Dominican Republic	1
	Spain	1
Ecuador	Argentina	1
	Chile	1
	Colombia	1
	United States	2
	Spain	1
Argentina	United States	1
	Brazil	1
	Chile	1
	Dominican Republic	1
	Peru	1
Colombia	Chile	1
	Perú	1
	Ecuador	1
	United States	1

In line with our long-standing commitment to provide customers with superior service and the best products on the market, in May 2009 LAN completed the retrofit of all its long-haul fleet (including its Boeing 767 and Airbus A340 passenger aircraft) with the new Premium Business class and improved Economy class. Combining the best features of the traditional First and Business classes, the new Premium Business includes 180 degrees recline full-flat seats which allow passengers to sleep with the maximum comfort and privacy. Premium Business also includes top-level personalized in-flight service. Changes in Economy class include new seats with a greater recline angle, a cushion that slides forward for increased comfort and convenience, and larger individual video monitors for each seat.

73

LAN’s sustained development of its coverage has been a crucial factor in its growth and 2011 was no exception. New routes were added along with flight increases in some key existing routes in order to offer more and better alternatives to both business and tourist travelers. In 2011, the Company continued to consolidate its hub in Lima, which serves as the center of its Latin American network and also complements its intercontinental network, by opening new routes and increasing flights on existing routes.

As part of its mission, LAN seeks to promote tourism to South America. Due to its large network of services, visitors from around the world can experience world renowned destinations such as Cusco, Easter Island, the Galapagos Islands, or Patagonia in Chile and Argentina, including the cities of Punta Arenas, Ushuaia, El Calafate and Bariloche.

According to the Chilean JAC data, Chilean international air passenger traffic increased 17.2% from 2010 to 2011, totaling approximately 6.0 million passengers, as measured in RPK. We had 51.3% of the international market share in Chile in 2011, which was a decrease compared to 52.8% in 2010. Our Chilean international operations can be divided into four main segments, based on the destination: to North America, Europe, the rest of Latin America, and the Pacific. As of February 29, 2012, our main competitors on direct routes between Chile and North America included American Airlines, Delta Airlines, Air Canada and Aeromexico. TACA and COPA also participated in the Chile-North American markets with stopovers in their respective Central American hubs. Our main competitors on routes between Chile and Europe were Air France-KLM and Iberia. On regional routes our main competitors included Aerolineas Argentinas, Air Canada, Avianca, GOL, TACA and TAM. We were the only airline operating between Chile and the South Pacific during this time.

According to Peruvian DGAC data, Peruvian international air passenger traffic increased 14.3% from 2010 to 2011, totaling approximately 5.8 million passengers, as measured by the number of passengers. We had 46.3% of the international market share in Peru in 2011, which was an increase compared to 43.9% in 2010. Our Peruvian international operations can be divided into three main segments, based on the destination: to North America, Europe and the rest of Latin America. As of February 29, 2012, our main competitors on direct routes between Peru and North America included American Airlines, United Airlines, Delta Airlines, Spirit Airlines, Air Canada and Aeromexico. TACA and COPA also participated in the Peru-North American markets with stopovers in their respective Central American hubs. On routes to Europe, our main competitors were Iberia, Air Europa and Air France-KLM. On regional routes our main competitors included included Aerolineas Argentinas, TACA, TAM, Avianca and GOL.

According to our internal estimates and travel agency statistics (captured through IATA Billing Settlement Plan or “BSP”), Ecuadorian international air passenger traffic increased 6.0% from 2010 to 2011, totaling approximately 3.0 million passengers. We had 31.0% of the international market share in Ecuador in 2011, which was an increase compared to 28.7% in 2010. Our Ecuadorian international operations can be divided into three main segments, based on the destination: to North America, Europe and the rest of Latin America. As of February 29, 2012, our main competitors on direct routes between Ecuador and North America included American Airlines, Continental Airlines, Delta Airlines and Aerogal. TACA and COPA also participate in the Ecuador-North American markets with stopovers in their respective Central American hubs. On routes to Europe, our main competitors included Air Comet, Iberia, and Air France-KLM. On regional routes, our main competitors included TACA, COPA and Avianca.

According to our internal estimates and travel agency statistics (captured through BSP), Argentinean international air passenger traffic increased 9.0% from 2010 to 2011, totaling approximately 9.9 million passengers. We had 19.4% of the international market share in Argentina in 2011, which was an increase compared to 16.5% in 2010. Our Argentinean international operations can be divided into two main segments, based on the destination: to North America and the rest of Latin America. As of February 29, 2012, our main competitors on the Buenos Aires-Miami route included American Airlines and Aerolíneas Argentinas. TAM, TACA and COPA also participated in the Argentina-North American markets with stopovers in their respective hubs. Our main competitors on the Buenos Aires-Dominican Republic route included COPA and American Airlines. Our main competitors on the Buenos Aires-Sao Paulo route included TAM, GOL and Aerolíneas Argentinas. Our main competitors on the Buenos Aires-Lima route included TACA and Aerolíneas Argentinas. Our main competitors on the Buenos Aires-Santiago route included Aerolíneas Argentinas and Air Canada.

74

According to Aeronautica Civil (Colombian Civil Aeronautics), the Colombian international market increased 12.8% from October 31, 2010 to October 31, 2011, totaling approximately 5.7 million passengers, as measured in RPK. The international passenger market in Colombia for the full year 2010 was 6.2 million passengers. We had 4.6% of the international market share in Colombia as of October 31, 2011, which was a decline compared to 6.0% as of October 31, 2010 (including Aires figures, before its acquisition by LAN). Our international operations in Colombia can be divided in two business segments, based on destination: to North America and the rest of Latin America. As of February 29, 2012, our main competitors on direct routes between Colombia and North America included Avianca, American Airlines, United Airlines, Air Canada, Delta Airlines and Aerogal. COPA also participated in the Colombia-North American markets with stopovers in its Central American hub. On regional routes, our main competitors included TACA, COPA and Avianca.

Business Model for Domestic Operations

In 2007 we initiated an important project to redesign our domestic business operations with the goal of increasing efficiency and improving the margins of LAN’s short-haul operations, specifically with respect to our domestic operations in Chile and Peru. The new business model was first tested in the last quarter of 2006. A key element of this project has been to significantly increase the utilization of our narrow body fleet, which we have been successfully achieving through modified itineraries including more point-to-point and overnight flights. We removed the Boeing 737-200 aircraft from our fleet in favor of the new more efficient Airbus A320-Family Aircraft. The Airbus A320-Family Aircraft fleet utilization reached approximately 9.84 block hours per day in 2011. The transition to a newer fleet allows for lower unscheduled maintenance costs as well as cost efficiencies achieved through operating fewer fleet types and operational efficiencies, including lower fuel consumption.

Other key elements of our new business model are the reduction in sales and distribution costs through higher Internet penetration and reduced agency commissions, a faster turnaround time, and increased self-check-in service through web check-in and kiosks at airports. These initiatives, together with simplifications in back-office and support functions, will continue to allow us to expand operations while controlling fixed costs, spurring a reduction in overhead costs. We have begun to pass on these operating efficiencies to consumers through significant fare reductions, which we expect will have a strong effect of stimulating new demand.

In 2007, we implemented all aspects of this new business model in the Chilean and Peruvian domestic markets. We launched our new short-haul business model on all domestic routes in Chile in April 2007, after a marketing campaign that began in March 2007. We launched the new model in all domestic Peruvian routes in January 2007.

As a result of the implementation of this model, we increased the number of passengers transported in all domestic markets. Between 2006 and 2011, the number of passengers transported increased significantly:

• 112% (from 2.5 million to 5.3 million) in Chile,

• 123% (from 1.7 million to 3.9 million) in Peru,

• 200% (from 0.6 million to 1.9 million) in Argentina, and

• with a minor effect in Ecuador as we just started domestic operations during 2009.

Over the past three years we have sustained constant growth in each of our domestic passenger operations, and between 2010 and 2011 we achieved an increase in domestic transported passengers at 11% which include operations within Chile, Argentina, Peru and Ecuador.

We plan to continue with the implementation of this business model during 2012 and we are evaluating its implementation in some regional routes, as we look for ways to increase operational efficiency, encourage direct sales and self check-in, and implement new sales strategies aimed at stimulating demand.

75

Operations within Chile

Through Lan Airlines and Lan Express we are the leading domestic passenger airline in Chile. We have operated domestic flights in Chile since the Company’s creation in 1929. As of February 29, 2012, we flew to 13 destinations within Chile (including Santiago, but not including Easter Island, which we consider an international destination even though it is a part of Chile, because we serve it with long-haul aircraft) as well as some seasonal destinations. Lan Airlines and Lan Express have integrated passenger operations, including operations under the same two-letter “designator reservation code,” and have coordinated fare structures, scheduling and other commercial matters in order to maximize cooperative benefits and revenues for the two carriers. Our strategy is based on providing frequent service to Chile’s main destinations, offering a reliable and high quality service, and leveraging our strong brand position in Chile and abroad. We evaluate our network of domestic routes on an ongoing basis in order to achieve optimal operational efficiency and profitability. Our strategic objective is to maintain our leadership position in our domestic routes.

During 2011 we operated an average fleet of 21 Airbus A320-Family Aircraft in the Chilean domestic market, and we plan to operate an average fleet of 24 Airbus A320-Family Aircraft in 2012. Domestic operations in Chile were positively affected by the greater utilization of the latest-generation Airbus fleet and the retirement of the Boeing 737-200s. Nowadays, LAN’s fleet has an average age of 3 years.

The new business model was launched nationwide within Chile in April 2007. We reduced sales costs by increasing direct sales to 80% in 2011 (with 63% of our 2011 sales done through the Internet) and by reducing agency commissions from 6% to 1% in February 2007. We also increased fleet utilization, crew productivity and the average flight leg through schedule changes. Additionally, we simplified our processes, which helped to increase the self check-in rate from 81.5% in 2010 to 82.7% in 2011. Finally, we utilized the greater efficiency of the Airbus aircraft to reach operational efficiencies such as reducing the turn-around time, increasing our punctuality (which reached 87.5% in 2010 and 87% in 2011) and lowering fuel consumption. As of December 31, 2011, we operated 100% of our ASKs with our Airbus A320-Family Aircraft fleet.

According to JAC data, the Chilean domestic market as a whole transported approximately 7.0 million passengers in 2011 and it had an increase of 17.6% in terms of passengers from 5.9 million in 2010. Our domestic passenger market share in Chile was 76.4% for 2011. During 2011, our main competitors in the domestic market were Sky Airlines and PAL Airlines, which began operations in June 2009. Sky Airlines currently operates a fleet of 13 Boeing 737-200 aircraft and flies to 12 destinations. PAL Airlines currently operates a fleet of 5 Boeing 737-200 aircraft and flies to 4 destinations.

There are currently no foreign airlines participating in the Chilean domestic market. Chile permits foreign airlines to operate in Chile. Additionally, there are no regulatory barriers that prevent a foreign airline from creating a Chilean subsidiary and entering the Chilean domestic market using that subsidiary.

Operations within Peru

Lan Peru started operations in 1999 with domestic and international flights from Lima. During the past ten years, Lan Peru has expanded consistently, consolidating its domestic operations and coverage of relevant markets with a continuous focus on improving our excellence for service.

Regarding the domestic market, Peru has tremendous potential compared to other Latin American markets based on per capita travel ratios. In 2011 the domestic market reached 5.9 million passengers and 6.3 million passengers are expected for 2012.

Lan Peru has one of the most modern fleets in Latin America, operating 22 Airbus A319 aircraft, with 14 for domestic operations and 8 for regional operations. This fleet is ideal for the characteristics of Peruvian routes, as it maximizes available payload in high-altitude airports. In terms of efficiency, a uniform fleet also allows for low maintenance costs, high crew productivity and operational flexibility.

76

Compared to 2010, Lan Peru’s domestic operations in Peru showed an expansion of 3% (as measured in RPKs) during 2011, despite the aggressive plans from competitors. According to data provided by the Peruvian DGAC, our domestic market share in Peru was 62% for 2007, 73% for 2008, 80% for 2009, 70% for 2010 and 64% for 2011 as measured in number of passengers.

A total of 3.9 million passengers traveled on Lan Peru’s domestic Peruvian routes in 2011, which represented an increase of 3% compared to 2010. As of February 29, 2012, competitors included Peruvian Airlines, TACA (which began new flights to Arequipa in August 2011 and Puerto Maldonado in January 2012 in addition to its existing frequencies to Cusco, Juliaca, Tarapoto and Trujillo), Star Peru and LCPeru (which is a small airline previously known as LC BUSRE).

Lan Peru expects to increase the connections between cities within the country. Cusco, the country’s most important tourist destination, accounts for most of Lan Peru’s domestic operations and is served by 17 flights each day. Lan Peru flies at least three times daily to each of its 13 destinations from Lima with Tumbes as an exception (2 flights daily).

Regarding airport services, Lan Peru has over 103 domestic daily arrivals and departures. Self-check levels have grown steadily in the past years, reaching 79% for domestic routes at the end of 2011.

Operations within Argentina

Lan Argentina initiated services in June 2005, covering two Argentine domestic destinations from Buenos Aires, Cordoba and Mendoza. Between 2005 and 2007, Lan Argentina increased the number of Argentine domestic destinations to nine adding Bariloche, Iguazu, Comodoro Rivadavia, Rio Gallegos, Ushuaia, Calafate and Salta. In June 2008, Lan Argentina initiated services to Neuquen and in September 2008 to San Juan. In April 2009, Lan Argentina initiated services to Tucuman.

From June to November 2006, Lan Argentina replaced its Boeing B737-200 fleet, which consisted of five aircraft, four of which were Airbus A320 aircraft. We use these aircraft in both domestic and regional operations. The replacement of these aircraft enabled Lan Argentina to increase the scope, size and efficiency of its operations. By the end of December 2011, we operated a fleet of nine Airbus A320 aircraft in our domestic operations.

In the domestic Argentine market, Lan Argentina operates in a regulated environment in which fares sold to Argentine passengers are subject to minimum and maximum prices that vary per route. In August 2006, by presidential decree, both the floor and ceiling of the regulated price range were increased by 20%. The decree liberalized foreign ownership of Argentinean airlines, previously capped at 49%. Since this decree, the floor and ceiling of the regulated price range have been consistently increased as follows: by 18% in April 2008, by 18% in May 2008, by 20% in 2009, by 15% in June 2010 and by 10% in November 2010.

Our domestic market share in Argentina, based on our internal estimates as of December 31, 2011 amounted to 30%. Our competitors in the Argentinean market during 2011 were Aerolíneas Argentinas and its affiliate Austral Líneas Aéreas. Together, these two companies held substantially the entire remaining share of the domestic Argentine market.

Operations within Ecuador

At the end of 2008, the Civil Aviation National Board authorized us to operate domestic flights in Ecuador. In April 2009, we initiated the operations between Quito and Guayaquil.

In December 2009, LAN Ecuador operated 49 weekly flights between Quito and Guayaquil, one of Latin America’s major routes. In September 2010, the Company started daily flights to the Galapagos Islands. In November 2011, LAN Ecuador added two more weekly flights to the airport of San Cristobal in the Galapagos Islands. As of February 29, 2012, LAN Ecuador operated 63 weekly flights between Quito and Guayaquil. The Company also began daily flights between Cuenca and Quito.

77

In 2011, LAN Ecuador transported 1.0 million passengers in the domestic passenger market, achieving a load factor of 77% with a growth of 63% in number of passengers with respect to 2010 and a national market of 25.6%.

In Ecuador, the company’s principal competitors are TAME, Aerogal and Icaro.

Operations within Colombia

On November 26, 2010, LAN acquired Colombian airline Aires (rebranded as Lan Colombia in 2011), for US$12 million in cash, in addition to assuming net liabilities of US$87 million. The Colombian market is the second largest market in South America with over 14 million annual domestic passengers and represents a key market in LAN’s consolidation as a leading airline within the region.

At the time of the acquisition, Lan Colombia was the second largest operator in Colombia’s domestic market with approximately 20% of the market share as of December 31, 2010. This predominant position has been maintained by Lan Colombia, by holding 19.1% of the domestic market share as of December 31, 2011 (based on the Company’s internal estimations). Lan Colombia operates 22 domestic destinations. Nowadays, Lan Colombia’s fleet consisted of 9 B737-700s, 3 Airbus A 320, 10 Q200 and 4 Q400, all of which are operating leases.

LAN’s strategy through this acquisition is to replicate LAN’s “low cost” model already operating in the domestic markets of Argentina, Chile, Ecuador and Peru, stimulating demand on domestic flights by providing more Colombian citizens the opportunity to use air transportation.

During 2011 the Company was focused on ensuring that the safety, on time performance and service quality standards of its new affiliate were consistent with LAN’s own high standards. To this end, Lan Colombia was successfully certified by IATA Operational Safety Audit (IOSA) in November 2011.

In December 2011, the Company launched the LAN brand in Colombia, a significant step in the successful turnaround of the Colombian domestic passenger operations. During 2011 the Company recognized US$52 million operating loss from its Colombian passenger operations. This loss includes significant costs related to the rebranding process, marketing initiatives aimed at integrating Colombia into LAN’s regional network, migration of Lan Colombia to LAN’s IT systems, the early termination of contracts with third party suppliers.

A total of 3 million passengers traveled on Lan Colombia domestic routes in 2011, which represented an increase of 12% compared to 2010.

As we look ahead to 2012, we expect to further benefit from the turnaround process that took place during 2011. By continuing the improvement of Lan Colombia’s standards and by working along with travel agencies in Colombia, we aim to approach the Colombian corporate segment. Furthermore, we expect to phase out during 2012 the first 3 Boeing 737-700s passenger aircraft operated by Lan Colombia and replace them with LAN’s Airbus A320s. Through these initiatives, and by consolidating LAN’s presence in Colombia, we expect to reach break-even for our Colombian passenger operations by the end of 2012.

Nowadays, Lan Colombia has seven weekly frequencies to Miami, being that its only international destination. In the medium term, Lan Colombia will evaluate the expansion of international passenger operations and the advantages of any synergies it may obtain from LAN Cargo’s affiliate in Colombia, Lanco, launched in March 2009.

Passenger Alliances and Commercial Agreements

The following are our passenger alliances and partnerships as of February 29, 2012:

• oneworld®. In June 2000, Lan Airlines and Lan Peru were officially incorporated into the oneworld® alliance. Lan Ecuador and Lan Argentina joined the alliance during 2007. Nowadays, oneworld® is a global marketing alliance consisting of Lan Airlines, Lan Peru, Lan Argentina, Lan Ecuador, American Airlines, British Airways, Cathay Pacific Airlines, Qantas, Iberia, Finnair, Japan Airlines, Royal Jordanian and S7. Together, these airlines are able to offer a truly global network for business and leisure travellers

78

flying to more than 750 destinations in nearly 150 countries, schedule flexibility and reciprocal frequent flyer program benefits. During 2012 it is expected that Kingfisher, Air Berlin and Malaysian Airlines will join the alliance.

• American Airlines. Since 1997, Lan Airlines has had an agreement with American Airlines, which enables Lan Airlines and American Airlines to share carrier codes for certain flights on global reservations systems, thereby enabling American Airlines passengers to purchase seats on Lan Airlines flights and vice-versa. The Department of Transportation, or DOT, granted antitrust immunity to our arrangement with American Airlines in October 1999. The antitrust immunity encompasses cooperation in commercial and operational areas such as pricing, scheduling, joint marketing efforts and reductions of airport and purchasing costs, as well as further implementation of cargo synergies in areas such as handling and other airport services. For more information see “—Regulation—U.S. Aeronautical Regulation—Certain Regulatory Authorizations in Connection with Strategic Alliances” below. Through this alliance, we currently offer service to thirty additional destinations in the United States and Canada. In 2005, the DOT granted antitrust immunity to a similar agreement between Lan Peru and American Airlines. This antitrust immunity allows enhanced coordination between Lan Peru and American Airlines, and both companies established in 2007 code-share operations between Peru and the U.S. with additional destinations in both countries. In the same year, Lan Argentina and American Airlines signed a codeshare agreement expanding the cooperation between the companies and at the end of 2011 a codeshare agreement between Lan Ecuador and American Airlines was signed, which allows to offer the American Airlines network in the U.S to all LAN passengers.

• Iberia. In January 2001, Lan Airlines initiated a code-share agreement with Iberia, pursuant to which we offer passengers between ten and fourteen non-stop frequencies per week between Santiago and Madrid. In subsequent years, other destinations were added to the agreement, such as Alicante, Amsterdam, Barcelona, Bilbao, Brussels, London (Heathrow), Malaga, Milan, Paris, Rome and Zurich. In 2007, Lan Ecuador and Lan Peru set up code-share agreements with Iberia for routes between Ecuador, Peru and Spain; as well as four additional European destinations with Lan Peru and seven destinations with Lan Ecuador. Nowadays, Lan Airlines, Lan Ecuador and Lan Peru offer around 17, 11 and 14 destinations in Europe, respectively.

• Qantas. In July 2002, Lan Airlines initiated a code-share agreement with Qantas to operate between Santiago, Chile and Sydney, Australia with a stopover in Auckland, New Zealand. As of February 29, 2011, this code-share agreement includes daily flights operated by Lan Airlines. On March 26, 2012, Qantas will start operating 3 non-stop Santiago-Sydney frequencies by means of a code-share agreement entered into with Lan Airlines.

• British Airways. In 2007, Lan Airlines initiated a code-share agreement with British Airways on Lan Airlines flights between Sao Paulo and Santiago to provide service for British Airways passengers traveling from London to Santiago through a connection in Sao Paulo. This code-share agreement also includes British Airways’ flights between Madrid and London.

• Aeromexico. In 2004, we expanded our previous alliance with Aeromexico. The new agreement includes all of our passenger airlines. Under this alliance, we code-share in flights to Mexico from Chile and Peru, as well as to 18 domestic destinations in Mexico. Additionally, it provides our passengers with benefits such as easier connections and reciprocal accrual and redemption of frequent flyer program rewards.

• TAM. In 2007, Lan Airlines and Lan Peru, established regional code-share agreements with TAM Linhas Aéreas. Through this agreement, LAN offers fourteen additional destinations in Brazil. LAN also code shares with Transportes Aéreos del Mercosur S.A. (“TAM Mercosur”) with respect to flights from Santiago to Asunción, Paraguay, that are operated by TAM Mercosur. These arrangements provide our passengers with reciprocal accrual and redemption of frequent flyer program rewards. In 2008, Lan Argentina established a code-share agreement with TAM from Buenos Aires to Sao Paulo and vice versa, which includes eight domestic destinations in Argentina and twelve domestic destinations in Brazil.

• Cathay Pacific. In May 2010, Lan Airlines initiated a code-share agreement with Cathay Pacific to operate between Santiago and Hong Kong, through connections in Los Angeles, New York and Auckland, and in November 2010, Lan Peru initiated a code-share agreement with Cathay Pacific to operate between Lima and Hong Kong, through connections in Los Angeles and San Francisco.

79

• Japan Airlines. In September 2011, Lan Airlines initiated a code-share agreement with Japan Airlines to operate between Santiago and Narita, through connections in Los Angeles and New York. Nowadays, Japan Airlines is currently code sharing with LAN to provide services for JAL passengers travelling from Narita to Santiago. We are in the process of obtaining the approvals required by Japanese authorities in order to start code sharing with Japan Airlines and be able to provide services for LAN passengers travelling from Santiago to Narita. We expect to obtain such approvals during the second quarter of 2012.

• Jetstar Airways. In November 2010, LAN signed an Interline Agreement and a Special Prorate Agreement (to sell Jetstar Airways flights) with Jetstar Airways in order to broaden the destinations offered to LAN’s customers, particularly in the domestic markets of New Zealand, Australia, and South East Asia.

• JetBlue. During March 2011, LAN signed an Interline Agreement and a Special Prorate Agreement (to sell JetBlue flights) with JetBlue increasing the connection opportunities between New York and Boston, Washington, Chicago, Pittsburgh and many other US cities through JetBlue’s hub in the John F. Kennedy Airport in New York.

• Other alliances and partnerships: Since 2005, we have had a code-share agreement with Korean Air. Under this agreement we place our code on Korean Air flights between Los Angeles and Seoul, while Korean Air places its code on our flights from Los Angeles to Santiago. Since 1999, Lan Airlines has been in an alliance with Alaska Airlines, which permits us to provide customers with service between Chile and three destinations in the west coast of the U.S. and Canada. Reciprocal accrual and redemption of frequent flyer program rewards is also available for LAN customers flying on Alaska Airlines flights and vice versa.

Passenger Marketing and Sales

Even though we market our services under the common “LAN” brand, we differentiate our marketing strategies between our long-haul and short-haul services.

Our long-haul marketing strategy emphasizes attributes valued by our international customers, including reliability, high quality on-board and ground service, comfort, comprehensive coverage of key South American markets and frequent service to major overseas gateways such as New York, Los Angeles, San Francisco, Miami, Madrid and Sydney. In order to strengthen our market position, we have continued improving our passenger cabins and service and constantly monitor our corporate image. As such, in December 2008 and May 2009 we completed a retrofit program for our Boeing 767-300 and for our Airbus A340-300 fleet respectively, merging the Business and First Classes cabins into a Premium Business Class featuring full-flat seats, new entertainment units for both Premium Business and Economy cabins, together with a new on-board service. We invested US$124 million in this retrofit program for all our long haul passenger aircraft, which aims to give our passengers a sense of a “shorter” and more pleasant flight. For our Business passengers, our cabin features an on-board service aimed at providing the passenger with more time to rest, and for our Economy Class passengers, our upgraded entertainment units aim to make the flight a more enjoyable one. In October 2010 LAN decided to renew the seat configuration of its Boeing 767-300, which included improvements that increased the capacity of each airplane from 221 to 238 seats. The original configuration had 191 seats in the Economy cabin and 30 seats in the Premium Business cabin. The new seat configuration increases the number of seats in the Economy cabin to 220 and decreases the number of seats in the Premium Business cabin to 18. This seat configuration will be used in those markets with a higher tourism demand and/or lower corporate travel demand. This strategy allows us to obtain higher revenues and a more efficient cost management

Our long-haul fleet plan includes the incorporation of the 32 new Boeing 787 in the second half of 2012. LAN will be the first airline in Latin America, and one of the first in the world, to receive this model whose latest-generation technology and cabin innovations represent a revolution in the airline industry. Passengers will experience the Boeing 787’s advantages in the form of higher cabin humidity and increased comfort. The acquisition of these Boeing 787s will allow us to reach new destinations and boost LAN’s existing services while also continuing to increase the efficiency of our operations and reduce our carbon footprint.

80

Our short-haul operations are designed to better match the customers’ needs in those routes, which are punctuality, reliability, higher frequencies, modern aircraft and efficient operations. As such, these routes now feature modern planes, with leather seats, increased frequencies with more point-to-point flights, improved punctuality and streamlined processes including Internet sales, web check-in and airport self-check-in. We completed the phase-out of our Boeing B737-200 fleet in 2008 and replaced it with modern Airbus Family Aircraft such as A320, A319 and A318. Nowadays, all our domestic operations (which include Argentina, Chile, Peru, Ecuador and Colombia) follow the same business model, which aims to make air travel accessible to more people through low fares supported by a low-cost operation based on the efficient use of our resources.

Our short-haul fleet is also growing and will continue being renewed during the next six years with the acquisition of 89 additional Airbus 320 family aircraft. These aircraft have the latest security standards in the industry, as well as improvements in the interior cabin design and new seat technology. They are 13.0% percent lighter than the current models sold by Airbus, and therefore they allow lower fuel consumption and CO2 emissions. These aircraft are also are more comfortable for passengers since they have leather seats with integrated foam and more in-flight entertainment screens. In addition to this, the upper bins include mirrors that ensure visibility of carry-on luggage among other improvements of interior design. All changes in these aircraft were designed to improve the travel experience for our passengers on domestic and regional flights.

On November 26, 2010, LAN acquired Aires (rebranded as Lan Colombia in 2011), a Colombian carrier, which holds an average of 19.0% of the domestic market share as of December 31, 2011. This important addition to the LAN group made it possible for LAN to start operating within Colombia, adding 22 domestic destinations to the already existing international operation.

We are constantly focused on delivering the services and flight items valued by customers in order to maintain high levels of customer satisfaction and we continuously monitor our customers’ preferences through surveys and perception studies. As a result, we created the new Premium Economy class on some regional routes in response to comments made by our business travelers. The Premium Economy program grants our customers preferential check-in and boarding, access to our VIP lounges, priority baggage claim, exclusive cabins with only twelve passengers, and personalized attention by our cabin attendants, among other benefits.

As mentioned above, we have been implementing a new business model in all our domestic operations (which include Argentina, Chile, Peru, Ecuador and Colombia) that seeks to make air travel accessible to more people through low fares supported by a low-cost operation based on the efficient use of our resources. During 2011 LAN received several awards solidifying the Company’s market position. These awards included Airline of the Year 2010 (AirFinance Journal) and Best E-commerce Website 2010 (E-commerce LATAM).

Branding

In March 2004, we launched our new “LAN” brand to bring together, under one strong international name, all our local brands such as “LAN Chile,” “LAN Peru,” “LAN Argentina” and “LAN Ecuador.” We developed our new brand and corporate image after an extensive process supported by a leading global branding agency.

Our corporate image is based on two core concepts: reliability and warmth, which support our promise of the best travel experience to, from and within South America. We are also committed to offer our customers with the best coverage to, from and within South America, and to promote sustainable tourism, helping develop the regions where we operate.

During 2005 and 2006, we focused on advancing the transition to our new brand image. This included the gradual repainting of our fleet, which was completed in the second quarter of 2006. Our commercial strategy, centered on exploiting the LAN alliance concept, has been widely recognized, as exemplified by Airline Business magazine’s recognition of us in 2004 with its “Airline Strategy Award, Marketing.”

81

Using a single brand enabled our customers to better understand the common service and operating standards among our airlines, and our new image improved our visibility, which enhanced flexibility and increased the efficiency of our marketing efforts. It also provided a platform for the strategic use in mature markets of the following three powerful sub-brands, all related to the LAN root:

• the www.lan.com website for the convenience of our web booking engine and services platform;

• LANPASS for our frequent flyer program; and

• LANTOURS, a sub-brand through which we offer travel packages, hotels and other ancillary products, as well as promote tourism activities to and from the regions in which we operate. LANTOURS took hold first in Chile and is gradually being introduced into other key markets.

In December of 2011, we successfully finished the rebranding process of Aires as LAN, which required the painting of around 70.0% of its fleet; changing the image of all its sales offices and personnel to LAN; and most importantly, transforming Aires’ service to comply with LAN standards, thus fully incorporating Colombia’s operation to our current brand architecture.

Our regular brand tracking and marketing effectiveness measurements show outstanding results in brand consistency and recognition, improving year after year, with marketing investments managed at healthily stable rates. As the corporate values behind our umbrella brand encompass attributes applicable to both operations, long haul and short haul, a single brand strategy has resulted in significant savings, as we only have to promote one master brand, thereby increasing the efficiency of our marketing efforts.

Distribution Channels

We use direct and indirect distribution channels. In the past few years, we have focused on streamlining our distribution strategy in order to reduce costs and enhance the effectiveness of our commercial efforts. This effort has resulted in efficiency gains, and we believe it should lead to further benefits in the future.

Travel agents conduct indirect sales that accounted for approximately 43.0% of passengers during 2011. We paid these travel agents standard commissions ranging from 0% to 7.0% depending on the market and the ticket region type (domestic / international). Consistent with our efforts to reduce commission costs, and in line with current market practices, in recent years we have reduced standard commissions in several markets. However, we are now charging a fee to customers for sales done through our own ticket offices or call centers in most countries, leaving the Internet as the only free-of-charge distribution channel.

Travel agents obtain airline travel information and issue airline tickets through Global Distribution Systems, or GDSs, that enable them to make reservations on flights from a large number of airlines. We participate actively in all major international GDSs, including Sabre, Amadeus, Galileo and Worldspan. In return for access to these systems, we pay transaction fees that are generally based on the number of reservations booked through each system. As part of its continued commitment to its passengers, in late 2009, LAN signed a series of agreements with Sabre, one of the major suppliers of IT solutions in the global airline industry. Through these agreements, Sabre will provide the Company with the most advanced technology in reservation and distribution systems, optimization of routes and operational planning. The process of implementing the new system platforms comprises a period of adjustment and migration that will last between two and three years until its full implementation. These agreements represent a major step in terms of innovation by implementing the industry’s most advanced technology to streamline business and operational processes involved in the service the Company provides to its customers. These agreements will serve to provide itineraries that best fit the needs of passengers and to provide simpler, agile and efficient services in airports and in the sales and distribution channels, improving LAN’s services in each of the stages of the travel experience.

Direct channels refer to sales by our own ticket offices, contact-centers and website. In 2011, direct bookings accounted for approximately 57.0% of all our passengers.

82

We have an extensive sales and marketing network in over thirty countries consisting of more than 155 domestic and international points-of-sale owned by us and approximately 45 general sales agents.

Our contact-centers support the growth of our operations constituting a sales and a multi-service channel. During 2011, we continued to grow and develop new services to match the increasing expectations of our clients and the growth of our direct sales channels, in particular the www.lan.com website. Our main contact-center located in Santiago accounts for 781 agents (of which 276 are home-based) and 284 agents in Lima. We complement our contact-center’s operations with third-party service providers that add approximately 600 agents who are located in Santiago, Lima and Buenos Aires. In total, all the centers handle more than 30,000 calls/contacts per day, which mainly originate from the regions where we fly (South America, North America, Europe and Australasia) and cover four languages (Spanish, English, Portuguese, French and German). We have continually upgraded our systems by incorporating technological advances to enhance efficiency and customer service.

Our website, www.lan.com, is an integral part of our commercial, marketing and service efforts. Together with other direct sales initiatives, our website provides us with an important tool to reduce our distribution costs. Our Internet-related sales have increased significantly in recent years, by 21.9% in 2009 compared to 2008, 22.0% in 2010 compared to 2009, and 22.6% 2011 compared to 2010, which amounted to US$796.4 million in 2011. We are continually improving our website, a key element of our new short-haul model, so that the technological platform can support the expected future growth.

Besides serving as a sales channel, we have utilized our website as a tool to provide value-added services and enhance communications. We send weekly promotional e-mails to more than 4.8 million subscribers. Members of our frequent flyer program receive their monthly balances and other information by e-mail and can access the data and redeem awards through our website. We have an active online marketing program which brings visitors to the website from search engines and travel-related websites.

During 2009 we improved several services on the website. We introduced the flexible award redemption service, which enables LANPASS members to obtain flights with their kilometers at any time of year. We also updated our Flight Information System to ensure accurate, real time information. In addition, we continued to promote our web-based check-in service for domestic and international flights. This system allows those passengers who are not checking-in bags, to go directly to the gate, and the remaining checked-in passengers, to leave their bags at a special bag drop counter and proceed to the gate. In addition to web-based check-in, we have self-check kiosks in 13 airports in Chile, seven airports in Peru, three airports in Argentina; three airports in Ecuador and eight in Colombia. As of December 31, 2011, the kiosk and web check-in utilization rate increased to 83.0% for domestic routes in Chile, 80.0% for domestic routes in Peru, 54.0% for domestic routes in Argentina and 50.0% for domestic routes in Ecuador. Also in 2010 we launched our LAN.com Mobile service, enabling our customers to check-in, verify their flight status and other itineraries using their internet-enabled mobile phones.

In 2010 LAN was recognized as the “Latin American E-commerce Company of the Year” by the Latin American e-Commerce Institute.

Electronic Ticketing

In 1997, we introduced electronic tickets, commonly referred to as e-tickets, and have since worked to increase their use. E-tickets are a key element of our sales efforts through the Internet and our call centers and they also produce important simplifications in our back-office, enabling us to significantly reduce distribution costs. Since 2008, the Company has reached a 100% penetration of e-ticketing on all LAN routes.

Also, during 2010 we completed the implementation of interline e-ticketing with all of our oneworld^® partners.

Advertising and Promotional Activities

Our advertisement and promotional efforts are aimed at enhancing our brand positioning and supporting specific aspects of our commercial efforts. These activities include the use of television, print, outdoors and radio advertisements as well as direct and online marketing.

83

During 2011, our campaigns where mainly focused on continuing stimulating demand by implementing a pricing strategy that has made flying more accessible in our domestic markets and within South America to those traveling especially for tourism. To this end, we are proud of having entered into partnerships with tour operators and tourism government agencies across the region (SERNATUR in Chile, PROMPERU in Peru, ProExport Colombia among others), which allowed us to reach new customers and to promote local and regional tourism in the markets where we operate. This is supported by the unique coverage and travel experience that we offer to those passengers traveling to, from and within South America.

We have also innovated our demand-generating advertising by promoting pre-low seasons special offers, thus making our demand curves more stable and making it possible for us to offer to our customers all our destinations at very accessible prices throughout the year.

Frequent Flyer Program

Our frequent flyer program is called LANPASS. The objective of LANPASS is to generate incremental revenue and customer retention through customer loyalty and targeted marketing. Worldwide, as of February 29, 2012, LANPASS has approximately 5.8 million members.

Customers earn kilometers in their LANPASS accounts based on distance flown and class of ticket purchased, or by using services of other participants in the LANPASS program. Based on an award schedule, customers can redeem kilometers for free tickets, upgrades or other products. Under our current frequent flyer program, our passengers are grouped into one standard level and three different elite levels based on each passenger’s flying behavior. These different groups determine which benefits customers are eligible to receive, such as free upgrades on a space-available basis, VIP lounge access and preferred boarding and check-in.

Aiming to increase redemption levels and expand redemption alternatives, in 2011 LANPASS increased the number of price levels for the redemption of tickets from three up to 14 (allowing the increase of number of seats available for redemption of kilometers), in order to give a better availability and flexibility for the customers. These new redemption price offers resulted in an increase of 28.0% in kilometers redeemed and 32.0% in award tickets redeemed by LANPASS’ members in 2011.

LANPASS has highly rated partners, including other airlines, hotels, car rental agencies, retailers, and credit card issuers from the main financial institutions in Chile, Peru, Ecuador, Argentina Uruguay, United States and, starting from 2012, also in Colombia. These partnerships give our customers the opportunity to accrue additional kilometers for using their services.

Through the incorporation of additional partners in 2011, LAN customers accrued 43.0% more kilometers than in 2010, by using other services different from the services offered by LAN and other airlines. In the banking segment, during 2010, LANPASS renewed its partnership with Santander Chile for another five years, spreading LANPASS accrual from credit/debit card to all retail banking offering. LANPASS also launched a new partnership with BBVA, a leading bank in Argentina, began to issue credit cards in the United States with U.S. Bank, and increased our offering in redemption catalogs in Brazil with Banco Itau.

In the non banking segment, LANPASS continues to leverage its member’s purchase behavior to partner with leading players in the markets and become the most attractive loyalty program in the home markets. In the past two years, LANPASS has entered into new industries, such as retail, supermarkets, automotive, real estate, drugstores and health care centers. As an active member of the oneworld^® alliance, we have reciprocal frequent-flyer agreements with all oneworld^® carriers. In addition to this, we have reciprocal agreements with other carriers, such as Alaska Airlines, Aeromexico and TAM. These agreements allow LANPASS members to accrue and redeem LANPASS kilometers on oneworld^® flights.

The LANPASS frequent flyer program aims to be the leading loyalty program in all of LAN’s home markets. In the past couple of years, we have implemented a number of marketing initiatives to increase customer’s engagement with the program outside Chile. In 2011, membership in LANPASS grew 32.0% in Peru, 27.0% in Ecuador and 32.0% in Argentina. Furthermore, the number of passengers flying with LAN, who are members of our LANPASS frequent flyer program, grew 7% during 2011.

84

Cargo Operations

General

The following table sets forth certain of our cargo operating statistics for domestic and international routes for the periods indicated:

	Year ended December 31,
	2011			2010			2009
The Company
ATKs (millions)
Total		5,192.7			4,628.7			3,848.9
RTKs (millions)
Total		3,612.4			3,245.3			2,627.4
Weight of cargo carried (thousands of tons)
Total		874.9			780.8			649.3
Total cargo yield (cargo revenues/RTKs, in US cents)		43.6			39.5			34.1
Total cargo load factor (%)		69.6	%		70.1	%		68.3	%

Our cargo business generated revenues of US$1,280.7 million in 2010 and US$1,576.5 million in 2011. This represented 28.3% and 27.6% of our total revenues, respectively. Cargo revenues declined 32.1% between 2008 and 2009 primarily due to the global economic crisis that affected the industry and the decline in salmon exports from Chile due to the ISA virus. Nevertheless, during 2010 and 2011 revenues increased 43.0% and 23.1%, respectively, on a year-over-year basis as we took advantage of the recovery of world cargo markets.

Our cargo business generally operates on the same route network used by our passenger airline business, which is supplemented by freighter-only operations. Overall, it includes approximately 86 destinations (over 66 are operated by passenger and/or freighter aircraft and approximately 20 operated only by freighter aircraft). We complement our own international operations through coordination with our regional affiliates, MasAir in Mexico, ABSA in Brazil and Lanco in Colombia. ABSA also operates in the Brazilian domestic market since March 2009. We carry cargo for a variety of customers, including other international air carriers, freight-forwarding companies, export oriented companies and individual consumers. For information about our fleet, see “—Fleet—General” below.

We transport cargo in four ways: (i) in the bellies of our passenger aircraft, (ii) in our own dedicated freighter fleet, (iii) in belly space that we purchase from other airlines and, (iv) in aircraft that we charter or lease pursuant to ACMI contracts (Aircraft, Crew, Maintenance and Insurance). Under the latter, which are also known as “wet-leases,” the lessor operates the aircraft and provides the aircraft, crew, maintenance and insurance pursuant to short- and medium-term contracts.

Our international cargo operations are headquartered in Miami, whose geographical location positions it as the natural gateway for Latin American imports and exports to and from the United States. Since 2001 we have operated in our 380,000 square-foot facilities within the Miami International Airport. In 2010 we upgraded this facility to enhance our ability to handle perishables and we leased an additional 117,000 square-foot warehouse close to our main facilities. The United States accounts for the majority of the cargo traffic to and from Latin America. Besides being the main market for Latin American exports by air, the United States is also the main supplier of goods, such as high-tech equipment or spare parts, transported by air to Latin American countries. We operate to three destinations in Europe: to Madrid, which we serve via passenger aircraft (using our flights from Santiago, Lima and Guayaquil), Frankfurt (through both passenger flights and freighter operations since October 2002, when we signed our partnership with Lufthansa Cargo (for more information on this agreement see “—Cargo Agreements” below), and Amsterdam (through freighter operations since October 2005).

85

In Latin America, the principal origins of our cargo are Colombia, Chile, Ecuador, Peru, Argentina and Brazil, which represent a large part of our northbound traffic. And for our southbound flights, Brazil is the main import market.

In general terms, cargo flows are unidirectional. This characteristic is a key determinant in the structure of cargo operations as well as in the commercial conditions in the cargo business. This is especially relevant in markets featuring structural imbalances between inbound and outbound flows or during specific periods of such disequilibrium. Lack of demand in one particular direction may force airlines to rely on different markets in order to maximize loads on return flights. Furthermore, demand weakness in one direction may limit the capacity that is profitable to allocate to some routes, therefore creating pressure on fares in order to compensate for weaker revenues in one particular direction. The evolution of our international cargo operations has always been affected by the flow imbalances of the Latin American cargo markets, resulting in a dramatic shift in the relative weight of southbound and northbound cargo flows throughout the years. For example, from 2002 to 2003 our international operations were characterized by very strong export traffic out of Latin America, but gradual increases in import demand, as well as the deceleration of export growth, led to more balanced cargo flows during 2004. Further extension of this trend led to excess demand on southbound routes since 2005.

We have designed our operations, route network and commercial strategies with the flexibility required to respond to changing conditions. As such, during 2003 we allocated additional capacity to northbound routes and adjusted fares on northbound routes in response to excess demand. During 2004 we gradually adjusted our operations to leverage a more balanced demand environment by performing an increased number of direct roundtrips between key export and import markets. However, weakness in exports since 2005 has driven us to support the northbound segment of certain routes with stopovers in additional export markets, to reduce northbound fares to stimulate demand and to raise southbound fares.

The flexibility that this business model allows based on adaptation to changes in market trends was key for LAN’s operations in 2009 when the business was affected by the contraction of import and export markets in response to the global economic crisis. In addition LAN Cargo saw a sharp drop in salmon exports from Chile as a result of an outbreak of the ISA virus. Such flexibility has also been a key element in the recuperation and growth experienced by LAN Cargo since 2010.

The sharp contraction of LAN’s traditional markets in 2009 - imports into the region and exports from the region – followed by the rapid recovery of demand in 2010 required the Company to fully lever the flexibility of its business model. During 2009 the Company implemented of a series of measures such as the adjustment of its capacity through a reduction in the number of planes rented under Aircraft, Crew, Maintenance & Insurance (“ACMI”) agreements and adjustments in the operations of its own cargo fleet of Boeing 767F freighters. This process was also reinforced by the incorporation of two new Boeing 777-200F, the most modern and efficient cargo aircraft of their type in the world, with a capacity of 104tons of freight and a range of 9,045 kilometers when carrying its maximum payload. This significant investment allowed LAN to consolidate its regional competitiveness by positioning it as the first airline in the region, and only the second internationally, to use these latest-generation cargo planes.

The Company also achieved a significant regional expansion in 2009. In March, LAN Cargo launched Lanco, a subsidiary in Colombia, which began operations after successfully obtaining the necessary operational and technical certification. It launched its services with two Boeing 767-300Fs, with a capacity for 54 tons of freight, connecting the cities of Bogotá and Medellín with Miami. It is important to note that Colombia is Latin America’s largest market for exports by air to the United States reaching an estimated 200,000 tons annually.

In addition, in March 2009, the Company’s cargo subsidiary in Brazil, ABSA, began operations in that country’s domestic market, with one flight daily, from Monday through Friday, between the cities of Sao Paulo and Manaus. On this route, ABSA operates an advanced-technology Boeing 767-300F with a capacity of 54 tons. This route accounts for a large part of Brazil’s airfreight traffic. Manaus is the country’s fourth largest city in terms of GDP, with a large number of companies, principally part of the electronics sector, in its industrial pole. The special tax incentives offered by the Amazon capital of Manaus as part of efforts to promote the area’s development, make it an attractive alternative for exporter and importer clients.

86

During 2010, revenue growth in the cargo business continued to reflect the Company’s ability to exploit the expansion in global cargo flows, as well as the development of key strategic initiatives. Active capacity management, with the purpose of optimizing capacity assignation coupled with new revenue management tools to manage cargo rates in response to demand, enabled LAN Cargo to benefit from the growth trends seen in import markets to Latin America, especially to Brazil. The expansion of operations to Europe utilizing the new Boeing 777-200 freighter fleet strengthened the Company’s competitive position and further diversified its revenue base. Additionally, through its Brazilian affiliate, ABSA, the Company continued to strengthen domestic cargo operations in Brazil. During 2010, ABSA launched operations from Sao Paulo to Recife and Fortaleza and added a second daily flight from Sao Paulo to Manaus. The Company also added capacity by securing three leased Boeing 767-300F, two of which were incorporated in late 2010 and one in early 2011. Furthermore, the Company continues to successfully optimize the capacity of the bellies of passenger aircraft to transport cargo, maximizing the synergies of the Company’s integrated passenger and cargo operation.

During 2011, cargo revenues grew 23.1%, reflecting the increase in traffic, with a growth of 11.5% of RTK. Capacity, measured in ATKs, increased 12.4% during 2011, resulting in a decrease of 0.5 points in load factors compared to 2010, reaching 69.6% in 2011. Yields increased 10.4% compared to 2010, driven by continuous improvement in revenue management tools, route optimization and higher transfer of costs through the surcharge fuel, increasing revenue per ATK in 9.5%.

The Company continues to increase selectively its capacity in order to meet demand in major markets where it operates. The growth of import flows in Latin America continues, but the weakening of cargo markets around the world has stimulated competition in South America, especially Brazil, where carriers from other regions have started operations. On the other hand, export volumes are recovering, partly driven by a gradual resurgence of exports of salmon in Chile. This capacity growth is being primarily fulfilled by the Company with the use of three Boeing 767-300F freighters, delivered to the Company between November 2010 and January 2011 with the purpose to increase its capacity on routes from Latin America to North America and Europe and routes between United States and Mexico. Furthermore, the Company continues to optimize its cargo capacity by using the bellies of passenger aircraft for cargo purposes, maximizing in this way the synergies of integrating the operations of both businesses.

During the last six years, we also improved our competitive position as key operators reduced their operations, and competitors such as UPS and FedEx either downsized their operations or exited some markets. Since mid-2004, competition increased as regional carriers added capacity, but despite this increase in competition, we have been able to maintain solid market shares in large part because of the efficient utilization of our fleet and network. Today, on Latin America-United States routes, our main competitors are Centurion, Transportes Aéreos Mercantiles Panamericanos S.A., or TAMPA, and Polar Air, and on the Latin American-Europe routes, our main competitors are Cargolux, Lufthansa Cargo, Martinair, Air France-KLM, and recently Emirates Airlines.

Cargo Agreements

Since 2002, Lan Cargo and Lufthansa Cargo have had a block space agreement between Europe and Latin America. As part of this agreement, Lan Cargo allocates space to Lufthansa Cargo on its flights between selected cities in Latin America and Europe, and Lufthansa Cargo allocates space to Lan Cargo on its flights between Europe and Brazil and Argentina.

We also have agreements with Asian carriers such as Korean Airlines, JAL, China Airlines, Air China and Cathay Pacific through which Lan Cargo receives space allocations from these airlines to move our cargo from Seoul, Tokyo, Taipei, Shanghai and Hong Kong to Los Angeles and Miami connecting with our network. In exchange, Lan Cargo provides them with space from these same two hubs in the United States to all Latin American destinations and also feeds them with westbound cargo.

Marketing and Sales

Our sales and marketing efforts are carried out either directly when we have a local office or through general sales agents. In Latin America we have our own offices in all key markets. In the United States we have our own offices in Miami, New York and Los Angeles, and work with representatives in various other cities. In Europe we have offices in Frankfurt and Madrid and use agents in other key cities. Finally, in Asia all our sales efforts are done through general sales agents. In total, we maintain a network of more than forty independent cargo sales agencies domestically and internationally.

87

Our cargo marketing strategy emphasizes our combination of freighter and passenger aircraft cargo capacity, which allows customers to ship large, bulky freight, as well as smaller, high-density cargo, fresh products, express shipments, and other types of cargo. Our cargo marketing strategy also emphasizes our high-quality services, scheduling flexibility and punctuality. On some routes, Lan Cargo offers special, value-added products such as Positive Flight Specific or FS, which enables the customer to choose a specific passenger flight to transport its goods. During 2010 we also launched the first phase of a new revenue management project aimed at optimizing yields. In 2011, we obtained the first benefits of a better capacity and overbooking administration, and better pricing practices.

Cargo-Related Investigations

In February 2006 the European Commission (“EC”), in conjunction with the Department of Justice of the United States (“DOJ”), initiated a global investigation of a large number of international cargo airlines (among them Lan Cargo, LAN’s cargo subsidiary) for possible price fixing of cargo fuel surcharges and other fees in the European and United States air cargo markets. On December 26, 2007, the European competition authorities notified Lan Cargo and LAN of the initiation of proceedings against twenty-five cargo airlines, among them Lan Cargo, for allegations of anti-competitive behavior in the airfreight business.

On January 21, 2009, Lan Cargo announced that it had reached a plea agreement with the DOJ in relation to the DOJ’s ongoing investigation regarding price fixing of fuel surcharges and other fees for cargo shipments. Under the plea agreement, Lan Cargo agreed to pay a fine of US$88 million. In addition, ABSA also reached a plea agreement with the DOJ and agreed to pay a fine of US$21 million. These amounts were stipulated to be paid over a five-year payment schedule starting in 2009. As of December 31, 2012, the pending amount to be paid during the next four years is approximately US$54 million and has been recorded within “Other Accounts Payable.”

On November 9, 2010 the EC imposed fines to 11 air carriers for a total amount of €800 million (equivalent to approximately US$1.1 billion). The fine imposed against Lan Cargo and its parent company, LAN Airlines, totaled €8.2 million (equivalent to approximately US$10.9 million). The Company provisioned US$25 million during the fourth quarter of 2007 for such fines, and maintained this provision until the fine was imposed in 2010. This was the lowest fine applied by the EC, which includes a significant reduction due to the Company’s cooperation with the Commission during the course of the investigation. In accordance with European Union law, on January 24, 2011 this administrative decision was appealed by Lan Cargo and Lan Airlines to the General Court in Luxembourg. Any judgment by the General Court may also be appealed to the Court of Justice of the European Union.

As of December 31, 2010 the Company recorded a US$14.1 million gain (pre-tax) due to the reversal of a portion of the provision related to the investigation in the cargo business carried out by the European Commission. This was as a result of the fine announced in November 2010, which was lower than the amount provided for. This reversal is recorded in Other gains/(losses).

The investigation by the DOJ prompted the filing of numerous civil class actions by freight forwarding and shipping companies against many airlines, including Lan Cargo and Lan Airlines, including fifty-four in the United States. The cases filed in the United States were consolidated in the United States District Court, Eastern District of New York and the original complaint was subsequently amended to include additional airlines, including ABSA. On May 11, 2011, Lan Cargo announced that it had reached a settlement agreement with the class action plaintiffs in relation to this litigation. As per the settlement agreement, Lan Cargo agreed to pay US$59.7 million. Furthermore, ABSA also reached a settlement agreement with class action plaintiffs and agreed to pay US$6.3 million. The amounts were paid to plaintiffs’ counsel escrow account in 2011.

In February 2006 the Canadian Competition Bureau (“CCB”), in conjunction with the DOJ, initiated a global investigation of a large number of international cargo airlines (among them Lan Cargo) for possible price fixing of cargo fuel surcharges and other fees in the Canadian air cargo markets. Given the current stage of the proceeding, it is not possible at this time to anticipate with any precision the outcome of the investigation. The CCB’s investigation prompted the filing of four separate civil class actions by freight forwarding and shipping companies against many

88

airlines, including Lan Cargo and Lan Airlines in Canada. . On January 31, 2012, the respective Board of Directors of Lan Airlines and Lan Cargo approved a settlement agreement with the class actions plaintiffs. As per the settlement agreement, Lan Airlines and Lan Cargo agreed to pay the amount of CAD$700,000 (Canadian Dollars). The settlement agreement and payment are pending court approval.

On April 5, 2008, Brazilian authorities notified ABSA of the initiation of administrative proceedings before the Conselho Administrativo de Defesa Econômica (the Brazilian Antitrust Authority) against several cargo airlines and airline officers, among them ABSA, for allegations of anticompetitive practices regarding fuel surcharges in the air cargo business. Given the current stage of the proceedings, it is not possible at this time to anticipate with any precision the outcome of the civil actions filed against Lan Cargo, although it is expected to be a lengthy process.

In June 2008, the Korean Fair Trade Commission notified LAN of an investigation into the air cargo industry and its non-compliance with the Monopoly Regulation and Fair Trade Act and has requested information and documentation from LAN, which LAN duly submitted. On May 26, 2010 the Korean Fair Trade Commission announced the imposition of penalties against 29 other airlines and excluded LAN from further investigation.

The New Zealand Commerce Commission also initiated an investigation into potential anti-competitive activities in the international air cargo markets and requested information and documentation from LAN, which LAN duly submitted. On December 15, 2008, the New Zealand Commerce Commission announced it would focus its investigation on ten airlines and excluded LAN from further investigation.

Fleet

General

As of February 29, 2012, we operated a fleet of 150 aircraft, comprised of 136 passenger aircraft and 14 cargo aircraft, as set forth in the following chart:

	Number of aircraft in operation						Average term of lease remaining (years)		Average age (years)
	Total		Owned(1)		Operating Lease
Passenger aircraft
Airbus A318-100		10		10		—		—		3.7
Airbus A319-100		25		25		—		—		4.6
Airbus A320-200		42		33		9		5.4		4.7
Boeing 737-700		9		0		9		1.6		9.4
Dash 8-200		10		0		10		3.6		14.6
Dash 8-400		4		0		4		8.4		5.8
Boeing 767-700		31		21		10		2.1		8.6
Airbus A340-300		5		4		1		0.89		11.7
Total passenger aircraft		136		93		40		3.6		6.8
Cargo aircraft
Boeing 767-300 Freighter		12		8		4		4.0		8.4
Boeing 777-200 Freighter		2		0		2		5.1		2.8
Total cargo aircraft		14		8		6		4.4		7.6
Total fleet(2)		150		101		49		3.7		6.9

(1) Aircraft included within property, plant and equipment.

(2) Does not include one Boeing 767-200 passenger aircraft leased to Aeromexico.

89

LAN’s strategic fleet renewal plan involves the sale of five Airbus A318 aircraft during 2011, five during 2012 and five during 2013.

The daily average hourly utilization rates of our aircraft for each of the periods indicated are set forth below.

	Year ended December 31,
	2011		2010		2009		2008
	(measured in hours)
Passenger aircraft
Airbus A340-300		14.2		14.6		14.5		14.6
Boeing 767-300 ER		12.8		13.5		13.2		13.6
Airbus A320-Family Aircraft		9.5		10.8		10.3		10.4
Cargo aircraft
Boeing 767-300 Freighter		14.8		15.4		14.7		16.7
Boeing 777-200 Freighter		14.3		14.2		10.6		—

We operate different aircraft types as we perform various different missions ranging from short-haul domestic trips to long-haul trans-continental flights. We have selected our aircraft based on the ability to effectively and efficiently serve these missions while trying to minimize the number of aircraft families we operate.

For short-haul domestic and regional flights we operate the Airbus A320-Family aircraft and, since the acquisition of Aires (rebranded as LAN Colombia in 2011), we also operate the Boeing 737-700 aircraft, the Dash 8-200 aircraft, and the Dash 8-400 aircraft. The Airbus A320 Family that we currently operate has been incorporated into our fleet pursuant to operating leases or have been purchased directly from Airbus pursuant to various purchase agreements since 1999. The last purchase was made in June 2011, where we ordered 20 A320 NEO aircraft. Consequently, as of February 29, 2012 we had outstanding orders for seven Airbus A319 aircraft, 52 Airbus A320 aircraft, 10 Airbus A321 aircraft for delivery between 2012 and 2016 and 20 Airbus A320 NEO aircraft for delivery between 2017 and 2018. Our purchase contracts with Airbus provide for some flexibility with regard to future changes in aircraft types and delivery dates. We believe that our fleet of A320-Family Aircraft will allow us to provide broader service across Latin America as well as the domestic markets that we serve given their longer range. We also believe that they will enable us to increase efficiency levels through reduced fuel consumption and maintenance costs.

For long-haul passenger and cargo flights we operate the Airbus A340-300 aircraft, the Boeing 767-300 passenger and cargo aircraft and Boeing 777 Freighter aircraft. The Boeing 767-300 aircraft’s size and range provides an optimal alternative for most of our long-haul passenger and cargo routes. Additionally, the commonality between the passenger and dedicated cargo versions allows us to leverage the ensuing economies of scale. We believe that these aircraft provide a key efficiency advantage over our peers, especially in the cargo business. The Boeing 767-300 aircraft that we currently operate have been incorporated into our fleet pursuant to operating leases or have been purchased directly from Boeing pursuant to various purchase orders since 1997. As of February 29, 2012 we had outstanding orders for 13 Boeing 767-300 aircraft. We also operate five Airbus A340-300 aircraft for long-haul routes. Given their range and four-engine configuration, these aircraft are well suited to perform trans-Atlantic and trans-Pacific missions out of Santiago. In the future, we will operate Boeing 787 aircraft for our long-haul fleet, for which we have placed 26 orders and committed six operating leases. We expect to receive our first Boeing 787 in 2012. For our cargo operations, we operate 12 Boeing 767 freighter and 2 Boeing 777 freighter. We expect to receive two Boeing 777 freighter aircraft during 2012. For more information, see “Item 10. Additional Information—Material Contracts”.

During the first quarter of 2009, we initiated the process of incorporation of winglets, advanced technology devices, in all our passenger and Freighter Boeing 767-300 aircraft. Winglets are placed on the wings of an aircraft causing an approximate 5% reduction in fuel consumption. The total investment in this project amounts to approximately US$100 million. As of February 29, 2012, 43 aircraft have been modified and US$76 million of the total investment has been disbursed. We expect to continue with the implementation of this project during 2012 as we continue to receive Boeing 767s.

90

Fleet Leasing and Financing Arrangements

Our financing and leasing methods include borrowing from financial institutions and leasing under financial leases, tax leases and operating leases.

In 2000, to finance Airbus aircraft, LAN entered into a US$1.3 billion umbrella credit facility with a syndicate of international financial institutions under which the Company borrowed in the form of separate loans in connection with the specific financing requirements of each Airbus aircraft (including pre-delivery and long-term financing). This umbrella facility was guaranteed by the English, French and German Export Credit Agencies. The repayment profile for each aircraft financed under the facility was for a period of up to eighteen years. Under this financing package LAN incorporated Airbus aircraft into its fleet through operating leases, financial leases and tax leases. Even though this facility covered the aircraft scheduled to be delivered under our 1998/9 Airbus purchase agreements through December 31, 2006, the Company decided to fund the 2006 deliveries with a new facility negotiated in 2006. This new facility financed the acquisition of

• eight Airbus A319 delivered in 2006;

• five A318 and two A320 delivered in 2007;

• ten A318, two A319 and two A320 delivered in 2008; and

• three A319 delivered in the first quarter of 2009.

This new US$920 million facility is similar to the previous one as there are separate loans drawn in connection with the specific financing requirements of each Airbus aircraft and is also based on support guarantees from the European Export Credit Agencies namely Compagnie Francaise d’Assurance pour le Commerce Exterieur (Coface), Euler Hermes Kreditversicherungs-AG (Euler Hermes) and the Secretary of State of Her Britannic Majesty’s Government acting by the Export Credits Guarantee Department (ECGD). Under this financing package LAN incorporated into its fleet Airbus aircraft through financial leases. The facility covered 85.0% of the purchase price of each aircraft plus the associated export credit agencies premium. The remaining 15.0% was funded directly by the Company. There is no remaining drawdown availability under this facility.

Between 2004 and 2006, LAN ordered 15 Boeing 767-300 passenger aircraft and freighters for delivery between 2005 and 2008. In 2004 the Company structured a new syndicated facility for US$260 million to finance the entire cost of the two Boeing 767-300 freighters delivered in 2005 and the first Boeing 767-300 passenger aircraft delivered in 2006. In 2005, LAN finalized the syndicated facility to fund the purchase of four Boeing 767-300 passenger and freighter aircraft for delivery in 2006. Between 2005 and 2006, LAN also finalized two additional syndicated facilities to fund the purchase of the remaining eight Boeing 767-300 Passenger aircraft. Three of these aircraft were delivered in 2007, and five were delivered in 2008. Each loan with respect to these aircraft is guaranteed by the Export-Import Bank of the United States (“Ex-Im Bank”) with a twelve-year profile for the financing of 85.0% of the aircraft value.

In June 12, 2005, LAN finished the payments with respect to a Boeing 767-200 aircraft that was held under a financial lease. This aircraft was subleased to a third party at market rate until December 2011. As of February 29, 2012, the aforementioned aircraft was in process of being returned by the third party to LAN.

In 2006, LAN also ordered three additional Boeing 767-300 passenger aircraft for delivery between 2009 and 2010. The first aircraft, which was delivered in November 2009, was financed through the issuance of an Ex-Im-Bank guaranteed bond and through LAN’s own funds (85.0% and 15.0%, respectively). The remaining two aircraft were financed through a new Ex-Im Bank guaranteed facility and through LAN’s own funds (85.0% and 15.0%, respectively).

In April 2007, LAN entered into two lease agreements with GE Commercial Aviation Services for the lease of two Boeing 777-200LR freighters, for delivery in 2009. In October 2007, we signed a purchase agreement with the Boeing Company for two additional Boeing 777-200LR freighters to be delivered in 2011 and 2012. In March 2010, LAN and the Boeing Company agreed to switch the first Boeing 777-200LR freighter for two Boeing 767-300 passenger aircraft to be delivered in 2011.

91

In the second half of 2007, the Company decided to acquire thirty-two new Boeing 787 Dreamliner aircraft with deliveries initially scheduled between 2011 and 2016. The Company entered into a purchase agreement with the Boeing Company for 26 of these aircraft and entered into a leasing agreement with the International Lease Finance Corporation for the remaining six aircraft.

In November 2008, the Company entered into a purchase agreement for four additional Boeing 767-300 passenger aircraft to be delivered in 2012. In March 2010, LAN decided to replace three of these passenger aircraft with three Boeing 767-300 freighters to be delivered between 2013 and 2014. The fourth aircraft was rescheduled to be delivered in 2011. During the last quarter of 2010, LAN decided to exchange the three Boeing 767 Freighters with three Boeing passenger 767-300 aircraft with deliveries in 2012. As part of this same contract, LAN also ordered a Boeing 777 Aircraft to be delivered in 2012.

During 2008, LAN decided to exercise 15 options to acquire A320-Family Aircraft. Six of these aircraft were delivered in 2010 and the remaining nine were delivered in 2011. In March 2010, LAN entered into a credit facility to finance the entire pre-delivery payments attached to these 15 aircraft. In April 2010, LAN entered into an agreement to finance the purchase of these 15 aircraft partially guaranteed by the European Export Credit Agencies and partially through its own funds (85.0% and 15.0%, respectively).

In the third quarter of 2010, LAN entered into three lease agreements with GE Commercial Aviation Services for the six year lease of Boeing 767-300 Freighters already delivered in November 2010, December 2010 and January 2011.

In December 2009, LAN entered into a purchase agreement with Airbus for 30 aircraft of the A320 family to be delivered between 2011 and 2014.

In July 2010, LAN entered into a purchase agreement with Airbus for an additional 50 aircraft of the A320 family to be delivered between 2012 and 2016.

In September 2010, LAN entered into two new six-year operating lease agreements with AerCap for 2 A320 aircraft for our operations in Colombia.

In January 2011, LAN entered into a seven-year lease agreement with the Bank of China Aviation Pte. Ltd. for one A320 aircraft.

In February, 2011, LAN increased its long haul aircraft orders by three Boeing 767-300 passenger aircraft with deliveries in the second half of 2012. In May 2011, LAN ordered five additional Boeing 767-300 passenger aircraft to be delivered between the last quarter of 2012 and the third quarter of 2013.

In June 2011, LAN signed a purchase agreement with Airbus for 20 A320 of the NEO Aircraft family, from which 10 of them are expected to be delivered in 2017 and the other half in 2018.

As of February 29, 2012, and as a result of the aircraft purchase agreements entered into with Airbus in 2009, 2010 and 2011, LAN has 89 Airbus passenger aircraft of the A320 family expected to be delivered between 2012 and 2018.

During the last quarter of 2011, LAN signed a purchase agreement for two Boeing 767-300 passenger aircraft with deliveries in the third and fourth quarter of 2012.

Regarding our Boeing fleet, nine Boeing 767-300 passenger aircraft are expected to be delivered in 2012 and four in 2013. We expect 32 Boeing 787-8/9 passenger aircraft to be delivered between 2012 and 2018 and two Boeing 777-freighter to be delivered in 2012.

92

As of February 29, 2012, we held 49 aircraft under operating leases compared to 46 as of February 29, 2011. Twenty three of these aircraft are related to Lan Colombia domestic operations which consist of 9 Boeing 737-700, 10 Dash 8-200 and 4 Dash 8-400 aircraft. Under the terms of our operating leases, we are required to return the aircraft in an agreed upon condition at the end of the lease. Although the title to the aircraft remains with the lessor, we are responsible during the lease term for the maintenance, servicing, insurance, repair and overhaul of the aircraft.

As of December 31, 2011, aggregate future minimum lease payments required under our aircraft operating leases were US$705 million. Our operating leases have terms ranging from three months to twelve years from the date of delivery of the aircraft. For more information, see Note 2.21 to our audited consolidated financial statements. For more information on our expected future capital expenditures in connection with aircraft purchases see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures”.

Maintenance

Our heavy maintenance, line maintenance and component shop are equipped to service our entire fleet of Airbus, Boeing and Bombardier aircraft. Our maintenance capabilities allow us flexibility in scheduling airframe maintenance, offering us an alternative to third-party maintenance providers.

LAN facilities at Comodoro Arturo Merino Benítez International Airport in Santiago, Chile are among the most extensive in Latin America and have been certified according to IOSA standards and as a FAA approved repair station. Our hangars and components shops at our Santiago repair station can service the Boeing 767, Boeing 777, Airbus 340 and Airbus 320 Family Aircraft fleet, as well as designing and manufacturing galleys, structures and composite materials. We also have the capability to retrofit aircraft interiors, including sophisticated in-flight entertainment equipment, and blended winglets in the Boeing 767 fleet. LAN facilities at El Dorado International Airport in Bogotá, Colombia can service the Boeing 737 and the Dash 8 Q200 - Q400 fleet.

Our engineering and maintenance division is supervised by the local DGAC and it is subjected to several recurrent external audits from civil aviation authorities and international entities such as the FAA, the Argentine Dirección Nacional de Aeronavegabilidad (the National Directorate of Airworthiness) (“DNA”), the Brazilian Agencia Nacional de Aviacao Civil (“ANAC”), the Ecuadorian Dirección General de Aeronáutica Civil (“DGAC Ecuador”), the Peruvian Dirección General de Aeronáutica Civil (“DGAC Peru”), the Colombian Unidad Administrativa Especial de Aeronáutica Civil (the UAEAC), the International Air Transport Association Operational Safety Audit (“IOSA”) (from the International Air Transport Association or “IATA”) and the International Civil Aviation Organization (“ICAO”), in order to strictly comply with applicable regulations. The audits are conducted in connection with each country’s certification procedures and enable us to continue to perform maintenance for aircraft registered in the certificating jurisdictions. Our repair station holds FAA Part-145 certifications under these approvals.

We also rely on third parties for certain maintenance support for our aircraft and engines. Lufthansa Technik provides our Airbus A320-Family Aircraft and A340 Aircraft component support on a power-by-the-hour basis under a long-term contract, which runs until 2019. International Aero Engines and CFM International provides the A320 and A319 engine support on a power-by-the-hour contract, which runs for twelve years once each engine is received. Pratt and Whitney provides the A318 engine support on a power-by-the-hour basis contract, which runs for ten years once an engine is received. General Electric provides the maintenance of our Airbus A340 engines under a similar contract, which runs for twelve years once an engine is received. In addition, General Electric provides for the maintenance of most of our Boeing 767 engines under a contract effective until 2013. Third parties also provide certain additional engine maintenance services. Air France-KLM, which services have been contracted until 2015, provides the maintenance of our Boeing 777 engines and components and to our Boeing 767-300 components.

We occasionally perform certain maintenance services for other airlines.

Our aircraft maintenance personnel participates in extensive training programs at the jointly operated Lufthansa LAN Technical Training S.A., located in Santiago, Chile.

93

In 2011, LAN continued implementing the management system known as LEAN in an effort to increase efficiency throughout its maintenance network. The adoption of this system constituted a redesigning of processes which detect problems during aircraft maintenance and offer a solution. The foregoing renders the daily tasks and processes carried out within the Company more efficient. Internationally, the LEAN system has been defined as a methodology for achieving excellence and continuous improvement. It seeks to eliminate activities that do not add value to processes, and suppressing those activities that are superfluous, thereby allowing companies to reduce costs, improve processes and increase customer satisfaction.

During the last year, LAN continued to benefit from the implementation of LEAN in heavy and line maintenance. Heavy maintenance is performed approximately every 12–18 months or a specific amount of actual flight hours as defined by the manufacturer, while line maintenance is performed on a daily basis. In 2011, we achieved approximately a 30.0% reduction in the time an aircraft remains in the hangar. Moreover, we achieved a 30.0% to 50.0% reduction in the time for some of the most demanding tasks in line maintenance and a 15.0% increase on workers’ productivity. Other benefits of LEAN include a reduction of approximately 64.0% in labor accidents in heavy maintenance areas, a reduction of 80.0% on delays deliveries of aircraft from programmed maintenance, and a considerable improvement on dispatch reliability. Furthermore, by establishing clear roles, challenges and achievements, the implementation of LEAN has had an important benefit in terms of employee motivation.

Safety and Security Corporate Direction

The Safety and Security Corporate Direction (“SSCD”) is an internal division in charge of the management of safety and security matters related to flight operations, operative and administrative buildings, organization and coordination of emergency response matters, safety and security audits and safety and occupational health.

The SSCD reports directly to LAN’s Chief Executive Officer (“CEO”), which reflects the firm commitment that the Company’s senior management has with its employees. The SSCD is comprised of five independent reporting management areas: safety management, security management, emergency response management, Safety & Security Audit management and Safety and Occupational Health Management.

Safety Management

We give high priority to providing safe and reliable air service, as it is considered a fundamental asset to LAN and one of the basic pillars for the development of our Company. We have uniform safety standards and safety-related training programs that cover all of our operations. LAN has implemented a Safety and Quality Management System (“SMS”) throughout the operational areas of the Company, which is certified by the Chilean DGAC and IOSA System. The SMS provides clear definitions of the functions and responsibilities regarding operational safety for all persons involved, from the top to the bottom of the operational structure of the airline. It strengthens the commitment and knowledge required from everyone in the Company regarding any and all actions that could affect safety.

The Operational Safety Director (“OSD”) is responsible for the Operational Safety Oversight and the implementation of the SMS. The OSD supervises a staff of approximately twenty-one safety specialists of different backgrounds, including pilots, aeronautical engineers, aircraft maintenance engineers, a psychologist, and dangerous goods and ground handling safety specialists.

Our corporate operational safety organization consists of four main areas:

• Flight Safety Management: The Flight Safety Area oversees and audits our operational safety measures, investigates major incidents and programs and controls the LOSA and FOQA Programs (as defined below). The Flight Safety Area also oversees and audits safety measures related to ground handling and cargo areas and investigates related incidents.

• Maintenance Safety Management: The Maintenance Safety Area oversees and audits our maintenance safety measures and investigates maintenance-related incidents.

94

• Flight Data Monitoring Management: The Flight Data Monitoring Area is responsible for the maintenance and administration of the recorded flight data and safety-related databases and software.

The main safety programs, elements and procedures include:

• Flight Operations Quality Assurance (“FOQA”). Since the end of 2002, LAN has been implementing a Flight Data Monitoring (“FDM”) program using two different analysis programs. The FDM program is fully developed for the A320-Family Aircraft, A340, Boeing B767, and B777 fleet. The statistical information obtained has produced standard operational procedure changes and valuable inputs to the Advance Qualification Program project. We have also fully developed a maintenance variation for the same fleets which monitors the engines, flight controls and general performance of the airplanes.

• Mandatory Occurrence and Mandatory Reports. Our operations policy manuals define the incidents that require a mandatory report. On a voluntary basis, personnel can provide confidential reports to the flight safety area in hard copy or electronic form.

• Safety Information Management. All safety information regarding all occurrences is entered into dedicated software, where it is analyzed according to its potential risk. Important incidents are investigated thoroughly. The relevant areas related to each particular incident implement corrective actions with the assistance of the corporate operational safety directory.

• Line Operation Safety Audit (“LOSA”). LOSA is a program designed to survey and analyze the safety components of our equipment and operations. LOSA observations have been conducted on the A-340, A-320 and Boeing B767 fleets. In 2007, a second LOSA observation has been applied to the A-340 fleet, which has given important information of the effectiveness of the corrective actions recommended by the first observation conducted in 2004.

• Human Factors Program. This program is based on a manual developed by LAN that includes all interconnectivities between flight operations and human factors. The program includes a Fatigue Risk Management Program that is being implemented since 2008. The program also includes Crew Resource Management and Flight Crews Training and study of incidents using the Threat and Error Management (“TEM”) model.

• Quality Assurance and IOSA and ISAGO Certification Programs. Our flight and maintenance safety areas have a quality assurance system. Our safety management system is based on the ISO 9001-2000 standards. We also periodically evaluate the skills, experience and safety records of our flight crews in order to maintain strict control over the quality of our flight crews. All of our aircraft pilots participate in training programs, some of which are sponsored by aircraft manufacturers, and all are required to undergo recurrent training. LAN Airlines and passenger and cargo subsidiaries are IOSA registered. We also have ISAGO certification for LAN, LAN Argentina and LAN Ecuador.

We also have an operational safety committee, composed of senior executives and key operational managers, responsible for the initiation of safety-related actions.

All of our Boeing 767, A320, A340 and Boeing 777 fleets are equipped with an enhanced ground proximity warning system, a traffic collision avoidance system, a wind shear detection system and reduced vertical separation minimum capabilities.

Since 1991, we have had no accidents involving major injury to passengers, crew or aircraft.

Security Management

The main policy and the essential principle of the Company is to ensure an adequate security protection to all its flights, aircraft, passengers, crew members, ground personnel, airport facilities and other services related to the commercial civil aviation against any threat or unlawful action.

95

The Company has implemented corporate policies and a quality management system through the operational system to detect any lack of security in its operations. Audits and assessments are used to assign different levels of security to international and domestic operations.

The Corporate Security Manager (“CSM”) has the responsibility to evaluate, analyze and assign threat levels (high, medium, low) to international and domestic operations, proposing security procedures for each scenario. The CSM leads an organization of five security managers and approximately fifteen security specialists. The current CSM is a former police officer with more than 25 years of experience in the civil aviation.

The corporate security organization has five main areas:

• Domestic Security Operations: that report to a former police officer with more than 20 years of experience in civil aviation.

• International Security Operations: that report to a former police officer, with more than 20 years of experience in civil aviation.

• North America, Caribbean and Europe Security Operations: that report to a security specialist, with more than 18 years of experience in civil aviation.

• Argentinean Security Operations: that report to a security specialist, with more than 30 years of experience in civil aviation.

• Peruvian Security Operations: that report to a security specialist, with more than 19 years of experience in civil aviation.

Each of the five areas is subdivided in internal investigations, fraud, training, cargo and passengers’ security, security of facilities and quality control.

Since 2002, the Company’s Corporate Security Manual unified international and domestic security procedures:

• Manual de Gestión de Seguridad (Manual of Security Management). The basis for local security procedures.

• Airport Security Plan or Airport Security Program. Approved by the DGAC for each country in which we have operations. It includes procedures to prevent unlawful conduct and procedures for a bomb threat or hijacking drill.

• Corporate Security Training Program. It includes the contents and definitions regarding security training for all areas involved in acceptance of aircraft, baggage, cargo and passengers.

• Airport Security Inspection Program. It has the contents and definitions regarding airport inspections and identification of security issues and corrective action plans for non-compliance.

Emergency Response Management

The emergency response area is responsible for the administration of the Emergency Response Plan (ERP). It has been developed for the effective management of accidents and serious incidents with the purpose of mitigating any impacts on the passenger and their relatives and the operations.

The ERP consists mainly of:

• Emergency Procedures. They are widely advertised inside the Company, approved by the DGAC and covered by the Emergency Administration Manual.

96

• Emergency Response Centre (ERC). The ERC includes three principal areas: the Emergency Strategy Committee, the Emergency Resolution Committee and the Public Relations Monitoring Area. Those areas are located at Santiago, Chile. Most of them have meetings rooms, computers, satellite TV, conference call systems, video conference facilities, kitchens and rest rooms.

• Special Assistance Team (SAT). We have a humanitarian assistance program that we deploy for family and passenger assistance. We have about 1,200 total active volunteers distributed as follows: Santiago (700 volunteers), Miami (120 volunteers), Lima (210 volunteers), Ecuador (110 volunteers), and Buenos Aires (90 volunteers). Our SAT is complemented by service vendors.

• Telephone Inquiry Center. It is located in Santiago, Chile, at our call-center office and has 500 agents. There are 18 toll free lines activated for family member calls and are published through the company web site and the media, in case of emergencies.

• Go Team. We have a special team that is dispatched to emergencies involving LAN aircraft. The Go Team includes a director, a SAT leader, a field investigation team (FIT) leader and other representatives from the general support, an Informatics & Telecommunication (IT) team, and security, finance, legal and maintenance departments.

• Logistic Area. It is activated and deployed in our head quarters and at the location of the accident.

Safety and Security Audit Management

The Safety and Security Audit Management reports directly to the Corporate Director. This area has the mission to advise senior management on issues relating to planning and control, design, documentation, implementation, maintenance and improvement of the SMS of LAN and its subsidiaries.

Functions and Responsibilities

• Administration of Internal Evaluation Program by conducting organization-wide audits in all operational areas.

• Advise to senior management regarding the fulfillment of IOSA and ISAGO standards.

• Report to senior management the status of the SMS and Corporate Quality Management Area.

• Coordination of the implementation of the IOSA and ISAGO external audits with the Audit Organization.

• Participation in the ISAGO IATA Audit Pool.

• Creation of guidelines for the quality assurance of the operational areas of Lan Airlines, Lan Express and Lan Cargo, and quality coordinators of the LAN subsidiaries.

• Implementation of the Internal Audit Plan and ISAGO and IOSA audits including operational processes relating to safety and security, quality objectives, status of corrective and prevented actions, and customer complains.

• Coordination of corrective and preventive actions arising from the implementation of the SMS and corporate quality.

• Establishing the IOSA and ISAGO Training and Qualification Auditors Procedure.

• Establishing a corporate system to evaluate and control the external suppliers, in case of outsourcing services.

97

Safety and Occupational Health Management

The main objective of the Safety and Occupational Health Management is to ensure the safety and health of workers at work, by advising, managing and helping the company prevent occupational accidents and diseases through the identification and control of occupational hazards and medical surveillance.

The forgoing objectives are satisfied through a dedicated team of professionals (engineers, doctors, risk prevention experts and paramedics), who constantly develop activities aimed at protecting LAN employees.

Functions and Responsibilities

• Implementation and control of the preventive management systems.

• Development of training programs.

• Promotion and dissemination of safety and occupational guidelines,

• Assessment of risk of work place.

• Medical assistance to all injured employees.

• Investigation of all accidents.

• Preemployment medical assessment.

• Compliance with legal regulations regarding occupational health, safety and environmental issues.

• Checking of the emergency systems installed in the facilities.

Fuel Supplies

Fuel costs comprise the single largest category of our operating expenses. Over the last years, our fuel consumption and operating expenses have increased due to the significant growth in our operations and to the increase in fuel prices as a result of economic and political factors. In 2011, the foregoing trend was affected by geopolitical instability in the Middle East and the total fuel costs represented 33.8% of our total operating expenses. The into-wing (fuel price plus taxes and transportation costs) 2011 average final price was US$3.11 per gallon, representing a 34.2% increase from the 2010 average. We can neither control nor accurately predict the volatility of fuel prices. Despite the foregoing, it is possible to partially offset the price volatility risk through our hedging and fuel surcharge programs in place in both our passenger and cargo business. For more information, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Risk of Fluctuations in Jet Fuel Prices”.

The following table details our consolidated fuel consumption and operating costs (which exclude fuel costs related to charter operations in which fuel expenses are covered by the entity that charters the flight) during the last three years.

	Year ended December 31,
	2011			2010			2009
Fuel consumption (thousands of gallons)		562,346.0			501,098.2			452,708.5
ATKs (millions)		10,056.1			8,968.8			7,811.8
Fuel consumption (thousands of gallons) per ATKs (millions)		55.9			55.9			58.0
Total fuel costs (US$ thousands)		1,750,052			1,161,927			959,608
Cost per gallon (US$)		3.11			2.32			2.12
Total fuel costs as a percentage of total operating costs		33.79	%		29.79	%		29.80	%

98

We have entered into fuel contracts to serve operations to more than sixty international and domestic destinations around the world. Contractual terms and conditions vary for each location depending on market conditions, logistics network, volume, economic and political factors, among others. In 2010, approximately 24.7% of our total fuel consumption was originated in Chile where we maintain a long-term commercial relationship with a joint venture between Air BP and Copec, and where we have entered into specific supply contracts with Petrobras Aviation and Enex Aviation. We have more than twenty additional suppliers in our network such as Repsol YPF, Cepsa, Petroperu, Chevron, Air Total, Q8 Aviation and Exxon Mobil. In our secondary hubs we have the following fuel suppliers: WFS (Miami), Exxon Mobil and Petroperu (Lima), Exxon Mobil, Repsol YPF and Shell (Buenos Aires) and PetroEcuador (Guayaquil).

Ground Facilities and Services

Our main operations are based at the Comodoro Arturo Merino Benítez International Airport in Santiago, Chile. We also operate from various other airports in Chile and abroad. We operate hangars, aircraft parking and other airport service facilities at the Comodoro Arturo Merino Benítez International Airport and other airports throughout Chile pursuant to concessions granted by the DGAC. We also maintain one customs warehouse at the Comodoro Arturo Merino Benítez International Airport, additional customs warehouses in Chile (Iquique, Antofagasta and Punta Arenas) and Argentina (Aeroparque) and operate cargo warehouses at the Miami International Airport to service our cargo customers. Our facilities at Miami International Airport include corporate offices for our cargo and passenger operations and temperature-controlled and freezer space for imports and exports.

We have VIP lounges at the Comodoro Arturo Merino Benítez International Airport. The 7,500 square feet Neruda lounge, which represented an investment of approximately US$550,000 in 2001, has been widely acclaimed. In 2005, Latin Trade magazine selected it as the “Best Airline Lounge” in Latin America. In the same airport we also have the 4,300 square feet Mistral lounge.

Finally, we incur certain airport usage fees and other charges for services performed by the various airports where we operate, such as air traffic control charges, take-off and landing fees, aircraft parking fees and fees payable in connection with the use of passenger waiting rooms and check-in counter space.

During 2010, APV’s (“In-flight Service Supplier”) new 1,650 square meter facilities were completed in the Comodoro Arturo Merino Benitez International Airport.

The development of the new building for the facilities of Andes Airports Services (“Andes,” which performs ground handling services) is in process which is scheduled to be delivered during the second half of 2012.

Ancillary Airline Activities

In addition to our airline operations, we generate revenues from a variety of other activities. In 2011, LAN generated other revenues of US$132.8 million from ancillary activities.

Our total revenue from aircraft leases (including subleases, dry-leases, wet-leases and capacity sales to certain alliance partners) and charter flights amounted to US$12.7 million in 2011.

On January 25, 2011 Lan Cargo S.A. and Inversiones Lan S.A., subsidiaries of LAN Airlines, signed a promise to sell to Bethia S.A. (“Bethia”) 100% of the capital in the LAN subsidiaries Blue Express Intl. Servicios de Transporte Limitada and Blue Express S.A. (together referred to as “Blue Express”), companies engaged in ground courier services, operating brands and certain computer programs.

The price stated in the promissory contract was US$54 million subject to any adjustments that might arise as a result of a due diligence to be conducted by Bethia. The transaction closed on April 6, 2011, with the execution by Lan Cargo S.A. e Inversiones Lan S.A. as sellers, and Servicios de Transporte Limitada and Inversiones Betmin SpA (subsidiaries of Bethia) as purchasers, of the respective contracts for the sale of 100% of the social capital of Blue Express in the terms agreed in the purchase promise. The final sale value of Blue Express was US$53.5 million. Since Blue Express’ book value was US$9.1 million, the sale generated a non-operational profit of approximately US$44.5 million, which was reflected on LAN’s 2011 results.

99

As a consequence of the sale of Blue Express in 2011, the Company’s courier business revenues fell from US$36.8 million in 2010 to US$11.0 million in 2011.

During 2011, we had revenues of US$44.0 million from tours and US$16.9 million for duty-free in-flight sales. The balance of our operating revenues, US$48.3 million in 2011, was generated by maintenance, storage and customs, handling and others.

Insurance

We carry hull insurance that includes, among other coverage, “all risk,” war and allied risks, spares and liability for passengers, cargo, mail, baggage and third parties. We renew our insurance coverage yearly, and are subject to deductibles that vary depending on the coverage type and the loss type. Our deductibles are US$1,250 for loss or damage per occurrence associated with passengers’ baggage liabilities, US$10,000 per occurrence for loss or damage associated with cargo liabilities and between US$500,000 and US$1.0 million per occurrence for hull “all risk” insurance (depending on the aircraft type). Additionally, we have hull deductible coverage to reduce the net hull deductible to US$100,000 per occurrence (aircraft and/or engine).

Since December 2006, we have negotiated common terms for Hull All Risk, Aviation Legal Liabilities and Spares coverage, together with British Airways, Aer Lingus and their affiliates and franchises which allows us to obtain premium reductions and coverage improvements. In April 2011, Iberia, Air Nostrum and Vueling also joined to such group.

Our insurance coverage has a one-year term starting in April of each year. The aggregate cost of our insurance coverage for the 2011 calendar year was US$16.3 million, excluding insurance relating to Aires, which represents a 4.6% increase in insurance expenses and a 17.2% decrease in average insurance rates compared to the 2010 calendar year.

Aires was covered under a separate insurance policy until October 1, 2011, when it was integrated under LAN’s policy. Its annual cost was US$7.9 million (US$7.3 million from January to October and US$0.6 million from October to December).

Information Technology

General

We use information technology in almost every aspect of our business.

Our reservations, departure control (check-in), inventory, flight planning and baggage tracing systems are operated by Amadeus, Sabre, Iberia and SITA, and we operate our internal systems from two data center facilities in Santiago, Chile. In 2006, we implemented a Disaster Recovery Plan between those two sites in order to ensure the functionality of our critical systems, with a recovery time objective of four days. The line of business infrastructure currently has an average recovery time of two hours for 80% of our systems and two days for the remaining 20%.

Third-party suppliers provide us with the following technical infrastructure elements:

• wide-area data network (provided mainly by SITA and Telefónica); and

• data centers and desktop operations and support (provided by Accenture and IBM).

100

Basic Infrastructure Operation

Since early 2010, we have outsourced our IT infrastructure with Accenture and IBM worldwide. During 2011 IBM managed the data center and Accenture handled our desktop equipment. In 2012 we will change the manager of our data center from IBM to HP. This outsourcing allows us to:

• deliver a standard world-class service;

• increase the efficiency of our IT operations;

• convert fixed costs into variable costs;

• guarantee that the service standards (such as up-time and response time) required by critical processes of our business are fulfilled;

• accelerate critical infrastructure projects while significantly reducing the resources required;

• increase the efficiency of our personnel; and

• focus internal IT efforts on business functions, rather than basic hardware and software issues.

Telecommunications

We have used the latest technology available with regard to our global telecommunications network. Our network has the capacity to transport voice, data, and video with the quality required by the Company, combining traditional private data channels with virtual private networks through the Internet.

Front-End Systems

During 2002, we deployed new systems to support our sales personnel. These systems provide the employees who have a direct contact with our customers with additional tools to improve service, enhance customer information and increase efficiency. During 2004 and 2005, we implemented these systems at our airport counters and our call centers.

Since 2005, we have favored a strategy of encouraging and facilitating self service alternatives for customers, through improving the functionality of the www.lan.com website as well as implementing self check-in kiosks in airports.

During 2009, we deployed a new online system in order to provide the processes that our engineering, maintenance and materials areas develop, with technological solutions. This project has allowed us to establish and automate simple and integrated processes, standardize processes for the Company (including our subsidiaries and related companies), facilitate handling of materials and maintenance, make relevant information available in a full, unique and consistent way to all users, and optimize distribution and execution (planned and non planned), among other benefits.

Enterprise Resource Planning

In 2002, we purchased an enterprise resource planning (“ERP”) system from SAP. This system was fully implemented in the second quarter of 2004 for Lan Airlines and almost all of its subsidiaries. This ERP system includes modules covering areas such as: finance, accounting, inventory management, human resources, business warehouse, as well as a user-friendly portal. We are currently working on optimizing and simplifying this system, and in leveraging it to increase the efficiency of our back-office processes.

101

Development and Maintenance System

With respect to new development needs, our first choice is to acquire existing packaged software, but we outsource this service when such software is not available in the market. Since early 2007, we have outsourced our IT system development to three principal vendors: TATA Consultancy Services, Everis, Accenture and Indra. Thanks to this outsourcing initiative, we have achieved:

• a decrease in project delays;

• an increase in systems reliability; and

• a shift in the efforts of the internal IT department to a more business oriented perspective.

New initiatives

We are implementing a new host (“Host”). A Host change is one of the most important decisions for the passenger business division in an airline in terms of process and technology. It consists in replacing the PSS, or Passenger Service System, that contains the reservation, inventory and departure control systems of an airline. This decision permits the understanding of the software from an aviation industry provider in ASP mode, adherence to standard processes and best industry practices and the integration of multiple legacy applications that complement the needs of the processes model for the airline business. For LAN, the Host change implies going from two suppliers (Amadeus and Resiber) currently covering the role of the complete PSS, to a single supplier (Sabre). This project represents an investment of approximately US$79.4 million, and is expected to provide immediate savings of 75% per passenger in reservation transaction costs and is estimated to be in place during June 2012.

The IT department expects to implement a Technology Refreshing Project between 2010 and 2012, to move to the platforms that will host our applications and services for the next five years. During 2010, Lan Airlines will define the Technology Refreshing Project and all the platforms, software, solutions and services that it will use to support its business. These hardware and software solutions will be gradually implemented between 2011 and 2012.

We are also buying new airplanes, namely, Boeing 787 aircraft. The Boeing 787 Dreamliner is Boeing’s most fuel-efficient aircraft and is the world’s first e-Enabled commercial airplane.

The Boeing 787 combines the integrated information and communications systems to drive operational efficiency and streamline airplane maintenance. The e-Enabled tools on the 787 will be a significant change from any other commercial airplane previously operated. The extensive e-Enabling on the 787 increases the need for network connectivity, hardware and software improvements, and systems management practices.

Regulation

Below is a brief reference to the material effects of aeronautical and other regulations in force in each of the relevant jurisdictions in which LAN and its subsidiaries operate.

Chile

Aeronautical Regulation

Both the DGAC and the JAC oversee and regulate the Chilean aviation industry. The DGAC reports directly to the Chilean Air Force and is responsible for supervising compliance with Chilean laws and regulations relating to air navigation. The JAC is the Chilean civil aviation authority. Primarily on the basis of Decree Law No. 2,564, which regulates commercial aviation, the JAC establishes the main commercial policies for the aviation industry in Chile, regulates the assignment of international routes, and the compliance with certain insurance requirements, and the DGAC regulates flight operations, including personnel, aircraft and security standards, air traffic control and airport management. We have obtained and maintain the necessary authority from the Chilean government to conduct flight operations, including authorization certificates from the JAC and technical operative certificates from the DGAC, the continuation of which is subject to the ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

102

Chile is a contracting state, as well as a permanent member, of the ICAO, an agency of the United Nations established in 1947 to assist in the planning and development of international air transport. The ICAO establishes technical standards for the international aviation industry, which Chilean authorities have incorporated into Chilean laws and regulations. In the absence of an applicable Chilean regulation concerning safety or maintenance, the DGAC has incorporated by reference the majority of the ICAO’s technical standards. We believe that we are in material compliance with all relevant technical standards.

Route Rights

Domestic Routes. Chilean airlines are not required to obtain permits in connection with carrying passengers or cargo on any domestic routes, but only to comply with the technical and insurance requirements established respectively by the DGAC and the JAC. There are no regulatory barriers that would prevent a foreign airline from creating a Chilean subsidiary and entering the Chilean domestic market using that subsidiary. On January 18, 2012 the Secretary of Transportation and the Secretary of Economics of Chile announced steps towards unilaterally opening the Chilean domestic skies in the near term.

International Routes. As an airline providing services on international routes, Lan Airlines is also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Chile and various other countries. There can be no assurance that existing bilateral agreements between Chile and foreign governments will continue, and a modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated between Chile and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain destinations of the former and, in certain cases, to further connect to third-country destinations. In Chile, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. If there is more than one applicant for a route frequency the JAC awards it through a public auction for a period of five years. The JAC grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails to operate a route for a period of six months or more, the JAC may terminate its rights to that route. International route frequencies are freely transferable. In the past, we have generally paid only nominal amounts for international route frequencies obtained in uncontested auctions.

Airfare Pricing Policy. Chilean airlines are permitted to establish their own domestic and international fares without government regulation, as long as they do not abuse any dominant market position they may enjoy. For more information, see “–Antitrust Regulation” below. Airlines may file complaints before the Antitrust Court with respect to monopolistic or other pricing practices by other airlines that violate Chile’s antitrust laws. In 1997, the Antitrust Commission approved and imposed a specific self-regulatory fare plan for our domestic operations consistent with the Antitrust Commission’s directive to maintain a competitive environment. According to this plan, we must file notice with the JAC of any increase or decrease in standard fares on routes deemed “non-competitive” by the JAC and any decrease in fares on “competitive” routes at least twenty days in advance. We must file notice with the JAC of any increase in fares on “competitive” routes at least ten days in advance. In addition, the Chilean authorities now require that we justify any modification that we make to our fares on non-competitive routes. We must also ensure that our average yields on a non-competitive route are not higher than those on competitive routes of similar distance.

Registration of Aircraft. Aircraft registration in Chile is governed by the Chilean Aeronautical Code (“CAC”). In order to register or continue to be registered in Chile, an aircraft must be wholly owned by either:

• a natural person who is a Chilean citizen; or

103

• a legal entity incorporated in and having its domicile and principal place of business in Chile and a majority of the capital stock of which is owned by Chilean nationals, among other requirements established in article 38 of the CAC.

• The Aeronautical Code expressly allows the DGAC to permit registration of aircraft belonging to non-Chilean individuals or entities with a permanent place of business in Chile. Aircraft owned by non-Chileans, but operated by Chileans or by an airline which is affiliated with a Chilean aviation entity, may also be registered in Chile. Registration of any aircraft can be cancelled if it is not in compliance with the requirements for registration and, in particular, if:

• the ownership requirements are not met; or

• the aircraft does not comply with any applicable safety requirements specified by the DGAC.

Safety. The DGAC requires that all aircraft operated by Chilean airlines be registered either with the DGAC or with an equivalent supervisory body in a country other than Chile. All aircraft must have a valid certificate of airworthiness issued by either the DGAC or an equivalent non-Chilean supervisory entity. In addition, the DGAC will not issue maintenance permits to a Chilean airline until the DGAC has assessed the airline’s maintenance capabilities. The DGAC renews maintenance permits annually, and has approved our maintenance operations. Only DGAC-certified maintenance facilities or facilities certified by an equivalent non-Chilean supervisory body in the country where the aircraft is registered may maintain and repair the aircraft operated by Chilean airlines. Aircraft maintenance personnel at such facilities must also be certified either by the DGAC or an equivalent non-Chilean supervisory body before assuming any aircraft maintenance positions.

Security. The DGAC establishes and supervises the implementation of security standards and regulations for the Chilean commercial aviation industry. Such standards and regulations are based on standards developed by international commercial aviation organizations. Each airline and airport in Chile must submit an aviation security handbook to the DGAC describing its security procedures for the day-to-day operations of commercial aviation and procedures for staff security training. Lan Airlines has submitted its aviation security handbook to the DGAC. Chilean airlines that operate international routes must also adopt security measures in accordance with the requirements of applicable bilateral international agreements.

Airport Policy. The DGAC supervises and manages airports in Chile, including the supervision of take-off and landing charges. The DGAC proposes airport charges, which are approved by the JAC and are the same at all airports. Since the mid-90s, a number of Chilean airports have been privatized, including the Comodoro Arturo Merino Benítez International Airport in Santiago. At the privatized airports, the airport administration manages the facilities under the supervision of the DGAC and JAC.

Environmental and Noise Regulation. There are no material environmental regulations or controls imposed upon airlines, applicable to aircraft, or that otherwise affect us in Chile, except for environmental laws and regulations of general applicability. There is no noise restriction regulation currently applicable to aircraft in Chile. However, Chilean authorities are planning to pass a noise-related regulation governing aircraft that fly to and within Chile. The proposed regulation will require all such aircraft to comply with certain noise restrictions, referred to in the market as Stage 3 standards. LAN’s fleet already complies with the proposed restrictions so we do not believe that enactment of the proposed standards would impose a material burden on us.

Argentina

Aeronautical Regulation

Both the Administración Nacional de Aviación Civil (“ANACI”) and the Secretary of Transport oversee and regulate the Argentinean aviation industry. ANACI regulates flight operations, including personnel, aircraft and security standards, air traffic control and airport management, and reports indirectly to the Ministry of Planning and is responsible for supervising compliance with Argentinean laws and regulations relating to air navigation. The Secretary of Transport also reports to the Ministry of Planning and regulates the assignment of international routes

104

and matters related to tariff regulation policies. We have obtained and maintain the necessary authorizations from the Argentinean government to conduct flight operations, including authorization certificates and technical operative certificates from ANACI, the continuation of which is subject to the ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

Argentina is a contracting state and a permanent member of the ICAO, an agency of the United Nations established in 1947 to assist in the planning and development of international air transport. The ICAO establishes technical standards for the international aviation industry, which Argentinean authorities have incorporated into Argentinean laws and regulations. In the absence of applicable Argentinean regulation concerning safety or maintenance, the ANACI has incorporated by reference the majority of the ICAO’s technical standards. We believe that we are in material compliance with all relevant technical standards.

Route Rights

Domestic Routes. In Argentina airlines are required to obtain permits in connection with carrying passengers or cargo on any domestic routes, and to comply with the technical requirements established by the local authority. There are no regulatory barriers preventing a foreign airline from creating an Argentine subsidiary and entering the Argentine domestic market using that subsidiary. However, ownership of such subsidiary by the foreign airline may not be direct, but through a subsidiary formed in Argentina, which in turn may be directly or indirectly owned by the foreign company. However, such subsidiary should operate Argentine registered aircraft and employ Argentine aeronautical personnel.

International Routes. As an airline providing services on international routes, Lan Argentina is also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Argentina and various other countries. There can be no assurance that existing bilateral agreements between Argentina and foreign governments will continue. Furthermore, a modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated between Argentina and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain destinations of the former and, in certain cases, to further connect to third-country destinations. In Argentina, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. ANACI grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails to operate a route for a period of six months or more, the ANACI may terminate its rights to that route.

Airfare Pricing Policy. Argentine airlines are permitted to establish their own international fares without government regulation, as long as they do not abuse any dominant market position they may enjoy. Yet, there are government-fixed maximum and minimum prices for domestic flights.

Registration of Aircraft. Aircraft registration in Argentina is governed by the Argentinean Aeronautical Code (“AAC”). In order to register or continue to be registered in Argentina, an aircraft must be wholly owned by either:

• a natural person who is an Argentinean citizen; or

• a legal entity incorporated in and having its domicile and principal place of business in Argentina and a majority of the capital stock of which is owned, directly or indirectly, by Argentinean nationals, among other requirements established in the AAC.

Safety. ANACI requires that all aircraft operated by Argentinean airlines be registered with ANACI. All aircraft must have a valid certificate of airworthiness issued by ANACI. In addition, ANACI will not issue maintenance permits to an Argentinean airline until ANACI has assessed the airline’s maintenance capabilities. ANACI renews maintenance permits periodically and approves maintenance operations once the airline initiates its operations and

105

each time an airline changes its maintenance regime. Only ANACI-certified maintenance facilities (in Argentina or in any other country) may maintain and repair the aircraft operated by Argentinean airlines. Aircraft maintenance personnel at such facilities must also be certified by ANACI before assuming any aircraft maintenance positions.

Security. ANACI establishes and supervises the implementation of security standards and regulations for the Argentinean commercial aviation industry. Such standards and regulations are based on standards developed by international commercial aviation organizations. Each airline and airport in Argentina must submit an aviation security handbook to ANACI describing its security procedures for the day-to-day operations of commercial aviation and procedures for staff security training. Lan Argentina has submitted its aviation security handbook to ANACI. Argentinean airlines that operate international routes must also adopt security measures in accordance with the requirements of applicable bilateral international agreements.

Airport Policy. The ORSNA (Organismo Regulador del Sistema Nacional de Aeropuertos) supervises and manages the airports in Argentina, including the supervision of take-off and landing charges. The ORSNA proposes airport charges, which are approved by ANACI and are the same at all airports. Nevertheless, while domestic flights are charged in local currency, international flights are charged in U.S. dollars. Since the late-90s, a number of Argentinean airports have been privatized, including Aeroparque and Aeropuerto Internacional de Ezeiza Ministro Pistarini in Buenos Aires, the two most important airports in Argentina. At the privatized airports, the airport administration manages the facilities under the supervision of ANACI and ORSNA.

Environmental and Noise Regulation. There are no material environmental regulations or controls imposed upon airlines, applicable to aircraft, or that otherwise affect us in Argentina, except for environmental laws and regulations of general applicability and noise restriction regulation currently applicable to aircraft in Argentina. Any aircraft operated by an Argentinean airline should comply with certain noise restrictions, specifically with Stage 3 standards, as set forth in chapter 91.805 of the Argentinean civilian aviation regulations (Regulaciones Argentinas de Aviación Civil) referred to in the market as Stage 3 standards. LAN’s fleet already complies with the proposed restrictions so we do not believe that enactment of the proposed standards would impose a material burden on us.

Peru

Aeronautical Regulation

The Peruvian DGAC (“PDGAC”) oversees and regulates the Peruvian aviation industry. The PDGAC reports directly to the Ministry of Transportation and Communications and is responsible for supervising compliance with Peruvian laws and regulations relating to air navigation. In addition, the PDGAC regulates the assignment of national and international routes, and the compliance with certain insurance requirements, and it regulates flight operations, including personnel, aircraft and security standards, air traffic control and airport management. We have obtained and maintain the necessary authorizations from the Peruvian government to conduct flight operations, including authorization and technical operative certificates, the continuation of which is subject to the ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

Peru is a contracting state and a permanent member of the ICAO. The ICAO establishes technical standards for the international aviation industry, which Peruvian authorities have incorporated into Peruvian laws and regulations. In the absence of an applicable Peruvian regulation concerning safety or maintenance, the PDGAC has incorporated by reference the majority of the ICAO’s technical standards. We believe that we are in material compliance with all relevant technical standards.

Route Rights

Domestic Routes. Peruvian airlines are required to obtain permits in connection with carrying passengers or cargo on any domestic routes and to comply with the technical requirements established by the PDGAC. Non-Peruvian airlines are not permitted to provide domestic air service between destinations in Peru.

106

International Routes. As an airline providing services on international routes, Lan Peru is also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Peru and various other countries. There can be no assurance that existing bilateral agreements between Peru and foreign governments will continue, and a modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated between Peru and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain destinations of the former and, in certain cases, to further connect to third-country destinations. In Peru, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. If there is more than one applicant for a route frequency the PDGAC awards it through a public auction for a period of four years. The PDGAC grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails to operate a route for a period of 90 days or more, the PDGAC may terminate its rights to that route, although that has never happened in practice.

Airfare Pricing Policy. Peruvian airlines are permitted to establish their own domestic and international fares without government regulation, as long as they do not abuse any dominant market position they may enjoy. For more information, see “–Antitrust Regulation” below. Airlines or other interested parties may file complaints before the Institute for Protection of Fair Competition and Consumer Rights (“Indecopi”) with respect to monopolistic or other pricing practices by other airlines that violate Peru’s antitrust laws.

Registration of Aircraft. Aircraft registration in Peru is governed by the Peruvian Civil Aviation Law. In order to own and register a Peruvian aircraft, the following conditions shall apply:

• In case of a natural person, the owner shall be a Peruvian citizen; or in case of a foreign person, the owner shall be permanently domiciled in Peru; or

• In case of a legal entity, it shall be incorporated in and having its domicile and principal place of business in Peru among other requirements established in article 47 of the Peruvian Civil Aviation Law.

• Aircraft owned by non-Peruvians citizens or entities with domicile in Peru may also be registered in Peru but only if the aircraft is used for general, not commercial aviation. Registration of any aircraft can be cancelled if it is not in compliance with the requirements for registration mentioned above and, in particular, if the aircraft does not comply with any applicable safety requirements specified by the PDGAC.

Safety. Peruvian law allows the use of aircraft that are registered either with the PDGAC or with an equivalent supervisory body in a country other than Peru. All aircraft must have a valid certificate of airworthiness issued by either the PDGAC or an equivalent non-Peruvian supervisory entity. In addition, the PDGAC will issue maintenance permits to a Peruvian airline as long as the PDGAC has assessed the airline’s maintenance capabilities. The PDGAC has approved our maintenance operations. Only PDGAC-certified maintenance facilities or facilities certified by an equivalent non-Peruvian supervisory body in the country where the aircraft is registered may maintain and repair the aircraft operated by Peruvian airlines. Aircraft maintenance personnel at such facilities must also be certified either by the PDGAC or an equivalent non-Peruvian supervisory body before be appointed to any aircraft maintenance positions.

Security. The PDGAC establishes and supervises the implementation of security standards and regulations for the Peruvian commercial aviation industry. Such standards and regulations are based on standards developed by international commercial aviation organizations. Each airline and airport in Peru must submit an aviation security handbook to the PDGAC describing its security procedures for the day-to-day operations of commercial aviation and procedures for staff security training. Lan Peru has submitted its aviation security handbook to the PDGAC. Peruvian airlines that operate international routes must also adopt security measures in accordance with the requirements of applicable bilateral international agreements.

107

Airport Policy. CORPAC supervises and manages airports in Peru, including the supervision of take-off and landing charges. CORPAC sets airport charges for navigation facilities, which may differ from airport to airport. Since the mid-90s, a number of Peruvian airports have been privatized, including the Aeropuerto Internacional Jorge Chávez in Lima. At the privatized airports, the airport administration manages the facilities under the supervision of the Organismo Supervisor de la Inversión en Infraestructura de Transporte de Uso Público, (the Supervising Agency of Investment in Public Transport Infrastructure Facilities or “OSITRAN”), an independent regulatory and supervising entity.

Environmental and Noise Regulation. There are no specific material environmental regulations or controls imposed upon airlines, applicable to aircraft, or that otherwise materially affect us in Peru, except for environmental laws and regulations of general applicability. There are noise restriction regulations currently applicable to aircraft in Peru. LAN’s fleet complies with the proposed restrictions so they do not impose a material burden on us.

Ecuador

Aeronautical Regulation

There are two institutions that control commercial aviation on behalf of the State: (i) The National Civil Aviation Board (“CNAC”), which directs aviation policy; and (ii) the General Civil Aviation Bureau (“EDGAC”), which is a technical regulatory and control agency. The CNAC issues operating permits and grants operating concessions to national and international airlines. It also issues opinions on bilateral and multilateral air transportation treaties, allocates routes and traffic rights, and approves joint operating agreements such as wet leases and shared codes.

Fundamentally, the EDGAC is responsible for:

• ensuring that the national standards and technical regulations and international ICAO standards and regulations are observed;

• keeping records on insurance, airworthiness and licenses of Ecuadorian civil aircraft;

• maintaining the National Aircraft Registry;

• issuing licenses to crews; and

• controlling air traffic control inside domestic air space.

The EDGAC also must comply with the standards and recommended methods of the ICAO since Ecuador is a signatory of the 1944 Chicago Convention.

Route Rights

Domestic Routes. Airlines must obtain authorization from CNAC (an operating permit or concession) to provide air transportation. For domestic operations, only companies incorporated in Ecuador can operate locally, and only Ecuadorian-licensed aircraft and dry leases are authorized to operate domestically.

International Routes. Permits for international operations are based on air transportation treaties signed by Ecuador or, otherwise, the principle of reciprocity is applied. All airlines doing business in Latin America that are incorporated in countries that are members of the Comunidad Andina de Naciones (the Andean Community, or “CAN”) obtain their traffic rights on the basis of decisions currently in force under that regime, in particular decision N°582 of 2004, which guarantee free access to markets, with no type of restriction except technical considerations.

Shared codes are allowed in Ecuador after authorization by the CNAC, but the respective airlines must have the relevant traffic rights.

108

Airfare Pricing Policy. On October 13, 2011, The Statutory Law of Regulation and Control of the Market Power was passed with a purpose to avoid, prevent, correct, eliminate and sanction the abuse of economic operators with market power, as well as to sanction restrictive, disloyal and agreements involving collusive practices. This Law creates a new public entity as the maximum authority of application and establishes the procedures of investigation and the applicable sanctions, which are severe. Rates are not regulated and are subject only to registration. In general, bilateral treaties regarding air transportation provide for airfares to be regulated by the regulation of the country of origin.

Registration of Aircraft. The legislation allows Ecuadorian companies to provide international air transportation services using aircraft licensed in Ecuador and aircraft with a foreign license, always provided the latter are exploited under dry leases. For domestic operations, aircraft is authorized only pursuant to dry leases and Ecuadorian registration. Aircraft interchange agreements are also allowed for international operations, provided that the aviation authority can confirm that the aircraft is under the operational control of an Ecuadorian operator. Wet leases are permitted, but very restricted.

Safety. In order to ensure aviation safety, the EDGAC requires that the airline hold an Air Operator Certificate and have Operating Specifications that are examined technically and rigorously to ensure compliance with the Civil Aviation Technical Regulations, which are essentially the same as the Federal Aviation Regulations (“FAR”) of the FAA. They cover matters of aircraft airworthiness, certification of maintenance facilities, and oversight by the EDGAC.

Security. The governing rules also apply to security in respect of the EDGAC. There are regulations, manuals and procedures on airport security overseen by the EDGAC.

Airport Policy. The international airports in Quito and Guayaquil are managed under administrative concessions, and the EDGAC merely controls air traffic. Fees for the use of airport facilities, terminal fees, landing fees, parking fees are all overseen and collected by the operator. Over-flight and approach fees are controlled and collected by the EDGAC.

Environmental and Noise Regulation. Aircraft must comply with the standards of category 3 under Ecuadorian applicable noise regulations, as set forth in Executive Decree (Decreto Ejecutivo) 1,405, enacted on October 24,2008, which provides certain technical specific criteria. Beginning in May 2010, aircraft must comply with standards of category 4 under cited regulation. Category 3 provides for compliance with ICAO regulations and technical conditions mandatory in the United States of America.

United States of America

Aeronautical Regulation

Operations to and from the United States by non-U.S. airlines, such as Lan Airlines, are subject to Title 49 of the U.S. Code, under which the Department of Transportation (“DOT”) and the FAA exercise regulatory authority. The DOT has jurisdiction over international aviation in connection with the United States, subject to review by the President of the United States. The DOT also has jurisdiction with respect to unfair practices and methods of competition by airlines and related consumer protection matters. The U.S. DOJ also has jurisdiction over airline competition matters under the U.S. federal antitrust laws. Flight operations between Chile and the United States by airlines licensed by either country are governed generally by the open skies air transport agreement that Chile and the United States signed in October 1997. Under the open skies agreement, there are no restrictions on the number of destinations or flights that either a U.S. or a Chilean airline may operate between the two countries or on the number of U.S. and Chilean airlines that may operate.

Authorizations and Licenses

Lan Airlines is authorized by the DOT to engage in scheduled and charter air transportation services, including the transportation of persons, property (cargo) and mail, or combinations thereof, between points in Chile and points in the United States and beyond (via intermediate points in other countries). Lan Airlines holds the necessary

109

authorizations from the DOT in the form of a foreign air carrier permit, Exemption Authorizations and Statements of Authorization to conduct current operations to and from the United States. Exemptions and Statements of Authorization are temporary in nature and are subject to renewal and therefore there can be no assurance that any particular exemption or statement of authorization will be renewed. Lan Airlines’ foreign air carrier permit has no expiration date, while a renewal of the exemption authorization (which includes the open skies traffic rights) was timely filed and the Authority was automatically extended until such time as the DOT issues the renewal order. Lan Airlines intends to request the inclusion of the open skies rights into our foreign air carrier permit, which would eliminate our need to renew the exemption authority in the future.

The FAA is engaged in the regulation with respect to safety matters, including aircraft maintenance and operations, equipment, aircraft noise, ground facilities, dispatch, communications, personnel, training, weather observation and other matters affecting air safety. The FAA requires each foreign air carrier to obtain certain operations specifications that authorize it to operate to particular airports on approved international routes using specified equipment. Lan Airlines currently holds FAA operations specifications under Part 129 of the FAR in compliance in all material respects with all requirements necessary to maintain in good standing of its operations specifications issued by the FAA. The FAA can amend, suspend, revoke or terminate those specifications, or can suspend temporarily or revoke permanently our authority if an airline fails to comply with the regulations, and can assess civil penalties for such failure. A modification, suspension or revocation of any of our DOT authorizations or FAA operations specifications could have a material adverse effect on our business.

The FAA also conducts safety audits and has the power to impose fines and other sanctions for violations of airline safety regulations. We have not incurred any material fines related to operations.

Certain Regulatory Authorizations in Connection with Strategic Alliances

The alliance between Lan Airlines and American Airlines includes three major components: a frequent flyer agreement, a reciprocal code-share agreement and the coordination of pricing, scheduling and other functions. The last two of these items required the approval of regulatory authorities in both Chile and the United States. With respect to the code-share agreement, the open skies agreement between Chile and the United States expressly permits code-sharing operations by U.S. and Chilean airlines. With regard to the coordination of pricing and scheduling, Lan Airlines and American Airlines filed a joint application with the DOT in December 1997, requesting approval of their alliance agreement and immunity from the application of all U.S. antitrust laws pursuant to Title 49 of the U.S. Code. Lan Airlines and American Airlines received approval and antitrust immunity from the DOT in September 1999, and implemented the code-share agreement in October 1999. In accordance with the terms of the DOT’s 1999 approval, Lan Airlines and American Airlines were required to resubmit their alliance agreement to the DOT for review within three years after the DOT’s grant of approval. Lan Airlines and American Airlines resubmitted the agreement in September 2002 and did not receive any comments from the DOT.

Lan Peru was granted antitrust immunity by the DOT on October 13, 2005 with respect to the alliance agreements and other agreements incorporated therein (i.e., the reciprocal code-share agreements, among others) with Lan Airlines and American Airlines. In accordance with the terms of the DOT’s 2005 approval, Lan Airlines, Lan Peru and American Airlines resubmitted their alliance agreement to the DOT for review in October 2010.

Security. On November 19, 2001, the Congress of the United States passed, and the President signed into law, the Aviation and Transportation Security Act, also referred to as the Aviation Security Act. This law federalized substantially all aspects of civil aviation security and created the Transportation Security Administration (“TSA”), which took over security responsibilities previously held by the FAA. The TSA is an agency of the U.S. Department of Homeland Security. The Aviation Security Act requires, among other things, the implementation of certain security measures by airlines and airports, such as the requirement that all passenger bags be screened for explosives. Funding for airline and airport security required under the Aviation Security Act is provided in part by a US$2.50 per segment passenger security fee, subject to a US$10 per roundtrip cap; however, airlines are responsible for costs in excess of this fee. Implementation of the requirements of the Aviation Security Act has resulted in increased costs for airlines and their passengers. Since the events of September 11, 2001, Congress has mandated and the TSA has implemented numerous security procedures and requirements that have imposed and will continue to impose burdens on airlines, passengers and shippers.

110

Noise Restrictions. Under the Airport Noise and Capacity Act of 1990 (“ANCA”), and related FAA regulations, aircraft that fly to the United States must comply with certain Stage 3 noise restrictions, which are currently the most stringent FAA noise requirements. All of our aircraft that fly to the United States meet the Stage 3 requirements.

Under the direction of the ICAO, governments are considering the creation of a new and more stringent noise standard than that contained in the ANCA. The ICAO adopted new noise standards in 2001 that established more stringent noise requirements for aircraft manufactured after January 1, 2006. In the U.S., legislation known as the “Vision 100—Century of Aviation Reauthorization Act,” which was signed into law in December 2003, required the FAA to issue regulations implementing Stage 4 noise standards consistent with recommendations adopted by the ICAO. FAA regulations require all aircraft designed and certified after January 1, 2006 to comply with Stage 4 noise restrictions.

FAA regulations also require compliance with the Traffic Alert and Collision Avoidance System, approved airborne wind shear warning system and aging aircraft regulations. Our entire fleet meets these requirements.

Brazil

Aeronautical Regulation

The Brazilian aviation industry is regulated and overseen by the ANAC. The ANAC reports directly to the Civil Aviation Secretary, which is subordinated by the Federal Executive Power of this country. Primarily on the basis of Law No. 11.182/2005, ANAC was created to regulate commercial aviation, air navigation, the assignment of domestic and international routes, compliance with certain insurance requirements, flight operations, including personnel, aircraft and security standards, air traffic control, in this case sharing it activities and responsibilities with the Departamento de Controle do Espaço Aéreo (Department of Airspace Control) (“DECEA”), which is a public secretary also subordinated to the Brazilian Defense Ministry, and airport management, in this last case sharing responsibilities with the Empresa Brasileira de Infra-Estrutura Aeroportuária (the Brazilian Airport Infrastructure Company, or “INFRAERO”), a public company that was created by Law No. 5862/72, and is responsible for administrating, operating and exploring Brazilian airports industrially and commercially.

We have obtained and maintain the necessary authority from the Brazilian government to conduct flight operations, including authorization and technical operative certificates from ANAC, the continuation of which is subject to ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

ANAC is the Brazilian civil aviation authority and it is responsible for supervising compliance with Brazilian laws and regulations relating to air navigation. Brazil is a contracting state and a permanent member of the ICAO. The ICAO establishes technical standards for the international aviation industry, which Brazilian authorities, represented by the Brazilian Defense Ministry, have incorporated into Brazilian laws and regulations. In the absence of an applicable Brazilian regulation concerning safety or maintenance, ANAC has incorporated by reference the majority of the ICAO’s technical standards.

Route Rights

Domestic Routes. Brazilian airlines are not required to obtain permits in connection with domestic passenger or cargo transportation, but only to comply with the technical requirements established by ANAC. Based on the Brazilian Aeronautical Code (“CBA”) established by Law No. 7.565/86, non-Brazilian airlines are not permitted to provide domestic air service between destinations in Brazil. The same law prevents a foreign airline from creating a Brazilian subsidiary and entering the Brazilian domestic market using that subsidiary.

International Routes. Brazilian and non-Brazilian airlines providing services on international routes are also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Brazil and various other countries. International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated between Brazil and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one

111

or more of its domestic airlines to operate scheduled services to certain destinations of the former and, in certain cases, to further connect to third-country destinations. In Brazil, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. If there is more than one applicant for a route frequency ANAC must carry out a public bid and award it to the elected airline. ANAC grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails to operate a route for a period of six months or more, ANAC may terminate its rights to that route. ANAC may also terminate its right if the recipient airline does not operate at least 80% of the frequency given for that specific route.

Airfare Pricing Policy. Brazilian and non-Brazilian airlines are permitted to establish their own international and domestic fares, in this last case only for Brazilian airlines, without government regulation, as long as they do not abuse any dominant market position they may enjoy. Airlines may file complaints before the Antitrust Court with respect to monopolistic or other pricing practices by other airlines that violate Brazil’s antitrust laws.

Registration of Aircraft. Aircraft registration in Brazil is managed by ANAC, which maintains the Brazilian Aeronautical Register, as regulated by the CBA. The CBA allows ANAC to permit registration of aircraft belonging to Brazilian and non-Brazilian individuals.

Safety. ANAC requires that all Brazilian aircraft must have a valid certificate of airworthiness issued by ANAC. In addition, ANAC will not issue maintenance permits to a Brazilian airline until it has assessed the airline’s maintenance capabilities. ANAC renews maintenance permits annually, and has approved our maintenance operations. Only ANAC certifies aircraft maintenance services and its personnel.

Security. ANAC establishes and supervises the implementation of security standards and regulations for the Brazilian commercial aviation industry. Such standards and regulations are based on standards developed by international commercial aviation organizations. Each airline and airport in Brazil must submit an aviation security handbook to ANAC describing its security procedures for the day-to-day operations of commercial aviation and procedures for staff security training.

Brazilian Airport Policy. INFRAERO supervises and manages airports in Brazil, including the supervision of take-off and landing charges. INFRAERO proposes airport charges, which are approved by ANAC and are the same at all airports. At privatized airports, the airport administration manages the facilities under the supervision of ANAC.

Environmental and Noise Regulation. ANAC coordinates and supervises noise regulations by regulation 121, which established noise restriction applicable to aircraft in Brazil. There are no material environmental regulations or controls imposed specifically upon airlines companies, applicable to aircraft, other than Brazilian general environmental laws and regulations.

Colombia

Aeronautical Regulation

The governmental entity in charge of regulating, directing and supervising the civil aviation is the Aeronáutica Civil (“AC”), a technical agency ascribed to the Ministry of Transportation. The AC is the aeronautical authority for the entire domestic territory, in charge of regulating and supervising the Colombian air space. The AC may interpret, apply and complement all civil aviation and air transportation regulation to ensure compliance with the Colombian Aeronautical Regulations (“RAC”). The AC also grants the necessary permits for air transportation.

Route Rights

The AC grants operation permits to domestic and foreign carrier that intend to operate in, from and to Colombia. In the case of Colombian airlines in order to obtain the operational permit the company must comply with the RAC and fulfill legal, economic and technical requirements, to later be subject to public hearings where the public convenience and necessity of the service is considered. The same process must be followed to add national or international routes, whose concession is subject to the bilateral instruments entered into by Colombia. Routes cannot be transferred under any circumstance and there is no limit to foreign investment in domestic airlines.

112

Airfare Pricing Policy. Since July 2007, as stated in resolution 3299 of the Aeronautical Civil entity, bottom level airfares for both international and domestic transportation were eliminated. Under resolution 904 issued in February 2012, the Aeronautical Civil entity decided to liberalize the obligation of charging a fuel surcharge for both domestic and international transportation of passengers and cargo. As of April 1, 2012, air carriers may now freely decide whether or not to charge a fuel surcharge. In the case that it is charged, the fuel surcharge must be part of the fare, but may be informed separately on the tickets, advertising or other methods of marketing used by the company.

In the same line, beginning on April 1, 2012 there will no longer be any restriction on top level fares published by the airlines or with respect to the obligations for air carriers to report to the Aeronautical civil entity the fares and conditions the day after being published.

Administrative fares are not subject to any changes and its charge is an obligation for the transport of passengers under Aeronautical Civil Regulations.

Registration of Aircraft. The AC, through the Office of Aeronautical Registration, is in charge of handling the registration of aircraft that will be operated by Colombian airlines. Registration may be obtained by a registration process fully conducted in Colombia or through the validation in Colombia of a foreign registration. For such registration, the aircraft must be legally imported to the country and inspected by the aeronautical inspectors. This office is also in charge of property registrations, lease contracts and liens of the registered aircraft.

Safety. Aircraft registered in Colombia obtain an airworthiness certificate or a validation of the airworthiness certificate (if they operate under the approval of the foreign registration).

Security. Following the guidelines of the OACI annexes, the AC issued an airport security program that must be strictly complied with by all the aircraft operators in the country as well as by airports.

Environmental and Noise Regulation. In Colombia, only aircraft that comply with category 3 noise limits may operate. There are strict regulations to control noise during takeoffs and landings of the aircraft at the El Dorado Airport in Bogotá due to its location in an urban area.

Antitrust Regulation

The Chilean antitrust authority, which we refer to as the Antitrust Court (previously the Antitrust Commission), oversees antitrust matters, which are governed by Decree Law No. 211 of 1973, as amended, or the Antitrust Law. The Antitrust Law prohibits any entity from preventing, restricting or distorting competition in any market or any part of any market. The Antitrust Law also prohibits any business or businesses that have a dominant position in any market or a substantial part of any market from abusing that dominant position. An aggrieved person may sue for damages arising from a breach of Antitrust Law and/or file a complaint with the Antitrust Court requesting an order to enjoin the violation of the Antitrust Law. The Antitrust Court has the authority to impose a variety of sanctions for violations of the Antitrust Law, including termination of contracts contrary to the Antitrust Law, dissolution of a company and imposition of fines and daily penalties on businesses. Courts may award damages and other remedies (such as an injunction) in appropriate circumstances. Lan Airlines, Lan Express and Lan Cargo must comply with Chilean Antitrust Law that prohibits a carrier from abusing a dominant position in the market. As described above under “Route Rights—Air Fare Pricing Policy,” in October 1997, the Antitrust Court approved a specific self-regulatory fare plan for us consistent with the Antitrust Court’s directive to maintain a competitive environment within the domestic market.

Since October 1997, Lan Airlines and Lan Express follow a self-regulatory plan, which was modified and approved by the Tribunal de la Libre Competencia (the Competition Court) in July 2005. In February 2010, the Fiscalía Nacional Economica (the National Economic Prosecutor’s Office) finalized the investigation initiated in 2007 regarding our compliance with this self-regulatory plan and no further observations were made.

113

For more recent information regarding regulatory proceedings see “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Legal and Arbitration Proceedings”.

C. ORGANIZATIONAL STRUCTURE

LAN is a company primarily involved in the transportation of passengers and cargo. Our operations are carried out principally by Lan Airlines and also by a number of different subsidiaries. As of February 29, 2012, in the passenger business we operated through six main airlines: Lan Airlines, Transporte Aéreo S.A. (which does business under the name “Lan Express”), Lan Perú S.A. (“Lan Peru”), Aerolane Líneas Aéreas Nacionales del Ecuador S.A. (“Lan Ecuador”), Lan Argentina S.A. (“Lan Argentina,” previously Aero 2000 S.A.) and Lan Colombia S.A. (“Lan Colombia”) previously denominated Aerovías de Integración Regional, Aires S.A. (“Aires”).

In the passenger business we market our sales primarily under the “LAN” brand”. As of February 29, 2012 we held a 99.90% stake in Lan Express through direct and indirect interests, a 69.98% stake in Lan Peru through direct and indirect interests, a 71.95% indirect stake in Lan Ecuador, a 94.99% indirect stake in Lan Argentina and a 98.21% indirect stake in Lan Colombia.

Our cargo operations are carried out by a number of companies, including Lan Airlines and Lan Cargo. Lan Airlines and Lan Cargo are complemented by the operations of certain related companies, such as Aero Transportes Mas de Carga S.A. de C.V. (“MasAir”), in Mexico, Aerolinhas Brasileiras S.A. (“ABSA”), in Brazil and Linea Aérea Carguera de Colombia S.A. (“Lanco”), in Colombia. As of February 29, 2012, we held a 69.08% stake in MasAir through direct and indirect participations, a 73.26% stake in ABSA through direct and indirect participations, and a 89.90% stake in LANCO through direct and indirect participations. In the cargo business, we market ourselves primarily under the Lan Cargo brand.

In addition to our air transportation activities, we provide a series of ancillary services. We offer handling services, courier services and logistics, small package and express door-to-door services through Lan Airlines and various subsidiaries.

D. PROPERTY, PLANTS AND EQUIPMENT

Headquarters

Our main facilities are located on approximately five acres of land that we own near the Comodoro Arturo Merino Benítez International Airport. The complex includes approximately 150,695 square feet of office space, 32,292 square feet of conference space and training facilities, 9,688 square feet of dining facilities and mock-up cabins used for crew instruction. In 2004, we adapted part of this building to meet our expanding training needs. This process included developing new rooms for technical instruction, in-flight and airport services.

During the fourth quarter of 2003, we moved some of our executive offices into a new building in a more central location in Santiago, Chile, where we initially occupied a total of four floors owned by LAN. In the first half of 2005 we added three more floors to accommodate our growth requirements. These floors are also owned by LAN. In 2007, in order to accommodate the Company’s growth, LAN leased two floors in an adjacent building (totaling 18,298 square feet), where some of LAN staff moved in February 2008. We have leased these additional floors since 2007, under a 5-year lease at a rate of approximately US$46,400 per month. In 2009, to respond to the Company’s growth, LAN leased two additional floors in this building (totaling 12,917 square feet). We have leased these additional floors since 2009, under a 3-year lease at a rate of approximately US$26,800 per month. In 2010, new offices were leased east of Santiago to allow for Company growth and to implement projects such as “Host,” which involves changing our system of reservations, sales, inventory and passenger check-in. We have leased these additional offices since 2010, under a 4-year lease at a rate of approximately US$35,000 per month. These additional offices add a total of 19,913 square feet to LAN’s property.

Furthermore, during 2011 we added to our facilities a new 11,840 square feet floor at the Arrau Building located in Santiago, Chile, which we lease for the new facilities of LAN Cargo. We have leased this floor since 2011, under a 3-year lease at a rate of approximately US$29,600 per month.

114

Maintenance Base

Our 877,258 square feet maintenance base is located on a site that we own inside the grounds of the Comodoro Arturo Merino Benítez International Airport. This facility contains our aircraft hangar, warehouses, workshops and offices, as well as a 559,720 square feet aircraft parking area capable of accommodating up to seventeen short-haul aircraft. We have a five-floor, 53,820 square feet office building plus a 10,000 square feet office and workshop space. This facility is certified by several civil aviation authorities, including the United States’ FAA. As such, we are permitted to perform maintenance work for third parties at the facility. The FAA periodically inspects the facility to ensure its compliance with FAA standards. In 2005, we finalized the construction of an additional hangar, as well as 75,000 square feet of aircraft parking space, for US$2.1 million. During 2006 we started a new investment plan at this facility that included building 64,580 square feet of additional aircraft parking space, a new 15,340 square feet building for offices and maintenance shops, a new 16,680 square feet engine shop and storage facility, and additional warehousing and external work space. The plan also included the upgrade of some of the current facilities, increasing parking space and building a new access road. Furthermore, in 2006 we completed the construction of an engine workshop with eight workstations and capacity for 36 engines, for a total investment of US$820,000. We also lease from the DGAC 193,750 square feet of space inside the Comodoro Arturo Merino Benítez International Airport for operational and service purposes. Our lease has a duration of 14 years at a rate of approximately US$42,000 per month.

In 2007, LAN approved a two-year capital expenditures plan earmarking approximately US$7.0 million for preparing our buildings and plants for the future growth of the Company and of its fleet.

During 2008, LAN finalized the construction of a 4,300 square feet warehouse especially designed for the storage of oil and flammable supplies, which complies with all the security standards required for its operation. We also upgraded some facilities such as bathrooms and dressing rooms in our maintenance base increasing the total area in 15,000 square feet.

During 2009, LAN finalized the construction of a new five-story building located in our maintenance base, which has a total surface of 49,500 square feet and represented an investment of US$5.8 million. This building has new workshops, a new food court with capacity for over 2,500 people in different shifts, two floors of new offices and meeting rooms.

Also, during 2009, LAN finalized the extension of the engine workshop, which added 900 square feet and represented an investment of US$0.5 million. This extension will be used mainly for the Boeing 777’s engine maintenance.

During 2010, LAN remodeled portions of the administrative offices in the Mario Bontempi Building and the Luis Ernesto Videla Building, which are located within the Company’s maintenance base on the ground of the Comodoro Arturo Merino Benitez International Airport.

Miami Facilities

We occupy a 36.3-acre site at the Miami International Airport that has been leased to us by the airport under a concession agreement. Our facilities include a 48,000 square feet corporate building, a 380,000 square feet cargo warehouse and a 783,000 square feet aircraft-parking platform, which were constructed and are now leased to us under a long-term contract by a North American developer. We began using these new facilities in September 2001 for our passenger and cargo offices (with the exception of our reservations and ticket offices). We converted 21,528 square feet of the warehouse into fully furnished offices during 2004. The consideration we pay for the use of this space is approximately US$735,000 per month.

During 2009, LAN began the extension of the cooling area in the cargo warehouse. This extension added 30,000 square feet and represented an investment of US$4.0 million. This extension was inaugurated on April 20, 2010.

115

During 2010, LAN signed a concession agreement with the AMB Property Corporation to add a new cargo warehouse for additional areas for future developments. Our concession has a duration of 5 years at a rate of approximately US$215,000 per month.

Other Facilities

We own a building and sixteen acres of land on the west side of the Comodoro Arturo Merino Benítez International Airport that houses a flight-training center. As of February 29, 2011, this facility features three full-flight simulators for Boeing 767, Airbus A320 and Boeing 737 aircraft. We leased this flight-training center under a long-term lease to CAE Inc. (a leading Canadian company in the flight training business) at a rate of approximately US$18,000 per month. These full-flight simulators were expanded during the second semester of 2011. We own a 661,980-square feet warehouse in Santiago, which includes 91,493 square feet of space for offices and other administrative facilities and 45,000 square feet distribution center. LAN currently leases the property to Blue Express, former subsidiaries of LAN that were sold on April 6, 2011 to Bethia.

In 2004, Fast Air Almacenes de Carga S.A. (“Fast Air”), one of our subsidiaries that operate import customs warehouses, began utilizing an import warehouse and office building at the Comodoro Arturo Merino Benítez International Airport. This 172,000 square feet building was developed in conjunction with two other operators. We have leased these facilities from 2004, under a 9-year lease at a rate of approximately US$200,000 per month.

We have also developed a recreational facility for our employees with Airbus’ support. The facility, denominated “Parque LAN,” is located in land that we own near the Comodoro Arturo Merino Benítez International Airport. Parque LAN includes amenities such as a gymnasium, synthetic fields for multiple uses and swimming pools.

During 2008, we acquired a 43,000 square feet piece of land in Chile, which represented a US$12 million investment, for the purpose of constructing our new corporate building.

During 2008, we acquired a 161,000 square feet piece of land near the Lima airport, which will host new facilities for the Company. Currently, the construction of this building is on-hold. In March 2009, we began the construction of a new maintenance base in Argentina. The project included a new hangar of 26,900 square feet with 9,600 square feet of offices, 1,070 square feet of workshops and an exterior platform of 5,300 square feet. This project comprised a US$3.2 million investment and was completed in 2009.

116

ITEM 4A UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

You should read the following discussion of our financial condition and results of operations together with our audited consolidated financial statements and the accompanying notes beginning on page F-13 of this annual report.

The summary consolidated annual financial information as of December 31, 2009, 2010 and 2011 and for the years ended December 31, 2009, 2010 and 2011, has been prepared in accordance with IFRS and has been derived from our audited consolidated annual financial statements included in this annual report.

Overview

The principal and most distinctive aspect of our business model is the way in which we integrate our passenger and cargo activities. Our sophisticated service-oriented approach to combining passenger and cargo traffic enables us to better utilize our aircraft, reduce our break-even load factors on passenger flights, and diversify our revenue streams. Furthermore, the geographically diversified nature of the passenger and cargo networks of LAN and its subsidiaries provide additional diversification in our operations and reduce exposure to any single market. These benefits have helped us maintain strong profitability and expand our operations consistently in recent years, despite volatile macroeconomic conditions and various external shocks that have affected the airline industry over the years.

Approximately 98% of our revenues are generated by our air transport activities. We generate the balance of our operating revenues from tour operator services, aircraft leases, on-board sales, third-party maintenance, ground handling, customs and storage brokerage operations and the divested courier unit which was sold in April 2011.

Our operating environment in 2011 was marked by continued growth in both cargo and passenger operations compared with 2010, coupled with fuel price increases which impacted our operating costs and to a lesser extent influenced the increase in yields. The Company demonstrated its ability to manage higher fuel prices through its fuel surcharge policy and financial hedging strategy in addition to tactical capacity adjustments on certain routes. Additionally our operations were impacted by the volcanic ash cloud resulting from the eruption of the Puyehue volcano in the south of Chile that took place from the second quarter 2011 and appeared in a discontinuous manner throughout the remaining part of the year. Costs were also impacted by the consolidation of LAN’s Colombian operations starting in January 2011, and one-time costs related to the startup and turnaround of Aires’ operations, which generated an operating loss of US$51.7 million in 2011.

During 2011, growth in passenger demand was driven by growth in both domestic and international markets in the region. Latin America continues to show strong traffic growth on international and domestic routes, supported by robust economic conditions in LAN’s home markets. Similarly during this period, cargo demand in the region showed solid growth as a result of continued trade activity mainly supported by markets such as Brazil, in which currency appreciation has a positive impact on trade imports. While competition on both passenger and cargo routes has grown gradually since 2006, during this period the growth of import flows to Latin America continued. Weaker cargo markets globally have driven additional competition to South America, especially Brazil, and have also resulted in higher competitive activity within the region. On the other hand, export volumes in Chile have recovered, partly driven by the gradual resurgence of salmon exports. Changes in competitive conditions in specific markets still generate opportunities for us to expand. Certain factors outside of our control, such as fuel prices that have risen consistently since 2002, and reached historically record-high levels in mid-2008, have also generated significant cost pressures. During 2011, fuel prices again increased as compared to 2010.

Our results for the period between 2010 and 2011 reflect our efforts in recent years to expand and diversify our revenue base while maintaining an efficient cost base. We have aimed to effectively respond to the opportunities and challenges presented by the expansion and diversification of our revenue base. This process included continuing the

117

expansion of our domestic passenger operations in Chile, Peru, Argentina and Ecuador and starting passenger operations in Colombia through the purchase of Aires in November 2010. As a result, we have significantly increased our passenger capacity and redeployed our assets in response to specific opportunities. In the cargo business, we have adjusted our routes and our capacity mix to adapt to changing cargo flows and we have expanded cargo operations within the region and on long haul routes to take advantage of existing opportunities. We have also launched initiatives to enhance customer preference and increase efficiency. These initiatives have enabled us to maintain a solid market position and to develop new mechanisms to sustain high levels of profitability despite facing unprecedented high fuel prices during 2008, the negative effects of the global economic crisis during 2009, and natural disasters such as the earthquake and volcano eruption in Chile during 2010 and 2011, respectively. As a result, net income amounted to US$336.5 million in 2008, US$231.1 million in 2009, US$419.7 million in 2010 and US$320.2 million in 2011.

Our operating results during 2011 evidenced our ability to leverage continued growth opportunities in both cargo and passenger markets, enhancing our leadership position in Latin America and reflecting our ability to face and mitigate impacts of adverse scenarios such as fuel price volatility and natural disasters. Based on our diversified, solid and flexible business model, as well as our consistent track record and solid balance sheet, we are continuously improving the Company’s long-term strategic position by addressing opportunities, strengthening our market presence and increasing competitiveness.

Passenger Operations

In general, our passenger revenues are driven by international and country-specific political and economic conditions, competitive activity, the attractiveness of the destinations that we serve, and the capacity we allocate among our different routes.

Passenger demand has grown in the last years, driven by positive economic conditions in Latin America. Economic growth and improved customer confidence have led to an expansion in both business and leisure traffic to and from Latin America. Increased interest in travel into South America from Europe and the United States has been another factor positively impacting overall passenger traffic. As a consequence, passenger volumes in markets such as Chile, Peru, Argentina and Ecuador grew significantly between 2010 and 2011. LAN’s traffic growth during 2011, which reached 15.9%, was also based on a capacity expansion plan driven by the net delivery of eighteen new passenger aircraft during the year plus the incorporation of Colombian operations through the Aires acquisition, which contributed approximately 4.5% to our total capacity measured by ASKs.

Competitive activity on both our domestic and international passenger routes has also varied over the last several years. On our international routes, competition gradually increased as both incumbent and new competitors expanded their operations. Nevertheless, we have maintained our market share in most of our international markets since 2005 and have gradually increased our presence in the domestic markets of Chile and Argentina, as well as in international routes. We also initiated domestic operations in Ecuador in April 2009 and in Colombia, through the acquisition of Aires in November 2010. In December 2011 Aires was rebranded as LAN Colombia.

During 2011 the combined yield for the international and domestic passenger businesses increased 11.2%, reflecting the strong demand and increase in fuel surcharges, in line with the increase of WTI prices and the crack spread. The growth rates in traffic and capacity in 2011 included inorganic growth resulting from the inclusion of LAN Colombia’s domestic and international operations, partially offset by the volcanic ash cloud that disrupted air traffic throughout the region.

During 2010 the combined yield for the international and domestic passenger businesses experienced a 6.8% increase, reflecting the recovery and growth in demand experienced in 2010 against 2009 when yields experienced a 16.2% decrease compared with 2008, as a result of the economic crisis that affected passenger demand for air flights in 2009 and a high comparison base in 2008 as fuel surcharges incorporated in the yields drove the increase in fuel prices during that year.

Overall, despite adverse and uncontrollable factors such as fuel prices increase and natural disasters, market conditions on the passenger business provided us with opportunities to advance on our strategic development plans and expand our operations. We addressed these by taking advantage of our integrated business model, efficient operations, continued customer focus, and flexible capacity management. Customer focus has provided a key tool to address competitive challenges as well as to successfully enter new markets.

118

We also took advantage of our flexibility to adapt capacity quickly in response to demand shocks or market opportunities. We actively manage our capacity by transferring capacity between routes or adding new aircraft when necessary. This enabled us to rapidly respond by adding capacity in the Peruvian domestic market during 2004 and supporting the launch of LAN Argentina’s domestic operations in 2005, as well as launching the latter’s international operations in October 2006, launching domestic operations in Ecuador in April 2009 and launching Colombian domestic operations in November 2010.

These opportunistic actions fit in with our long-term development strategy, which is aimed at consolidating LAN as the preferred carrier in South America. This plan incorporates development of domestic, regional and intercontinental routes in the markets we serve. Continuous monitoring of demand trends and competitive activity has allowed us to identify opportunities and, as a consequence, additional capacity has also been allocated to operations to the South Pacific, Europe and the United States, as well as to specific regional routes. We also shifted capacity among our routes in order to better match seasonal patterns in flights to the United States and to other destinations. Further refinements to our itineraries were also implemented in order to improve connectivity between our operations and those of our partners.

During 2011 we experienced a significant operating impact due to the presence of volcanic ash resulting from the eruption of the Puyehue volcano in southern Chile during the month of June. The displacement of ashes periodically affected operations in Argentina, southern Chile and our South Pacific route to Australia and New Zealand. Although the volcanic activity has been reduced, it is highly unpredictable. Our focus during this emergency was to maintain the safety of our operations, resulting in tactical cancellations on the affected routes based on available information. In addition, our commercial policies have focused on providing maximum flexibility for rescheduling flights, in order to avoid an impact on demand. Overall, we estimate a negative impact of US$36.6 million dollars as a result of decreased revenue, passenger compensations and higher fuel costs due to itinerary changes.

LAN’s flexibility and broad passenger network also allowed us to manage the negative impact of the catastrophic earthquake that struck Chile in February 2010, causing significant damage to the terminal building at the Santiago International Airport and affecting all air travel in and out of the country. With no alternative airport in the Santiago Metropolitan Region, commercial passenger operations were suspended for three days, and were re-launched on March 2, 2010 with provisional facilities. LAN operated with reduced capacity out of Santiago until the terminal building was fully operational on March 28, 2010. LAN estimates the net impact of decreased passenger operations due to the earthquake were approximately US$30 million in 2010. Cargo operations were not materially affected by the earthquake, nor were the passenger operations of LAN or its subsidiaries in Peru, Ecuador and Argentina.

We have also enhanced our regional network by selectively adding new destinations and launching new routes. Since 2004, we have been developing an intra-regional hub in Lima. We have launched several routes that enable us to effectively use Lima as a connecting point for passengers traveling between Mexico City, Bogotá, Caracas, Guayaquil, Quito, Buenos Aires, La Paz, Santa Cruz, Sao Paulo and Santiago de Chile. In 2007, we began direct service between Lima and Madrid; in 2008, we began service to Medellín, Colombia (with one stop in Quito); and in 2009, we began service from Lima to Cali via Quito and from Lima to Punta Cana, Cancun and Cordoba. Regarding long-haul operations, in July 2010, LAN Peru launched four weekly frequencies between Lima and San Francisco, with connections from Sao Paulo, Santiago and Buenos Aires. During the first half of 2010 the Company implemented various new passenger destinations. We plan to continue growing our operation in Lima by increasing the number of flight frequencies we operate on these routes as we did during 2011 with Miami and Bogota and also by adding new destinations.

• On May 10, 2010, LAN Argentina launched three daily flights between Santiago and Aeroparque airport in Buenos Aires and in June 2010 it launched services between Aeroparque and Sao Paulo, among others. In December 2011, LAN Argentina’s permits for regional flights from Aeroparque were cancelled by the Argentinean Aeronautical Authority, while the affected flight Buenos Aires – Santiago was reassigned to Ezeiza Airport. In both the Chilean and Peruvian domestic markets, total domestic traffic increased during 2011, driven mainly by the positive macroeconomic scenarios in both markets and by attractive fare structures in line with the model for short-haul operations that we implemented in 2007.

119

• Between 2005 and 2011, LAN Argentina increased the number of Argentine domestic destinations from six to fifteen and, based on internal estimates, our market share was approximately 30% as of December 2011.

• By the end of 2008, Ecuador’s aeronautical authority, CNAC, granted LAN Ecuador permission to operate domestic flights within the country. These operations started in April 2009 with flights between the cities of Quito and Guayaquil. As of December 2011, LAN Ecuador was operating sixty-three flights a week between Guayaquil and Quito, one of the most heavily traveled routes in Latin America, as well as fourteen flights a week from Quito to Cuenca and seven flights a week from Guayaquil to Cuenca. In September 2010, LAN Ecuador launched regular service to the Galapagos Islands, offering a daily flight from both Quito and Guayaquil. Finally, in November 2011, LAN Ecuador incorporated two additional weekly flights to the airport of San Cristobal in the Galapagos Islands. LAN Ecuador had 25.6% market share in the domestic market of Ecuador as of December 2011.

Cargo Operations

Our cargo operations depend on exports from and imports to South America and are, therefore, affected by economic conditions, foreign exchange rates, changes in international trade, the health of particular industries, competition and fuel prices (which we usually pass on to our customers through a cargo fuel surcharge). The relative size of inbound and outbound flows to a particular market or route is a key element in cargo operations as the unidirectional nature of freight flows requires airlines to create routes that combine origin-destination pairs that feature complementary freight flows. Changes in macroeconomic conditions may lead to major fluctuations in cargo flows to and from Latin America, therefore requiring continuous route and capacity adjustments.

The flexibility that this business model allows based on adaptation to changes in market trends was key for LAN’s operations in 2009 when the business was affected by the contraction of import and export markets in response to the global economic crisis. In addition, LAN Cargo saw a sharp drop in salmon exports from Chile as a result of an outbreak of the ISA virus. During 2009 LAN received two Boeing 777 freighters at a time where there was a decrease in demand in cargo operations. These aircraft were utilized to increase capacity, mainly on routes between South America and Europe. Not only did the incorporation of these cargo planes increase capacity, but they also helped the company expand its coverage beyond the region and strengthen its cargo services to Europe; LAN currently operates routes between Frankfurt and Brazil, Argentina and Chile, Ecuador and Colombia and Amsterdam and Frankfurt.

During 2009 the Company achieved an important step in regional expansion. Colombia is Latin America’s largest market for exports by air transport to the United States, exporting an estimated 167,000 tons annually. In March 2009, LAN Cargo launched LANCO, after successfully obtaining the necessary operational and technical certification. It launched its services with two latest-generation Boeing 767-300Fs, with a capacity for 54 tons of freight, connecting the cities of Bogotá and Medellin with Miami.

In addition, in March 2009, the Company’s cargo subsidiary in Brazil, ABSA, began operations in the country’s domestic market, with one flight daily - from Monday to Friday - between the cities of Sao Paulo and Manaus. On this route, ABSA operates an advanced-technology Boeing 767-300F with a capacity of 54 tons. This route accounts for a large part of Brazil’s airfreight traffic. Manaus is the country’s fourth largest city in terms of GDP, with a large number of companies, principally in the electronics sector, in its industrial pole. The special tax incentives offered by the Amazon capital of Manaus as part of efforts to promote the area’s development, make it an attractive alternative for exporter and importer clients. During 2010, the Company opened a route between Sao Paulo and Fortaleza and Sao Paulo and Recife. During 2011 the Company added a route between Sao Paulo, Belem and Manaus.

Regarding the cargo fleet, during 2012, the Company expects delivery of 2 Boeing 777F freighter aircraft during the second half of the year.

120

As the economy started to recover at the end of 2009, and continuing through 2010 and 2011, LAN was able to take advantage of the new capacity and growth opportunities in various markets; as a result, the cargo business played an important role in driving LAN’s revenue growth in 2010 and 2011.

Cargo traffic increased 11.5% between 2010 and 2011, from 3,239 million in cargo revenue ton kilometers in 2010 to 3,612 million cargo revenue ton kilometers in 2011. This improvement was positive compared to the 0.8% decrease experienced by the international air cargo industry, while the Latin-American cargo segment experienced a 1.5% growth. The Company increased its capacity by approximately 12.4%, resulting in a 0.5 point decrease in its load factor to 69.6%. The increase in capacity was mainly driven by LAN’s incorporation of two new Boeing 767-300F freighters in December 2010 and January 2011. These aircraft were assigned to boost growth in the Latin American, United States West Coast and Mexican markets, as well as by higher utilization of the freighter fleet. LAN Cargo transported 875 thousand tons of freight in 2011, an increase of 12.2% as compared to 2010.

In 2011, LAN’s cargo revenues rose in 23.1% to US$1.577 million, representing 27.6% of the Company’s total annual revenues. The growth in revenues also reflects the 10.4% increase in cargo yields that year.

Cost Structure

LAN’s costs are generally driven by the size of our operations, fuel prices, fleet costs and exchange rates.

As an airline, we are subject to fluctuations in costs that are outside our control, particularly fuel prices and exchange rates. However, we manage part of our exposure to changes in fuel prices through a fuel-hedging policy and the use of pass-through mechanisms on both the passenger and cargo businesses. For more information see “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Risk of Fluctuations in Jet Fuel Prices”. Personnel expenses are another significant component of our overall costs. Because a significant portion of our labor costs is denominated in pesos, appreciation of the peso against the dollar as well as increases in local inflation rates can result in increased costs in dollar terms and can negatively affect our results. However, this cost pressure is mitigated by the partial natural hedge between the currencies of denomination of our total operating revenues and expenses.

Commission to travel and cargo agents also compose a significant cost to us. We compete with other airlines over the amount of commission we pay per sale, particularly in connection with special programs and marketing efforts, and to maintain competitive incentives with travel agents. In February 2007 we reduced commission paid to agents in Chile for economy class ticket sales from 6% to 1%. Between 2007 and 2008, commissions were also reduced to 1% in Ecuador, Argentina and Peru.

Fleet related expenses, namely aircraft rentals and depreciation are another significant cost. These costs are mainly fixed and can be reduced on a per unit basis by achieving higher daily aircraft utilization rates.

During 2011, LAN’s operating costs increased in 35.4%, mainly impacted by an increase of 28.8% in fuel prices which led to US$588.1 million in increased fuel expenses and contributed to a 18.0% increase in cost per ATK (a key industry metric). Excluding fuel costs, the increase in cost per ATK over this period was 10.6%. In addition, the Company recognized a US$39.9 million fuel hedge gain compared to a US$1.0 million fuel hedge gain in 2010.

Apart from higher expenditure on fuel, the Company paid higher wages and salaries due to a higher average headcount that is in-line with the Company’s operational expansion, and the impact of the appreciation of Latin American currencies in 2011.

We have launched various efficiency-related initiatives aimed at reducing fuel consumption and increasingly incorporating efficient aircraft into the fleet.

Higher aircraft utilization has been an important source of improved efficiency. Our long-haul passenger and cargo aircraft are used, on average, over 13.0 hours per day (Boeing 767-300 12.8 hrs per day and Airbus A340 14.2 hours per day). Our utilization strategy in 2011 was mostly designed in concert with the addition of new routes to

121

our network, which enabled us to leverage our human and physical assets for increased efficiency as well as increasing frequencies. In domestic operations we have also worked consistently to improve our cost structure. This process has included initiatives such as the modification of short-haul service standards, which were implemented in late 2005 and modified further in 2007 as a result of the new business model on domestic routes, enabling us to reduce passenger service expenses. The key elements of this new business model have been a reduction in sales and distribution costs through higher Internet penetration and reduced agency commission, a faster turnaround time, and increased self check-in service through web check-in and kiosks at airports.

In addition, during 2009 we implemented LEAN, a system for improving our processes by eliminating activities that do not add value to processes (thus increasing the value of each activity and suppressing those that are superfluous), thereby allowing us to reduce costs, and increase customer satisfaction. In addition, during 2011 we continued to install winglets on our Boeing 767 aircraft fleet, achieving fuel efficiencies of approximately 5% per aircraft. To mitigate the environmental impact of our operations we strive to operate in a sustainable manner by reducing our fuel consumption and related emissions.

Outlook

Our long-term strategy is aimed at consolidating LAN’s position as the main passenger and cargo airline in South America. We will continue to expand our network by further developing our existing routes, adding new destinations, developing new alliances, and entering new markets. We expect our brand recognition and a continuous effort to improve service standards to drive increased customer preference, ultimately leading to strong market shares in the markets we serve. Our product and service design is aimed at providing passengers and cargo customers with differentiated offerings that provide valuable solutions to the needs of each of our customer types. We also aim to have products and services that evolve together with changes in technology, market conditions and competitive actions. We plan to maintain a highly competitive cost structure by leveraging our cost-conscious culture, incorporating new technologies and practices, and by identifying and implementing adequate cost-reduction and efficiency-related initiatives. We believe that a focus on flexibility will enable us to adequately react to changing market conditions. Finally, a healthy financial structure will allow us to effectively fund our growth, enhance our strategic development and reinforce our customer appeal.

Our results will be mainly determined by the expansion of our current network, the evolution of our market share in our main markets, our level of success in entering new markets, the continued implementation of new efficiency-related programs, the continued implementation of our business model for short-haul operations, and fuel price levels.

• We plan to increase frequencies on long-haul flights out of Chile, Peru, Ecuador and Argentina, and eventually add new destinations in the United States and Europe. We plan to reinforce our regional network through the addition of new frequencies on our current routes and the addition of new destinations. We plan in a next step to expand international operations through LAN Colombia. As of February 29, 2012, LAN Colombia operates only one international route from El Dorado airport in Bogotá to Miami. We will also seek to enter into new alliances in both the passenger and cargo business, especially to build up our presence in new markets.

• Competitive activity in key markets has increased gradually in recent years, and we expect it to continue doing so in the future. Nevertheless, we expect to maintain solid market shares based on offering attractive value propositions that combine broad international and domestic networks, a strong customer focus and a competitive cost base.

• We are also working on increasing efficiency by streamlining our support processes, reducing commercial costs, and by continuing with the implementation of our new business model on short-haul operations. Further enhancements should arise from economies of scale, especially as solid growth in the passenger business accompanied by controlled fixed costs will serve to dilute our fixed costs base. In both the passenger and the cargo business, efficiencies are also expected to come from the replacement of older aircraft with new and more fuel-efficient Boeing 787 and Boeing 777 models and from efficiency-related initiatives such as installing winglets on the B767 fleet as well as continuing to adjust aircraft configuration to market demand.

122

Our financial performance will also be highly dependent on jet fuel prices. These prices rose significantly until mid-2008, which led to a sharp rise in our fuel expenditures, but significantly declined in 2009. Presently, there is a trend towards increases in jet fuel prices because of the increased demand caused by the 2010 recovery in the global economy coupled with geopolitical conflicts that affected global fuel supply in the last year. Although we have implemented a number of strategies to mitigate the impact of the volatility of fuel prices, including financial hedging, the use of fuel surcharges, and tactical reduction of capacity, it is unlikely that we will be able to fully protect ourselves against the volatility of fuel costs.

Overall, we believe that these initiatives will enable us to successfully respond to growth opportunities, maintain a solid competitive position, and enhance our distinct cost performance.

Results of Operation

The following table sets forth certain income statement data for Lan Airlines.

	Year Ended December 31,
	2011			2010			2009			2011			2010			2009			11/10			10/09
	(in US$ millions, except per share and capital stock data)									As a percentage of total operating revenues									% change
Consolidated Results of Income by Function
Operating revenues
Passenger		4,008.9			3,109.8			2,623.6			71.8			70.8			74.6			28.9			18.5
Cargo		1,576.5			1,280.7			895.6			28.2			29.2			25.4			23.1			43.0
Total operating revenues		5,585.4			4,390.5			3,519.2			100.0			100.0			100.0			27.2			24.8
Cost of sales		(4,078.6	)		(3,012.7	)		(2,522.8	)		(73.0	)		(68.6	)		(71.7	)		35.4			19.4
Gross margin		1,506.8			1,377.8			996.4			27.0			31.4			28.3			9.4			38.3
Other operating income		132.8			132.8			136.4			2.4			3.0			3.9			0.0			(2.6	)
Distribution costs		(479.8	)		(383.5	)		(327.0	)		(8.6	)		(8.7	)		(9.3	)		25.1			17.3
Administrative expenses		(405.7	)		(331.8	)		(269.6	)		(7.3	)		(7.6	)		(7.7	)		22.3			23.1
Other operating expenses		(214.4	)		(172.4	)		(100.5	)		(3.8	)		(3.9	)		(2.9	)		24.4			71.5
Financial Income		14.5			14.9			18.2			0.3			(0.3	)		(0.5	)		(2.7	)		(18.1	)
Financial costs (from non-financial activities)		(139.1	)		(155.3	)		(153.1	)		(2.5	)		(3.5	)		(4.4	)		(10.4	)		1.4
Earning on investments (equity method)		0.5			0.1			0.3			0.0			0.0			0.0			400.0			(66.7	)
Exchange rate differences		(0.3	)		13.8			(11.2	)		0.0			0.3			(0.3	)		(102.2	)		(223.2	)-
Result of indexation units		0.1			0.1			(0.6	)		0.0			0.0			0.0			0.0			(116.7	)-
Negative goodwill		—			—			—			—			0.0			0.0			—			—
Other net earnings (losses)		(33.0	)		5.4			(11.7	)		(0.6	)		1.0			(0.3	)		(711.1	)		(146.2	)-
Income before income taxes		382.4			502.0			277.5			6.8			11.4			7.9			(23.8	)		80.9
Income tax		(61.8	)		(81.1	)		(44.5	)		(1.1	)		(1.8	)		(1.3	)		(23.8	)		82.2
Net income for the period		320.6			420.9			233.0			5.7			9.6			6.6			(23.8	)		80.6
Income for the period attributable to the parent company’s equity holders		320.2			419.7			231.1			5.7			9.6			6.6			(23.7	)		80.6
Income for the period attributable to non-controlling interest		0.4			1.2			1.9			0.0			0.1			0.1			(66.7	)		(36.8	)
Net income for the period		320.6			420.9			233.0			5.7			9.6			6.6			(23.8	)		81.6
Earnings per share
Basic earnings per share (US$)		0.9434			1.2388			0.6822
Diluted earnings per share (US$)		0.9426			1.2353			0.6822

Year ended December 31, 2011 compared to year ended December 31, 2010

Net Income

Net income for the period decreased 23.8% from US$420.9 million in 2010 to US$320.6 million in 2011. Net income attributable to the parent company’s equity holders decreased 23.7% from US$419.7 million in 2010 to

123

US$320.2 million in 2011, mainly due to the impact of the startup of LAN’s operations in Colombia and the volcanic ash cloud that disrupted air traffic throughout the region, which amounted to approximately US$51.7 million and US$36.6 million respectively, as well as 34.2% higher fuel prices, a portion of which was not recovered via the fuel surcharge mechanism.

The revenue increase during 2011 continues to reflect solid demand trends in both passenger and cargo operations. Passenger and cargo revenues accounted for 71.8% and 28.2% of total operating revenues, respectively. Passenger yields increased mainly as a result of an increase in fuel surcharges, in line with the increase of WTI prices and the crack spread.

Passenger traffic and capacity in 2011 included LAN Colombia’s domestic and international operations. Capacity increases focused mainly on domestic routes within Chile, regional routes within Latin America, and long-haul routes to the United States. This expansion was partially offset by decreased capacity on long haul routes to Europe as a result of itinerary changes implemented in 2011, mainly the cancellation of the route between Madrid and Paris in July, 2011.

Operating costs increased mainly due to higher fuel costs of US$454.7 million, reflecting increased consumption of 12.2%, a 28.8% increase after hedges in fuel prices, higher wages and salaries driven by the appreciation of Latin America currencies, and higher headcount resulting from the consolidation of Aires.

Operating Revenues

Operating revenues in 2011 totaled US$5,585.4 million, a 27.2% increase as compared to total operating revenues of US$4,390.5 million in 2010. Our consolidated passenger revenues increased 28.9% to US$4,008.9 million in 2011 from US$3,109.8 million in 2010, due to a 11.2% increase in yields (from US¢9.4 to US¢10.4), and passenger load factors, which increased from 78.3% in 2010 to 79.8% in 2011 as the 15.9% increase in traffic outpaced the 13.7% capacity increase. Overall, revenues per ASK increased 13.4%. Traffic grew as a result of a 23.7% increase in domestic traffic (including domestic operations by LAN and its affiliates in Chile, Argentina, Peru and Ecuador), and a 12.6% increase in international traffic. International traffic accounted for approximately 68.1% of our total passenger traffic during 2011. At system level, yields increased 11.9% as a result of solid demand trends in both passenger and cargo operations that were also affected by fuel surcharges.

Domestic passenger revenues in Chile, Peru, Argentina, Ecuador and Colombia which accounted for approximately 39% of our total passenger revenues in 2011 as compared to approximately 35% in 2010, increased 42.2% to US$1,540.8 million in 2011 from US$1,093.0 million in 2010. Domestic passenger traffic (as measured in RPKs) increased 23.7%, while domestic passenger capacity (as measured in ASKs) increased 23.5%, resulting in a increase in load factor from 77.7% in 2010 to 77.8% in 2011. Domestic passenger yield increased 17.6% from US¢10.8 in 2010 to US¢12.7 in 2011, mainly due to strong increases in traffic and to a lesser extent fuel surcharges.

International passenger revenues, which accounted for approximately 61% of total passenger revenues in 2011 as compared to approximately 65% of passenger revenues in 2010, increased 21.7% to US$2,454.4 million in 2011 from US$2,016.9 million in 2010. International passenger traffic (as measured in RPKs) increased 12.6%, while passenger capacity (as measured in ASKs) increased 9.4% in 2011, resulting in an improvement in load factor from 78.5% in 2010 to 80.8% in 2011. Total international passenger yield (based on RPKs) increased 8.1% to US¢9.4 in 2011 from US¢8.7 in 2010, driven by the inclusion of fuel surcharges and solid demand.

Cargo revenues increased 23.1%, to US$1,576.5 million in 2011 from US$1,280.7 million in 2010, mainly driven by a 10.4% increase in yields (US¢43.6 in 2011 from US¢39.5 in 2010), and coupled with an 11.5% increase in traffic. In 2011, cargo traffic was driven by solid demand in the region reflected in growth in Latin American cargo markets, as well as improved revenue management practices and itinerary optimization. On the other hand capacity increased 12.4% during 2011. As a consequence, load factors decreased from 70.1% in 2010 to 69.6% in 2011, while revenues per ATK increased 9.5% as compared to 2010.

124

Cost of Sales

Cost of sales in 2011 totaled US$4,078.6 million, representing a 35.4 % increase as compared to cost of sales of US$3,012.7 million in 2010. As a percentage of total revenues, cost of sales increased from 68.6% in 2010 to 73.0 % in 2011, mainly as a result of higher fuel prices compared to 2010 and higher costs related to the consolidation of LAN’s Colombian operations.

The increase in cost of sales was driven by higher aircraft fuel expenses, which totaled US$1,750.1 million in 2011, a 50.6% increase as compared to aircraft fuel expenses of US$1,161.9 million in 2010. Fuel expenses increased mainly due to a 37.2% increase in unhedged jet fuel prices (34.2% in the hedged price), coupled with a 12.2% increase in consumption. However, the Company recognized a US$39.9 million fuel hedge gain, compared to a US$1.0 million fuel hedge gain in 2010, resulting in a 28.8% increase in fuel prices after hedges.

Fuel costs comprise the single largest category of our operating expenses. Over the last few years, our fuel consumption and operating expenses have increased due to the significant growth in our operations and to the increase in fuel prices as a result of economic and political factors. In 2011, the foregoing trend was affected by geopolitical instability in the Middle East and the total fuel costs represented 33.8% of our total operating expenses. The into-wing (fuel price plus taxes and transportation costs) 2011 average final price was US$3.11 per gallon, representing a 34.2% increase from the 2010 average.

Depreciation and amortization increased 17.8% mainly due to the incorporation in 2011 under property, plant and equipments of four new Airbus A319, 9 new Airbus A320s, and three Boeing 767-300s and the incorporation of additional aircrafts under operating leases.

Aircraft maintenance expenses increased by 51.2%, from US$120.7 million in 2010 to US$182.4 million in 2011 mainly due to the incorporation of the LAN Colombia´s fleet and the delivery of four Airbus A319 and 13 Airbus A320 passenger aircraft, three Boeing 767-300 passenger aircraft and one Boeing 767-300F freighter. The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.

Aircraft Rentals increased 76.7% due to the incorporation of LAN Colombia’s fleet, consisting of nine Boeing 737-700s, 10 Dash 8-200s and four Dash 8-Q400s. Additionally, this increase considered the incorporation in 2011 of six leased Airbus A320s, and one leased Boeing 767-300F freighter.

Passenger service expenses totaled US$136.0 million in 2011 compared to US$114.2 million in 2010. This represented a 19.1% increase that was driven by a 30.6% increase in the number of passengers transported during the year, as well as higher compensation paid to passengers during this period.

As a result of the above, gross margin increased 9.4% from US$1,377.8 million in 2010 to US$1,506.8 million in 2011.

Other operating income remained stable at to US$132.8 million in 2010 and 2011, where growth in revenues from tours and travel services, duty free sales and maintenance services were offset by the exclusion of revenues from Blue Express, LAN’s logistic and courier subsidiary sold in early April 2011.

Interest income decreased by 2.7% to US$14.5 million in 2011 from US$14.9 million in 2010, due to a lower average cash balance during the period.

Distribution costs increased 25.1% from US$383.5 million in 2010 to US$479.8 million in 2011. This increase was caused by higher overall commissions to agents (related to both passenger and cargo sales), which increased 20.7% to US$209.3 million in 2011 from US$173.4 million in 2010, and by a. 27.2% increase in traffic revenues (passenger and cargo), partially offset by a 0.2 point reduction in average commissions. This reduction was mainly related to lower commissions in the cargo business.

Administrative expenses increased 22.3% from US$331.8 million in 2010 to US$405.7 million in 2011 due to the higher wages of administrative personnel and higher asset (non aircraft) depreciation, as a result of additions in 2010 and 2011.

Other operating expenses increased 24.4% from US$172.4 million in 2010 to US$214.4 million in 2011, as a result of higher sales costs, advertising and marketing expenses and costs related to tours and travel services.

Financial costs (from non-financial activities) decreased by 10.4% to US$139.1 million in 2011 from US$155.3 million in 2010 due to the fact that higher average long-term debt related to fleet financing was offset by the recognition of interest related to the financing of pre-delivery payments (PDPs), in line with the accounting policy regarding these payments (IFRS).

125

Exchange rate differences decreased from a gain of US$13.8 million in 2010 to an expense of US$0.3 million in 2011. The 2010 amount was a result of a recognized US$5.4 million gain that mainly stemmed from foreign exchange variations during the period; part of the exchange gain was a result of remittances from LAN’s operations in Venezuela. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Risk of Variation in Foreign Currency Exchange Rates”, for a discussion of LAN’s hedging program for currency fluctuations. On December 31, 2011, the Company held US$25.9 million in assets located in Venezuela, of which over 92.0% constituted cash equivalents. On a consolidated basis, the Company’s assets related to its operations in Venezuela represented 0.4% of the total assets of the Company. For the year 2011, operating revenues of the Venezuelan regional office represented 1.2% of the Company’s consolidated revenues. In Venezuela, effective 2003, the authorities decreed that all remittances abroad should be approved by the Currency Management Commission (CADIVI). Despite having free availability of bolivares in Venezuela, the Company has certain restrictions for freely remitting these funds outside Venezuela. Since January 2010, exchange rate for Venezuelan Bolivars (VEF) is fixed to 4.3 VEF/US$ .The Company’s operations in Venezuela are carried out through an agency that, from an accounting perspective, is considered an extension of the Company. Therefore, the functional currency is the US dollar and hyperinflationary accounting is not required.

As of December 31, 2010 the Company recorded a US$14.1 million gain (pre-tax) due to the reversal of a portion of the provision related to the investigation in the cargo business carried out by the European Commission. This was as a result of the fine announced in November 2010, which was lower than the amount provided for. This reversal is recorded in Other gains/(losses). (See “Item 4. Information on the Company—Business Overview—Cargo Operations—Cargo-Related Investigations”).

Under other net earnings (losses), the Company recorded a US$33.0 million loss, reflecting the US$66 million charge related to the civil class action in the cargo business, partially offset by the US$45 million gain from the sale of Blue Express. This loss also included a one-time charge of UF 116,091 (US$5.0 million) resulting from a settlement agreement with Chilean airline PAL regarding the pending legal proceeding before the TDLC and their appeal before the Chilean Supreme Court in connection with the merger process between LAN and TAM.

Income tax expenses decreased by 23.8%, amounting to US$61.8 million in 2011 as compared to US$81.1 million in 2010. This decrease was primarily the result of a 23.8% decrease in pre-tax income, For more information, see “—Critical Accounting Policies—Deferred Taxes” below and Note 19 to our audited consolidated financial statements.

Year ended December 31, 2010 compared to year ended December 31, 2009

Net Income

Net income for the period increased 80.6% from US$233.0 million in 2009 to US$420.9 million in 2010. Net income attributable to the parent company’s equity holders increased 81.6% from US$231.1 million in 2009 to US$419.7 million in 2010.

The revenue increase during 2010 was driven by the recovery of the world economy and the strong capacity expansion in both the passenger and cargo businesses. In addition, the traffic increased strongly, driving yields and load factors higher.

Operating costs increased mainly due to higher fuel prices, higher wages and salaries driven by the appreciation of Latin America currencies, as well as higher costs related to ACMI leases in the cargo business.

Operating Revenues

Operating revenues in 2010 totaled US$4,390.5 million, a 24.8% increase as compared to total operating revenues of US$3,519.2 million in 2009. Our consolidated passenger revenues increased 18,5% to US$3,109.8

126

million in 2010 from US$2,623.6 million in 2009, due to a 6.8% increase in yields (from US¢8.8 to US¢9.4), and passenger load factors, which increased from 76.9% in 2009 to 78.3% in 2010 as the 11.2% increase in traffic outpaced the 9.2% capacity increase. Overall, revenues per ASK increased 8.5%. Traffic grew as a result of a 10.6% increase in domestic traffic (including domestic operations by LAN and its affiliates in Chile, Argentina, Peru and Ecuador), and an 11.3% increase in international traffic. International traffic accounted for approximately 70% of our total passenger traffic during 2010. Yields increased 6.8% as a result of a stronger demand environment driven by world economy recovery during the year.

Domestic passenger revenues in Chile, Peru, Argentina and Ecuador, which accounted for approximately 35% of our total passenger revenues in 2010 as compared to approximately 36% in 2009, increased 14.7% to US$1,072.4 million in 2010 from US$934.9 million in 2009. Domestic passenger traffic (as measured in RPKs) increased 10.5%, while domestic passenger capacity (as measured in ASKs) increased 6.6%, resulting in a increase in load factor from 74.9% in 2009 to 77.7% in 2010. Domestic passenger yield increased 3.7% from US¢10.4 in 2009 to US¢10.8 in 2010, mainly due to strong increases in traffic.

International passenger revenues, which accounted for approximately 65% of total passenger revenues in 2010 as compared to approximately 64% of passenger revenues in 2009, increased 20.7% to US$2,018.2 million in 2010 from US$1,672.0 million in 2009. International passenger traffic (as measured in RPKs) increased 11.3%, while passenger capacity (as measured in ASKs) increased 10.4% in 2010, resulting in an improvement in load factor from 77.8% in 2009 to 78.5% in 2010. Total international passenger yield (based on RPKs) increased 8.7% to US¢8.7 in 2010 from US¢8.0 in 2009, driven by strong world economy recovery.

Cargo revenues increased 43.0%, to US$1,280.7 million in 2010 from US$895.6 million in 2009, mainly driven by a 24.8% increase in yields (US¢41.6 in 2010 from US¢35.7 in 2009), and coupled with a 23.5% increase in traffic. In 2010, cargo traffic was driven by a strong recovery and growth in the global cargo markets, as well as better revenue management practices capacity increased 20.5% during 2010. As a consequence, load factors increased from 68.4% in 2009 to 70.1% in 2010. Revenues per ATK also increased 18.7% as compared to 2009.

Cost of Sales

Cost of sales in 2010 totaled US$3,012.7 million, representing a 19.4% increase as compared to cost of sales of US$2,522.8 million in 2009. As a percentage of total revenues, cost of sales decreased from 71.7% in 2009 to 68.6% in 2010, as a result of higher traffic and yields compared to 2009.

The increase in cost of sales was driven by higher aircraft fuel expenses, which totaled US$1,161.9 million in 2010, a 21.1% increase as compared to aircraft fuel expenses of US$959.6 million in 2009. Fuel expenses increased 21.1% mainly due to a 26.4% increase in unhedged jet fuel prices (9.4% in the hedged price), coupled with a 10.7% increase in consumption. However, the Company recognized a US$1.0 million fuel hedge gain, compared to a US$128.7 million fuel hedge loss in 2009.

In addition, the Company recorded higher ACMI leases in the cargo business due to the expansion in the cargo business. Depreciation expenses increased mainly due to the incorporation of one new Boeing 767-300 passenger aircraft in February 2010 and eight new Airbus A320 aircraft between July and December 2010. For further information on depreciation policies, please refer to “Critical Accounting Policies” below, and Note 2 to our audited consolidated financial statements.

Aircraft maintenance expenses decreased by 0.3%, from US$121.0 million in 2009 to US$120.6 million in 2010, due to lower maintenance payments to third parties, which offset the effects of a larger fleet. Aircraft rental expenses increased mainly due to an increase in the average rental cost due to the delivery of two leased Boeing 777 freighters in April and May 2009, two leased Airbus A320s in September 2010 and two leased Boeing 767-300 freighters in November and December 2010. Wages and benefits expenses increased mainly because of a higher average headcount, which is in-line with the Company’s operational expansion, an appreciation of Latin American currencies, and an increase in variable bonus payments, which were in line with higher profits obtained in 2010.

127

Passenger service expenses totaled US$114.2 million in 2010 compared to US$92.8 million in 2009. This represented a 23.1% increase that was driven by a 12.3% increase in the number of passengers transported during the year, as well as higher compensation paid to passengers during this period.

As a result of the above, gross margin increased 38.3% from US$996.4 million in 2009 to US$1,377.8 million in 2010.

Other operating income decreased by 2.6% to US$132.8 million in 2010 from US$136.4 million in 2009, mainly because of a decrease in tour and travel services and lower revenues from aircraft leases, which were partially offset by higher revenues from storage and custom services to third parties. Interest income decreased by 18.1% to US$14.9 million in 2010 from US$18.2 million in 2009, mainly due to lower average interest rates.

Distribution costs increased 17.3% from US$327.0 million in 2009 to US$383.5 million in 2010. This increase was caused by higher overall commissions to agents (related to both passenger and cargo sales), which increased by 20.5% to US$173.4 million in 2010 from US$143.9 million in 2009, and by a 24.8% increase in traffic revenues (for both passenger and cargo revenues); this increase was partially offset by a 0.1 point reduction in the average commission paid. This reduction was mainly related to a decrease in the commission rate paid to agents in the passenger business.

Administrative expenses increased 23.1% from US$269.6 million in 2009 to US$331.8 million in 2010 due to the higher wages of administrative personnel and higher asset (non aircraft) depreciation, as a result of additions in 2009 and 2010.

Other operating expenses increased 71.5% from US$100.5 million in 2009 to US$172.4 million in 2010, as a result of higher sales costs, advertising and marketing expenses and costs related to tours and travel services.

Financial costs (from non-financial activities) increased by 1.4% to US$155.3 million in 2010 from US$153.1 million in 2009 due to higher debt related to fleet financing, but was partially offset by lower average interest rates.

Exchange rate differences increased from an expense of US$11.2 million in 2009 to a gain of US$13.8 million in 2010 as a result of a recognized US$5.4 million gain that mainly stemmed from foreign exchange variations during the period; part of the exchange gain was a result of remittances from LAN’s operations in Venezuela. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Risk of Variation in Foreign Currency Exchange Rates”, for a discussion of LAN’s hedging program for currency fluctuations. During 2009 the devaluation of the Venezuelan currency impacted the Company’s operations in that country and the Company recognized a US$28.0 million charge related to it.

On December 31, 2010, the Company held US$36.0 million in assets located in Venezuela, of which over 74.0% constituted cash equivalents. On a consolidated basis, the Company’s assets related to its operations in Venezuela represented less than 0.5% of the total assets of the Company. For the year 2010, operating revenues of the Venezuelan regional office represented 1.7% of the Company’s consolidated revenues. The Company’s operations in Venezuela are carried out through an agency that, from an accounting perspective, is considered an extension of the Company. Therefore, the functional currency is the US dollar and hyperinflationary accounting is not required.

As of December 31, 2010 the Company recorded a US$14.1 million gain (pre-tax) due to the reversal of a portion of the provision related to the investigation in the cargo business carried out by the European Commission. This was as a result of the fine announced in November 2010, which was lower than the amount provided for. This reversal is recorded in Other gains/(losses). (See “Item 4. Information on the Company—Business of the Company—Cargo Operations—Cargo-Related Investigations”).

Income tax expenses increased by 82.2%, amounting to US$81.1 million in 2010 as compared to US$44.5 million in 2009. This increase was primarily the result of an 80.9% increase in pre-tax income, coupled with a 0.1% increase in the average tax rate (currently 16.2%) in 2010. For more information, see “—Critical Accounting Policies—Deferred Taxes” below and Note 19 to our audited consolidated financial statements.

128

U.S. Dollar Presentation and Price-Level Adjustments

General

Foreign currency transactions

(a) Presentation and functional currencies

The items included in the financial statements of each of Lan Airlines and its consolidated subsidiaries are valued using the currency of the main economic environment in which the entity operates (the “functional currency”). The functional currency of Lan Airlines is the U.S. dollar, which is also the currency of presentation of the audited consolidated financial statements of Lan Airlines and its subsidiaries.

(b) Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates on the transaction dates. Foreign currency gains and losses resulting from the liquidation of these transactions and from the translation, at the closing exchange rates, of the monetary assets and liabilities denominated in foreign currency, are shown in the consolidated statement of income.

(c) Group entities

The results and financial position of all the LAN entities (none of which utilizes the currency of a hyper-inflationary economy) that have a functional currency other than the currency of presentation are translated to the currency of presentation as follows:

(i) Assets and liabilities of each consolidated statement of financial position are translated at the closing exchange rate on the date of the consolidated statement of financial position;

(ii) The revenues and expenses of each results account are translated at monthly average rates; and

(iii) All the resultant exchange differences are shown as a separate component in net equity.

For consolidation purposes, exchange differences arising from the translation of a net investment in foreign entities (or in local entities with a functional currency different to that of the parent), and of loans and other foreign currency instruments designated as hedges for such investments, are recorded within net equity. When the investment is sold, these exchange differences are shown in the consolidated statement of income as part of the loss or gain on the sale.

Adjustments to the goodwill and fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the period-end exchange rate.

Effects of Exchange Rate Fluctuations

Our functional currency is the U.S. dollar in terms of the pricing of our products, composition of our balance sheet and effects on our results of operations. Most of our revenues (78% in 2011) are in U.S. dollars or in prices pegged to the U.S. dollar and a substantial portion of our expenses (53% in 2011) is denominated in dollars or pegged to the U.S. dollar, particularly fuel costs, landing and over flight fees, aircraft rentals, insurance and aircraft components and supplies. Almost all of our liabilities are denominated in U.S. dollars (93% as of December 31, 2011), including bank loans, air traffic liabilities, and certain amounts payable to our suppliers. As of December 31, 2011, 91% of our assets were denominated in U.S. dollars, principally aircraft, cash and cash equivalents, accounts receivable and other fixed assets. Substantially all of our commitments, including operating leases and purchase commitments for aircraft, are denominated in U.S. dollars.

129

Although we generally maintain our international passenger fares and cargo prices in U.S. dollars or at prices pegged to the U.S. dollar, we are exposed to foreign exchange losses and gains due to exchange rate fluctuations. We recorded a net foreign exchange profit of US$13.8 million in 2010 and a net foreign exchange loss of US$0.3 million in 2011, which are set forth in our consolidated statement of income under “Exchange rates differences.” For more information, see Notes 2.3(a) and 31 to our audited consolidated financial statements. The profit incurred in 2010 was mainly related to the appreciation of the Latin American currencies against the U.S. dollar.

IFRS/Non-IFRS Reconciliation

We use “Cost per ATK” and “Cost per ATK excluding fuel price variations” in analyzing operating costs on a per unit basis. “ATKs” (available ton kilometers) measure the number of tons of capacity available for the transportation of revenue load (passengers and/or cargo) multiplied by the kilometers flown. To obtain our unit costs, which are used by our management in the analysis of our results, we divide our “total costs” by our total ATKs. “Total costs” are calculated by starting with operating costs as defined under IFRS and making certain adjustments for interest costs and other revenues. The cost component is further adjusted to obtain “costs per ATKs excluding fuel price variations,” in order to remove the impact of changes in fuel prices for the year. “Cost per ATK” and “Cost per ATK excluding fuel price variations” do not have a standardized meaning, and as such may not be comparable to similarly titled measures provided by other companies. These metrics should not be considered in isolation or as a substitute for operating costs or as indicators of performance or cash flows as a measure of liquidity.

The table below reconciles operating costs as defined by IFRS to costs used in the calculation of “Cost per ATK” and “Cost per ATK excluding fuel price variations.”

	2011		2010		2009
Cost per ATK
Operating cost (US$ thousands)		5,178,554		3,900,474		3,219,813
+ Interest expense (US$ thousands)		139,077		155,279		153,109
– Interest income (US$ thousands)		14,453		14,946		18,183
– Other operating income (US$ thousands)		132,804		132,826		136,351
ATK operating costs		5,170,374		3,907,981		3,218,388
Divided by system’s ATKs (thousands)		10,056,142		8,968,792		7,811,750
= Cost per ATK (US$ cents)		51.42		43.57		41.20
Cost per ATK excluding fuel price variations
ATK operating costs (thousands)		5,170,374		3,907,981		3,218,388
– Actual fuel expenses (US$ thousands)		1,750,052		1,161,927		959,608
+ (Gallons consumed) times (previous year’s fuel price)		1,303,946		1,062,179		1,410,767
ATK operating costs excluding fuel price variations		4,724,268		3,808,233		3,669,547
Divided by system’s ATKs (thousands)		10,056,142		8,968,792		7,811,750
= Cost per ATK excluding fuel price variations (US$ cents)		46.98		42.46		46.97

In addition, we use revenues per ASK or ATK, as applicable, in analyzing revenues on a per unit basis. To obtain our unit revenues, which are used by our management in the analysis of our results, we divide our passenger revenues by our total ASKs and our cargo revenues by our total ATKs. We use our revenues as defined under IFRS for purposes of the calculation of this metric. Revenues per ASK or ATK, as the case may be, do not have a standardized meaning, and as such may not be comparable to similarly titled measures provided by other companies. It is not an IFRS based measure of performance or liquidity. This metric should not be considered in isolation or as a substitute for revenues or as indicators of performance or cash flows as a measure of liquidity.

The table below shows the calculation of our revenues per ASK or ATK, as applicable, in each of the periods indicated:

	2011		2010		2009
Passenger Revenues (US$ million)		4,008.91		3,109.80		2,623.61
ASK (million)		48,153.58		42,355.20		38,776.20
Passenger Revenues/ASK (US$ cents)		8.3		7.3		6.8
Cargo Revenues (US$ million)		1,576.53		1,280.71		895.55
ATK (million)		5,192.74		4,628.73		3,848.89
Cargo Revenues/ATK (US$ cents)		30.4		27.7		23.3

130

Seasonality

Our operating revenues are substantially dependent on overall passenger and cargo traffic volume, which is subject to seasonal and other changes in traffic patterns. Our passenger revenues are generally higher in the first and fourth quarters of each year, during the southern hemisphere’s (Chile and Argentina) spring and summer, than in the second and third quarters. Since Peru, Ecuador and Colombia have different seasonal patterns, the expansion into those markets has led to stronger passenger revenues in the second and third quarters, therefore moderating the overall seasonality of our passenger business. Our cargo revenues generally are higher in the fourth quarter, which correspond to the harvest season in the southern hemisphere.

Critical Accounting Policies

The preparation of our consolidated financial statements in accordance with IFRS requires our management to adopt accounting policies and make estimates and judgments to develop amounts reported in our consolidated financial statements and related notes. We strive to maintain a process to review the application of our accounting policies and to evaluate the appropriateness of the estimates that are required to prepare our consolidated financial statements. We believe that the consistent application of these policies enables us and our subsidiaries to provide readers of the financial statements with more useful and reliable information about our operating results and financial condition.

Critical accounting policies and estimates are those that are reflective of significant judgments and uncertainties, and potentially result in materially different outcomes under different assumptions and conditions. For a discussion on these and other accounting policies, see Note 2 to our consolidated financial statements. The following are the accounting policies that we believe are the most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective or complex judgments.

Accounting estimates judgments

The Company has used estimates to value and book some of the assets, liabilities, revenues, expenses and commitments; these basically refer to:

• The evaluation of possible impairment loss for certain assets.

• The useful life and residual value of fixed assets and intangible assets.

• The criteria employed in the valuation of certain assets.

• Air tickets sold that are not actually used.

• The calculation of deferred income at the period-end corresponding to the valuation of kilometers credited to holders of the LANPASS loyalty card which have not yet been used.

• The need for provisioning and where required the determination of their values.

• The recoverability of deferred tax assets.

• These estimates are made on the basis of the best information available on the matters analyzed. In any case, it is possible that events will require them to be modified in the future, in which case the effects would be accounted for prospectively.

131

Revenue Recognition

Revenues include the fair value of the proceeds received or to be received on sales of goods and rendering services in the ordinary course of the Company’s business. Revenues are shown net of refunds, rebates and discounts.

(a) Rendering of services

a.1 Passenger and cargo transport

We recognize passenger and cargo revenues either when the transportation service is provided or when we determine that the tickets will not be used or refunded, which, in the case of passenger revenues, reduces the air traffic liability. We estimate revenue breakage based on historical breakage experience that takes into account the aging of tickets that will not be used or refunded. Commissions payable related to such unearned earnings are shown net of the air traffic liability. Other revenues, including aircraft leases, courier, logistic and ground services, duty free sales, and storage and customs brokering, are recognized when services are provided.

The amount of passenger ticket sales not yet recognized as revenue is reflected as an air traffic liability. Air traffic liability includes estimates of the amount of future refunds and exchanges, net of forfeitures for all unused tickets once the flight date has passed. We perform periodic evaluations of this estimated liability based on actual results. Any adjustments, which can be significant, are included in the results of operations for the periods in which the evaluations are completed. These adjustments relate primarily to the differences between our estimation of certain revenue transactions and the related sales price, as well as refunds, exchanges and other items for which final settlement occurs in periods subsequent to the sale of the related tickets at amounts other than the original sales price.

Actual events and circumstances may differ from historical fare sale activity and customer travel patterns and can result in refunds, exchanges or forfeited tickets differing significantly from estimates. We evaluate our estimates periodically. If actual refunds, exchanges or forfeitures fall outside of our estimated ranges, we review our estimates and assumptions and adjust air traffic liability and passenger revenues as necessary. As with any estimates, actual results may vary from estimated amounts.

a.2 Frequent flyer program

The Company has a frequent flyer program called LANPASS, whose objective is customer loyalty through the delivery of kilometers every time that members of the program fly with the Company or its alliance partners, use the services of entities registered with the program or make purchases with an associated credit card. The kilometers earned can be exchanged for flights tickets or other services of associated entities. The consolidated financial statements include liabilities for this concept (deferred income), according to the estimate of the valuation established for the kilometers accumulated pending use at that date, in accordance with IFRIC 13: “Customer loyalty programs”. Kilometers expire if they are not utilized over a period of three years. This period is renewable if the passenger takes a flight or meets specific requirements regarding the accumulation of kilometers through one of the partners of the program.

Property, Plant and Equipment

The land of Lan Airlines and Subsidiaries is recognized at cost less any accumulated impairment loss.

The rest of the property, plant and equipment are shown, initially and subsequently, at their historic cost less the corresponding depreciation and any impairment loss, except for certain land and minor equipment that are reassessed at first adoption, according to IFRS.

The amount of advance payments to aircraft manufacturers are capitalized by the Company under “Construction in progress” until receipt of aircraft.

132

Subsequent costs (replacement of components, improvements and extensions) are included in the value of the initial asset or shown as a separate asset only when it is probable that the future economic benefits associated with the elements of property, plant and equipment are going to flow to the Company and the cost of such element can be determined reliably. The value of the component replaced is written-off in the books. The rest of the repairs and maintenance are charged to the result of the year in which they are incurred.

Depreciation of property, plant and equipment is calculated using the straight-line method over their estimated useful lives; except in the case of certain technical components, which are depreciated on the basis of cycles and hours flown.

The residual value and useful life of assets is revised, and adjusted if necessary, once a year.

When the carrying amount of an asset is higher than its estimated recoverable amount, its value is reduced immediately to its recoverable amount. For more information, see Note 2.8 to our audited consolidated financial statements.

Losses and gains on the sale of property, plant and equipment are calculated by comparing the proceeds obtained with the book value and are included in the consolidated statement of income.

Maintenance

The costs incurred for scheduled major maintenance of aircraft’s fuselage and engines are capitalized and depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to its use expressed based on cycles and flight hours. Unscheduled maintenances of aircraft and engines are charged to income as incurred.

Derivative Financial Instruments and Hedging Activities

Derivatives are booked initially at fair value on the date the derivative contracts are signed and later they continue to be valued at their fair value. The method for booking the resultant loss or gain depends on whether the derivative has been designated as a hedging instrument and, if so, the nature of the item hedged.

The Company designates certain derivatives as:

(a) Hedge of the fair value of recognized assets (“fair value hedge”);

(b) Hedge of a identified risk associated with a recognized liability or an expected highly probable transaction (“cash-flow hedge”); or

(c) Derivatives that do not qualify for hedge accounting.

The Company documents, at the inception of each transaction, the relationship between the hedging instrument and the hedged item, as well as its objectives for managing risk and the strategy for carrying out various hedging transactions. The Company also documents its assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being hedged.

The total fair value of the hedging derivatives is booked as an other non-current financial asset or liability if the remaining maturity of the hedging instrument is over 12 months, and as an other current financial asset or liability if the remaining term of the hedging instrument is less than 12 months. Derivatives not booked as hedges are classified as other financial assets or liabilities, current in the case that their remaining maturity is less than 12 months and non-current in the case that it is more than 12 months.

133

(a) Fair value hedges

Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the consolidated statement of income, together with any change in the fair value of the asset or liability hedged that is attributable to the risk being hedged.

(b) Cash flow hedges

The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is shown in net equity. The loss or gain relating to the ineffective portion is recognized immediately in the consolidated statement of income under “Other gains (losses).”

In the case of variable interest-rate hedges, this means that the amounts recognized in equity are reclassified to results within financial cost at the same time the associated debts accrue interest.

For fuel price hedges, the amounts shown in equity are reclassified to results as Cost of sales to the extent that the fuel subject to the hedge is used.

When hedging instruments mature or are sold or when they do not meet the requirements to be accounted for as hedges, any gain or loss accumulated in net equity until that moment remains in equity and is reclassified to the consolidated statement of income when the hedged transaction is finally recognized. When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in net equity is taken immediately to the consolidated statement of income as “Other gains (losses).”

(c) Derivatives not booked as a hedge

Certain derivatives are not booked as a hedge. The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in the consolidated statement of income, in “Other gains (losses).”

Deferred taxes

Deferred taxes are calculated, according to the balance-sheet method, on the temporary differences arising between the tax bases of assets and liabilities and their book values. However, if the temporary differences arise from the initial recognition of a liability or an asset in a transaction different from a business combination that at the time of the transaction does not affect the accounting result or the tax gain or loss, they are not booked. The deferred tax is determined using the tax rates (and laws), that have been enacted or substantially enacted at the end of the reporting period, and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is discharged.

Deferred tax assets are recognized when it is probable that there will be sufficient future tax earnings with which to compensate the temporary differences.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where timing of the reversal of the temporary differences is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Recently Issued Accounting Pronouncements

• IAS 12 Income taxes (Amendment)

• IAS 1 Presentation of financial statements (Amendment)

• IAS 28 Investments in associates and joint ventures

• IAS 27 Separate financial statements

134

• IFRS 10 Consolidated financial statements

• IFRS 11 Joint arrangements

• IFRS 12 Disclosures of interests in other entities

• IFRS 13 Fair value measurement

• IAS 19 Employee benefits (Amendment)

• IFRS 9 Financial instruments

• IFRIC 20 Stripping costs in the production phase of mine

The Company’s management believes that the adoption of the standards, amendments and interpretations described above would not have had a significant impact on the Company’s consolidated financial statements in the year of their first application. The Company has not early adopted any of the above standards.

B. Liquidity and Capital Resources

Our cash and cash equivalents totaled US$374.4 million as of December 31, 2011, US$631.1 million as of December 31, 2010 and US$731.5 million as of December 31, 2009. The decrease in our cash and cash equivalents from 2010 to 2011 was due to higher investment activities related to a higher number of aircraft incorporations in our fleet. Cash from operations derives primarily from providing air passenger and cargo transportation to customers. Operating cash outflows are primarily related to the recurring expenses of airline operations. Net cash inflows from operating activities were US$762.6 million in 2011, US$1,125.3 million in 2010 and US$845.8 million in 2009. The main reasons for the 32.2% decrease in 2011 from 2010 in net cash flows from operating activities were the 37.2% increase in fuel prices during the period, as well as an increase in wages and benefits as a result of the consolidation as of January 2011 of Colombian airline Aires, the ongoing effects of the volcanic ash cloud on domestic operations in Chile and Argentina and the appreciation of local currencies in Latin America. Fuel prices and exchange rate fluctuations may continue to impact LAN’s operating cash flow generation in the future. Nevertheless, LAN continued to show solid traffic growth and yield increases in both passenger and cargo operations. The main reasons for the 33.0% increase in 2010 from 2009 in net cash flows from operating activities were the increase in passenger and cargo revenues as a result of traffic growth and yield increases, which outpaced the growth in operating costs and expenses.

In recent years, we have been able to meet our working capital and capital expenditure requirements through cash from our operations. Given the nature of our business, the Company generally benefits from having a positive working capital, i.e. actual cash flow movement (cash inflows).

Our working capital position at year-end 2011, and in previous year-ends, was negative. However, the Company has consistently generated cash inflows as a result of changes in working capital since current liabilities increased more than current assets during those periods. This occurs mainly as a result of advance ticket sales (i.e., services that are paid in advance before they are delivered and suppliers are paid), which are recognized as deferred revenues and constitute a distinctive characteristic of accounting of passenger revenue in the airline industry.

During 2011, the Company generated cash for US$114.0 million, as compared with US$326.7 million in 2010 and US$3.4 million in 2009, benefiting from an increase in its negative working capital position. We expect to continue generating positive working capital movements through our operations. However, we cannot predict whether current trends and conditions will continue, or how the effects of competition or other factors that are beyond our control could affect us.

135

Below please find a table providing a detailed calculation of our working capital position and working capital movements for the period 2009 through 2011:

	2009			2010			2011
	(in US$ thousands)
Current assets
Trade and other accounts receivable		423,739			481,350			537,406
Accounts receivable from related entities		38			50			838
Inventories		46,563			53,193			72,787
Current liabilities
Trade and other accounts payable		476,597			645,571			645,086
Accounts payable to related entities		297			184			367
Deferred Revenues		493,034			721,042			868,557
Working capital year-end position		(499,585	)		(832,204	)		(902,979	)
Working capital movement
Cash inflows/(cash outflows)		3,426			332,616			70,775

As of December 31, 2011, the cash pledged to financial institutions relating to margin calls on derivative positions was US$117.2 million.

Net cash flows used in investing activities was US$1,238.3 million in 2011, US$1,100.4 million in 2010 and US$589.7 million in 2009. Cash capital expenditures were US$1,367.0 million in 2011, US$1,029.2 million in 2010 and US$538.6 million in 2009. The increase in capital expenditures in 2011 was due to the acquisition of higher number of aircraft and the required investments related to them.

Our capital expenditures for 2011 were mainly composed of:

• cash contributions for pre-delivery deposits related to aircraft with deliveries in 2011, 2012 and 2013;

• the acquisition of 13 Airbus A320 Passenger aircraft and three Boeing B767-300 Passenger aircraft; and

• the acquisition of aircraft spare parts and spare engines.

Our capital expenditures for 2010 were mainly composed of:

• cash contributions for pre-delivery deposits related to aircraft with deliveries in 2010, 2011 and 2012;

• the acquisition of eight Airbus A320 Passenger aircraft and one Boeing B767-300 Passenger aircraft; and

• the acquisition of aircraft spare parts and spare engines.

Our capital expenditures for 2009 were mainly composed of:

• cash contributions for pre-delivery deposits related to aircraft with deliveries in 2009, 2010 and 2011;

• the acquisition of three Airbus A319 Passenger aircraft and three Boeing B767-300 Passenger aircraft; and

• the acquisition of aircraft spare parts and spare engines.

For more information about current and future capital expenditures, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures”. The difference between net cash used in investing activities and cash capital expenditures during 2011, relates mainly to the investment in financial instruments, the sale of five A318 passenger aircraft and the sale of Blue Express which was a subsidiary dedicated to ground courier services.

136

Net cash inflows from financing activities were US$219.1 million in 2011, compared to net cash outflows of US$124.7 million in 2010 and US$99.2 million of cash inflows in 2009. Such variance was due to new issuance of shares, inflows from short term loans and the reduction in interest payments due to changes in loans structures and floating rate debt. In 2011, our main uses of cash were US$883.4 million for loan payments, US$192.1 million for dividends payments and US$119.1 million for interest payments. In 2010, our main uses of cash were US$554.5 million for loan payments, US$155.4 million for dividends payments and US$128.7 million for interest payments. In 2009, our main uses of cash were US$261.7 million for loan payments, US$139.9 million for dividend payments and US$129.3 million for interest payments.

Our cash and cash equivalents including investment funds and domestic and foreign bonds are mainly held in U.S. dollars or U.S. dollar-based instruments. A fraction (around 22%) of our cash position is held in currencies other than U.S. dollars to fulfill short-term obligations denominated in local currencies.

Capital Expenditures

Our capital expenditures are related to the acquisition of aircraft, aircraft-related equipment, IT equipment, support infrastructure and the funding of pre-delivery deposits. Our capital expenditures totaled US$1,367.0 million in 2011, US$1,029.2 million in 2010 and US$538.6 million in 2009. The increase in capital expenditure is explained by a higher number of aircraft acquired during 2011.

The following chart sets forth our estimate, as of January 31, 2012, of our future capital expenditures for 2012, 2013, 2014, 2015 and 2016:

	Expenditures by year, as of January 31, 2012
	2012			2013			2014			2015		2016
	(in US$ millions)
Expenditures on aircraft		1,688			1,332			1,568			1,032		1,067
PDPs (1)		(310	)		(127	)		(213	)		18		(8	)
Purchase Obligations		1,378			1,208			1,355			1,050		1,059
Other expenditures(2)		209			214			226			239		239
Total		1,587			1,422			1,581			1,289		1,298

⁽¹⁾  Pre-delivery payments (inflows are presented as after the delivery of the aircraft is made, the manufacturer refunds the PDP’s to LAN).

⁽²⁾  Includes expenditures on spare engines and parts, information technology and other expenditures.

The expenditures set out in the table above reflect payments for purchases and other fleet-related items, as well as for information technology and other items. See “Item 4. Information on the Company—Business Overview—Fleet”. Principally, we have projected our capital expenditures based on:

• the delivery of 12 Airbus A320-Family Aircraft in 2012, 14 in 2013, 17 in 2014, 15 in 2015, 12 in 2016, 10 in 2017 and 10 in 2018;

• the delivery of nine Boeing B767-300 Passenger aircraft in 2012 and four in 2013;

• the delivery of two Boeing 777 Freighter aircraft in 2012;

• the delivery of two Boeing 787-8 passenger aircraft in 2012, three in 2013 and seventeen between 2014 and 2018;

• the delivery of four Boeing 787-9 passenger aircraft in 2015;

• the implementation of a new host system as a part of a three year capital expenditure plan, totaling approximately US$70 million; and

137

• Costs related to the startup of new operations in the region under LAN’s standards.

We expect that cash generated from operations, short-term credit-lines and long-term syndicated loans with various banks will be sufficient to meet our cash requirements in the foreseeable future, although events that materially affect our operating results could also have a negative impact on our liquidity.

C. Research and Development, Patents and Licenses, etc.

We believe that the LAN brand has strong value and it is synonymous of superior service in the Latin American and International airline industry. In March 2004, we launched our new “LAN” brand to bring together, under one strong international name, all our local brands such as “LAN Chile,” “LAN Peru,” “LAN Argentina” and “LAN Ecuador.” We developed our new brand and corporate image after an extensive process supported by a leading global branding agency.

We have registered the trademarks “LAN”, “LAN Chile,” “LAN Peru,” “LAN Argentina” and “LAN Ecuador” with the trademark office in Chile, Peru, Argentina and Ecuador, respectively. We license certain brands, logos and trade dress under the alliance agreement with oneworld^® related to our alliance. We will have the right to continue to use oneworld^® current logos on our aircraft while LAN is a member of such alliance.

D. Trend Information

During 2012, we expect to continue seeing positive trends in both passenger and cargo operations, where we see significant growth opportunities in domestic and international markets in Latin America. Regarding fuel prices, they have remained relatively stable. Nevertheless, geopolitical instability, which affects the supply of fuel, is a potential risk since fuel supply is key to our business, as it represents approximately 30% of our operating costs. We can address increases in fuel prices through our fuel-hedging policy and the use of pass-through mechanisms for both the passenger and cargo operations. However, these strategies are never completely effective and margins are negatively impacted by a higher fuel price scenario. Specifically, we expect to face:

• revenue growth in the passenger operations, caused by capacity expansion inline with traffic growth. During January and February 2012, passenger traffic increased 13.6% compared with the same period in 2011, driven mainly by solid growth on domestic operations, which increased 19.1% as compared to 2011, as well as 10.9% growth in international operations. During such period, total passenger capacity increased 12.8%, leading to a 0.6 points increase in load factors from 82.5% to 83.1%. Capacity increases focused mainly on domestic routes within Chile, regional routes within Latin America, and long-haul routes to the United States. This expansion was partially offset by decreased capacity on long haul routes to Europe as a result of itinerary changes implemented in early 2011; and

• growth in the cargo operations is expected to be driven by continued increase in imports to Latin America, mainly to Brazil, and continued recovery of export volumes, partly driven by further recovery of salmon exports. During January and February 2012, cargo demand, as measured in RTKs, increased 0.7%, while capacity increased by 3.1%. In turn, the cargo load factor decreased 1.5 points to 65.3%.

In 2012, we expect to continue expanding and diversifying our revenue base through the expansion of our network, namely, by further developing our existing routes, adding new destinations, developing new alliances, and entering new markets. During 2012, we expect to receive 12 Airbus A320 family aircraft to operate domestic and regional routes, as well as nine Boeing 767-300 and the first two Boeing 787-8 Dreamliners for long-haul routes. We also expect the sale of five Airbus A318 aircraft and the return of two leased Boeing 767-300, while also returning three Boeing 737-700s operated by LAN Colombia.

In the cargo business, we will continue adding capacity in response to demand in our core markets. We expect the growth of import flows to Latin America to continue, but weaker cargo markets globally might further drive additional competition to South America, especially Brazil. We will continue to monitor the cargo market trends on a weekly basis in order to react as soon as possible if necessary. Also, we plan to continue optimizing the utilization of the bellies of our passenger aircraft to maximize synergies associated with the Company’s integrated passenger/cargo business model. Cargo capacity growth in 2012 will be driven by the delivery of 2 Boeing 777 freighters in the second half of the year.

138

We continue to maintain significant flexibility to adjust the physical size of our fleet. Between 2012 and 2014, we will have 13 operating lease expirations (including Japanese operating leases) in our wide-body passenger fleet, which can be terminated without cost. Starting in 2010, part of our Boeing 767 fleet has been fully paid, providing us with additional financial flexibility.

We also intend to make our cost structure more efficient and to offset potential decreases in demand with more efficient asset utilization, and we aim to enhance efficiency by streamlining our support processes, reducing commercial costs, continuing to develop our low-cost type business model for short-haul operations, and further developing the LEAN system in our processes.

We expect more stable fuel prices for 2012, but will continue using fuel hedging programs and fuel surcharge mechanisms in both the passenger and cargo businesses to help minimize the impact of short-term movements in crude oil prices. For instance, as of March 15, 2012 we have hedged approximately 58% of our estimated fuel requirements for the second quarter 2012, 27% for the third quarter and 8% for the fourth quarter. These hedging instruments are comprised of a combination of collars and swaps. Swaps are at an average price of US$92.2 dollars per barrel while collars are in average between US$71.6 and US$95.7 dollars per barrel.

E. Off-Balance Sheet Arrangements

As of December 31, 2011 the Company had aircraft and aircraft engines under operating leases. These operating leases provide us with great flexibility to adjust to any demand volatility that may affect the airline industry and therefore we consider such arrangements to be of great value.

Under the aforementioned operating leases, LAN is responsible for all maintenance, insurance and other costs associated with operating these aircraft. The Company has not made any residual value or similar guarantees to our lessors. There are certain guarantees and indemnities to other unrelated parties that are not reflected on the Company’s balance sheet, but we believe that these will not have a significant impact on our results of operations or financial condition.

The Company operates 17 aircraft under a financing structure called Japanese Operating Lease (“JOL”). This method involves the creation of a special purpose entity that acquires aircraft with bank and third party financing. Under IFRS, these aircraft are shown in the consolidated statement of financial position as part of “Property, plant and equipment” and the corresponding debt is shown as a liability.

As of February 29, 2012 we are not aware of any event, lawsuit, commitment, trend or uncertainty that may result in, or is reasonably likely to result in, the termination of the operating leases. See Note 33 to our audited consolidated financial statements for a more detailed discussion of these commitments.

F. Tabular Disclosure of Contractual Obligations

We have contractual obligations and commitments primarily related to the payment of debt, lease arrangements and for the future incorporation of aircraft to our fleet. As of December 31, 2011 we have financed the acquisition of 21 Boeing 767-300 Passenger aircraft and eight Boeing 767-300 Freighters through bond issuances and syndicated loans provided by international financial institutions with the support of partial guarantees issued by the Ex-Im Bank with repayment profiles of either 12 or 15 years. The Ex-Im Bank guarantees support 85% of the net purchase price and are secured with a first priority mortgage on the aircraft in favor of a security trustee on behalf of Ex-Im Bank. The documentation for each loan follows standard market forms for this type of financing, including standard events of default. We have financed the remaining 15% of the net purchase price with commercial loans or with our own funds. Our Ex-Im Bank supported financings are denominated in U.S. dollars and have quarterly amortizations with a combination of fixed and floating rates linked to U.S. dollar LIBOR. Through the use of interest rate swaps, we

139

have effectively converted a significant portion of our floating rate debt under these loans into fixed rate debt. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Risk of Fluctuations in Interest Rates”, for more information. Between 2004 and 2009, LAN sold its ownership in the entities borrowing some of these loans and they were therefore reclassified as financial leases. As of December 31, 2011, the total amount outstanding under our Ex-Im Bank-supported financings totaled US$1,259.2 million.

In April 2010, LAN entered into an agreement to finance the purchase of 15 aircraft partially guaranteed by the European Export Credit Agencies and partially through its own funds (85% and 15%, respectively) where six of them were delivered in 2010 and the remaining nine in 2011. These loans have a 12 years maturity profile and quarterly payments. During the second half of 2010 LAN financed eight additional A320 family aircraft supported by the European Export Credit Agencies and partially through its own funds (85% and 15% respectively).

During the year 2011 LAN continued financing its A320 family aircraft fleet supported by the European Export Credit Agencies totaling 13 additional aircraft. These aircraft were financed 80% by loans guaranteed by the European Export Credit Agencies and the remaining portion (20%) by LAN’s own funds.

In the first quarter 2011, LAN entered into a sale and lease back agreement to finance eight of its A320 family aircraft. Four of them were delivered in the third quarter of 2011 and the remaining four are expected to be delivered between April and July 2012.

Our total debt (including capital leases) as of December 31, 2011, was US$3,788.3 million compared to US$3,259.7 million in 2010 and US$3,074.4 million in 2009. The increase in long-term debt during 2011 relates to the incorporation of debt-financed fixed assets. We have minimum lease payment obligations primarily associated with our aircraft leases. As of December 31, 2011, we had 49 aircraft under operating leases (23 which correspond to recent acquired Aires total fleet), and we had minimum lease payment obligations of US$705 million compared to US$700 million as of December 31, 2010 and US$444 million as of December 31, 2009. The average interest rate of our long-term debt was 4.5% as of December 31, 2011. Of the total debt amount, 82.3% accrues interest at a fixed rate (either through a stated fixed interest rate or through our use of interest rate swap agreements) or is subject to interest rate caps. As of February 29, 2012, we also had purchase obligations for:

• Seven Airbus A319, 52 Airbus A320, 10 Airbus A321, 20 Airbus A320 NEO;

• 13 Boeing 767-300 Passenger aircraft;

• Two Boeing 777-200 Freighter aircraft; and

• 26 Boeing 787 Passenger aircraft;

The purchase obligations amount to a combined total of US$8,645.6 million, with delivery between 2012 and 2018.

LAN has practically no short term debt, while its long term debt is mainly related to aircraft financing and has 12 to 15 year repayment profiles. As of December 2011, LAN had US$537.3 million in bank loans under current liabilities. Of this amount, US$153.8 million was short term debt, which represents only 6.6% of total current liabilities. The remaining US$383.6 million is composed mainly of long term debt related to aircraft financing, which is payable within the next 12 months.

The following table sets forth our material expected obligations and commitments as of January 31, 2012:

	Payments due by period, as of January 31, 2012
	Total		2012		2013		2014		2015		2016		Thereafter
	(in US$ millions)
Principal debt payments		2,538.2		273.4		288.8		270.4		271.9		275.6		1,158.2
Interest debt payments		341.0		68.2		64.1		54.7		46.2		37.5		70.2
Capital leases(1)		338.1		60.7		63.8		60.3		49.6		44.6		59.1
Operating leases(2)		689.0		150.0		157.7		121.4		92.3		77.1		90.4

140

	Payments due by period, as of January 31, 2012
	Total		2012		2013		2014		2015		2016		Thereafter
	(in US$ millions)
Purchase obligations		8,646.7		1,687.8		1,331.9		1,567.6		1,031.5		1,067.0		1,960.8
Total		12,553.0		2,240.1		1,906.3		2,074.4		1,491.5		1,501.8		3,338.7

⁽¹⁾  Includes interests.

⁽²⁾  Includes aircraft leases and other non-cancelable leases.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The management of Lan Airlines is conducted by its board of directors which, in accordance with Lan Airlines’ by-laws, consists of nine directors who are elected every two years for two-year terms at annual regular shareholders’ meetings, and may be re-elected. The board of directors may appoint replacements to fill any vacancies that occur during periods between elections. Scheduled meetings of the board of directors are held once a month and extraordinary board of directors’ meetings are called when summoned by the chairman of the board of directors and two other directors, or when requested by a majority of the directors.

The current board of directors was elected at the annual shareholders’ meeting held on April 29, 2010. Its term expires in April 2012. The following are Lan Airlines’ directors and senior management:

Directors	Position
Jorge Awad Mehech(1)	Director / Chairman
Darío Calderón González	Director
José Cox Donoso	Director
Juan José Cueto Plaza(2)	Director
Juan Cueto Sierra(2)	Director
Ramón Eblen Kadis(3)	Director
Bernardo Fontaine Talavera	Director
Carlos Heller Solari(4)	Director
Gerardo Jofré Miranda	Director
Senior Management	Position
Enrique Cueto Plaza(2)	Chief Executive Officer
Ignacio Cueto Plaza(2)	President and Chief Operating Officer
Alejandro de la Fuente Goic	Chief Financial Officer
Armando Valdivieso Montes	Chief Executive Officer-Passenger
Cristián Ureta Larraín	Chief Executive Officer-Cargo
Roberto Alvo Milosawlewitsch	Senior Vice President, Strategic Planning and Corporate Development
Cristian Toro Cañas	Senior Vice President, Legal
Enrique Elsaca Hirmas	Senior Vice President, Operations
Emilio del Real Sota	Senior Vice President, Human Resources
Pablo Querol Grinstein	Senior Vice President, Corporate Affairs

⁽¹⁾  Mr. Jorge Awad Mehech was re-elected chairman of the board of directors in May 2010.

⁽²⁾  Messrs. Ignacio, Juan José and Enrique Cueto Plaza are brothers, and Mr. Juan Cueto Sierra is their father. All four are members of the Cueto Group (as defined in “Item 7”), the Controlling Shareholders.

⁽³⁾  Mr. Ramón Eblen Kadis is a member of the Eblen Group, which is defined in “Item 7” as a “Major Shareholder.”

⁽⁴⁾  Mr. Carlos Heller Solari is a member of the Bethia Group, which is defined in “Item 7” as a “Major Shareholder.”

141

Biographical Information

Set forth below are brief biographical descriptions of Lan Airlines’ directors and senior management.

Directors

Mr. Jorge Awad Mehech, 66 years old, has served as chairman and member of Lan Airlines’ board of directors since July 2001. Mr. Awad had previously served as chairman of our board of directors from 1994 to October 2000. Mr. Awad’s current term as chairman ends on the date of the annual shareholders’ meeting to be held in 2012. He held the position of Senior Vice President of Fast Air from 1979 to 1993. Mr. Awad is the Chairman of the Chilean Association of Banks and Financial Institutions and a member of the Council of the Television Corporation of the Pontifical Catholic University of Valparaíso. Additionally Mr. Awad serves on the board of directors of Banco de Chile. He is also a board member of ICARE (Instituto Chileno de Administración Racional de Empresas), a Chilean organization seeking to promote private enterprise, and Prohumana, a Chilean organization that promotes corporate social responsibility within Chilean corporations. As of February 29, 2012, according to shareholder registration data in Chile, Mr. Awad shared in the beneficial ownership of Lan Airlines, through Inversiones y Asesorías Fabiola S.A., of 201,784 common shares (0.06% of Lan Airlines’ outstanding shares).

Mr. Darío Calderón González, 65 years old, has served on Lan Airlines’ board of directors since 1994. Mr. Calderón’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Calderón has been a partner in Calderón y Cía, a Chilean law firm, since 1970. Mr. Calderón currently serves on the board of directors of other Chilean companies, including Integramédica S.A., Imprenta A Molina Flores S.A., Enjoy S.A., and Datanet S.A. Mr. Calderón is also a board member and chairman of Nutrechile A.G., a non-profit organization organized by all the concessionaries of the Junta de Auxilio Escolar y Becas (Board of Students Aid and Scholarships) of the Chilean Ministry of Education.

Mr. José Cox Donoso, 57 years old, has served on Lan Airlines’ board of directors from April 1994 to June 1995 and from September 1995 to the present. Mr. Cox’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Cox has also served as chairman of the board of directors of Lan Cargo since September 1995. In addition, Mr. Cox serves on the board of directors of CMB-Prime Administradora de Fondos S.A., Socovesa S.A., Puerto Coronel S.A., Puerto Angamos S.A., Kaufmann S.A., Asesorías e Inversiones Ilihue S.A. and Inversiones Tricahue S.A. As of February 29, 2012, Mr. Cox shared in the beneficial ownership of Lan Airlines, through Asesorías e Inversiones Ilihue Limitada, 2,654,324 common shares of Lan Airlines (0.78% of Lan Airlines’ outstanding shares).

Mr. Juan José Cueto Plaza, 51 years old, has served on Lan Airlines’ board of directors since 1994. Mr. Cueto’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Cueto currently serves as Executive Vice President of Inversiones Costa Verde S.A., a position he has held since 1990, and serves on the boards of directors of Consorcio Maderero S.A., Minera Michilla S.A., Inversiones del Buen Retiro S.A., Inmobiliaria e Inversiones Asturias S.A., Inversiones Mineras del Cantábrico S.A., Costa Verde Aeronáutica S.A., Sinergia Inmobiliaria S.A. and Valle Escondido S.A. Mr. Cueto is the son of Mr. Juan Cueto Sierra, a director of Lan Airlines, and the brother of Messrs. Enrique and Ignacio Cueto Plaza, Chief Executive Officer and Chief Operating Officer of Lan Airlines, respectively. Mr. Cueto is a member of the Cueto Group (one of Lan Airlines’ Controlling Shareholders). As of February 29, 2012, Mr. Cueto shared in the beneficial ownership of 115,399,502 common shares of Lan Airlines (33.90% of Lan Airlines’ outstanding shares) held by the Cueto Group. Mr. Cueto is also a member of the board of directors of Holdco II. For more information see “Item 7. Controlling Shareholders and Related Party Transactions”.

Mr. Juan Cueto Sierra, 82 years old, was one of the founders of Fast Air in 1978 and has served on Lan Airlines’ board of directors since 1998. Mr. Cueto’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Cueto has wide experience in a range of business activities. Mr. Cueto is the father of Messrs. Juan José, Enrique and Ignacio Cueto Plaza, Director, Chief Executive Officer and Chief Operating Officer of Lan Airlines, respectively. Mr. Cueto currently serves on the board of directors of Costa Verde Aeronáutica S.A.

142

Mr. Ramón Eblen Kadis, 67 years old, has served on Lan Airlines’ board of directors since June 1994. Mr. Eblen’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Eblen has served as President of Comercial Los Lagos Ltda., Inversiones Santa Blanca S.A., and TJC Chile S.A. Mr. Eblen is a member of the Eblen Group (a major shareholder of Lan Airlines). As of February 29, 2012, Mr. Eblen shared in the beneficial ownership of 31,778,049 common shares of Lan Airlines (approximately 9.34% of Lan Airlines’ outstanding shares) held by the Eblen Group. For more information see “Item 7. Controlling Shareholders and Related Party Transactions”.

Mr. Bernardo Fontaine Talavera, 47 years old, has served on Lan Airlines’ board of directors since April 2005. Mr. Fontaine’s term ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Fontaine was head of the financial services branch of Falabella, a major Chilean retailer, and served as executive director of CMR Falabella and Vice-Chairman of the Board of Banco Falabella. Mr. Fontaine also served as head of the M&A Corporate Finance division of Citicorp-Citibank Chile. Mr. Fontaine currently serves on the boards of Deutsche Bank Chile, Metro S.A., Bicecorp S.A., Banco Bice, Bice Vida S.A., Embonor S.A., Aquamont S.A., South-Am S.A., Fundación el Buen Samaritano, Place Vendome S.A. and Loginsa S.A., Fundación El Buen Samaritano and Fundación Convivir. He is also the general manager of Tres Mares S.A., Indigo S.A. and Sarlat S.A., which owned, together, as of February 29, 2012,1,980,408 shares of Lan Airlines S.A. (0.58% of Lan Airlines’ outstanding shares).

Mr. Carlos Heller Solari, 50 years old, joined Lan Airline’s board of directors in May 2010. Mr. Heller’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Heller has a vast experience in the retail, transports and agriculture sectors. Mr. Heller is Vice President of Bethia S.A. (“Bethia”) (holding company and owner of Axxion S.A. and Axxdos S.A.), Chairman of Axxion S.A., Club Hípico de Santiago, Sotraser S.A. and Agrícola Ancali. He also participates as a board of directors’ member of SACI Falabella S.A., Falabella Retail S.A., Sodimac S.A. , Titanium S.A., Viña Indómita S.A., Viña Santa Alicia S.A., Blue Express S.A. and Aero Andina S.A. Additionally he is the major shareholder and Vice President of “Azul Azul” (Universidad de Chile’s first division soccer team administrator). As of February 29, 2012, Mr. Heller directly held 48,900 common shares of Lan Airlines (0.01% of Lan Airlines’ outstanding shares) and indirectly held 27,103,273 common shares of Lan Airlines through Axxion (7.96% of Lan Airlines’ outstanding shares).

Mr. Gerardo Jofré Miranda, 62 years old, has joined Lan Airlines’ Board of directors on May 2010. Mr. Jofré’s term as a director ends on the date of the annual shareholders’ meeting to be held in 2012. Mr. Jofré is Chairman of Codelco and member of the boards of directors of Construmart S.A., Andromeda S.A., Inmobiliaria Playa Amarilla S.A. and Air Life Chile S.A. Mr. Jofré is President of Saber Más Foundation and member of the Real Estate Investment Council of Santander Real Estate Funds. From 2005 to 2010 he served as member of the boards of directors of Endesa Chile S.A., Viña San Pedro Tarapacá S.A., D&S S.A., Inmobiliaria Titanium S.A. and Inmobiliaria Parque del Sendero S.A. Mr. Jofré was Director of Insurance for America for Santander Group of Spain between the years 2004 and 2005. From 1989 to 2004 he served on Santander Group in Chile, as Vice Chairman of the Group and as CEO, member of the boards of directors and Chairman of many of the Group’s companies.

Senior Management

Mr. Enrique Cueto Plaza, 53 years old, is Lan Airlines’ Chief Executive Officer, and has held this position since 1994. From 1993 to 1994, Mr. Cueto served on Lan Airlines’ board of directors. From 1983 to 1993, Mr. Cueto was Chief Executive Officer of Fast Air, a Chilean Cargo airline. Mr. Cueto has in-depth knowledge of passenger and cargo airline management, both in commercial and operational aspects, gained during his 23 years in the airline industry. Mr. Cueto is an active member of the oneworld^® Alliance Governing Board, the IATA (International Air Transport Association) Board of Governors. He is also member of the Board of the Federation of Chilean Industry (SOFOFA) and of the Board of the Endeavor foundation, an organization dedicated to the promotion of entrepreneurship in Chile. Mr. Cueto is the son of Mr. Juan Cueto Sierra, a member of the board of Lan Airlines, and the brother of Messrs. Juan José and Ignacio Cueto Plaza, member of the board and President and Chief Operating Officer of Lan Airlines, respectively. Mr. Cueto is also a member of the Cueto Group (one of Lan Airlines’ Controlling Shareholders). As of February 29, 2012, Mr. Cueto shared in the beneficial ownership of 115,399,502 common shares of Lan Airlines (33.90% of Lan Airlines’ outstanding shares) held by the Cueto Group. For more information see “Item 7. Controlling Shareholders and Related Party Transactions”.

143

Mr. Ignacio Cueto Plaza, 48 years old, is Lan Airlines’ President and Chief Operating Officer. Until being promoted to his current position in 2005, Mr. Cueto served as Chief Executive Officer-Passenger Business, a position he assumed in 1999. Mr. Cueto served on the board of directors of Lan Airlines and Ladeco from 1995 to 1997 and from 1994 to 1997, respectively. In addition, Mr. Cueto served as Chief Executive Officer of Fast Air from 1993 to 1995 and as President of the LAN Cargo Group from 1995 to 1998. Between 1985 and 1993, Mr. Cueto held several positions at Fast Air, including Service Manager for the Miami sales office, Director of Sales for Chile and Vice President of Sales and Marketing. Mr. Cueto is the son of Mr. Juan Cueto Sierra, director of Lan Airlines, and the brother of Messrs. Juan José and Enrique Cueto Plaza, Director and Chief Executive Officer of Lan Airlines, respectively. Mr. Cueto is also a member of the Cueto Group (one of Lan Airlines’ Controlling Shareholders). As of February 29, 2012, Mr. Cueto shared in the beneficial ownership of 115,399,502 common shares of Lan Airlines (33.90% of Lan Airlines’ outstanding shares) held by the Cueto Group. For more information see “Item 7. Controlling Shareholders and Related Party Transactions”.

Mr. Alejandro de la Fuente Goic, 52 years old, is Lan Airlines’ Chief Financial Officer, and has held this position since October 1995. Mr. de la Fuente joined Lan Airlines in April 1995. Prior to joining Lan Airlines, Mr. de la Fuente served as Chief Financial Officer of Chiquita Frupac Ltd., a subsidiary of Chiquita Brands Inc., beginning in 1992. As of February 29, 2012, Mr. de la Fuente owned 37,383 common shares of Lan Airlines (0.01% of Lan Airlines’ outstanding shares).

Mr. Armando Valdivieso Montes, 49 years old, is Lan Airlines’ General Manager-Passenger, a position he assumed in 2006. Between 1997 and 2005 he served as Chief Executive Officer-Cargo Business. From 1994 to 1997, Mr. Valdivieso was President of Fast Air. From 1991 to 1994, Mr. Valdivieso served as Vice President, North America of Fast Air Miami. As of February 29, 2012, according to shareholder registration data in Chile, Mr. Valdivieso owned 59,704 common shares of Lan Airlines (0.02% of Lan Airlines’ outstanding shares).

Mr. Cristian Ureta Larrain, 49 years old, is Lan Airlines’ General Manager-Cargo, a position he assumed in 2005. Mr. Ureta has an Engineering degree from Pontificia Universidad Católica and a Special Executive Program from Stanford University. Between 2002 and 2005 Mr. Ureta served as Production Vice President for Lan Cargo. Between 1998 and 2002 he was Lan Cargo’s Planning and Development Vice President. Prior to that, Mr. Ureta served as General Director and Commercial Director at MAS Air, and as Service Manager for Fast Air.

Mr. Roberto Alvo Milosawlewitsch, 43 years old, is Lan Airlines’ Senior Vice-president Strategic Planning and Development, a position he assumed in 2008. Prior to holding his current position, Mr. Alvo served as CFO of Lan Argentina from 2005 until 2008, as Vice-president of Development of Lan Airlines from 2003 until 2005 and Vice-president of Treasury of Lan Airlines from 2001 until 2003. Before 2001 Mr. Alvo held various positions at Sociedad Química y Minera de Chile S.A., a leading non-metallic Chilean mining company. Mr. Alvo is a civil engineer and obtained an MBA from IMD in Lausanne, Switzerland.

Mr. Cristian Toro Cañas, 41 years old, is Lan Airlines’ Senior Vice President, Legal, a position he assumed in January 2008. Mr. Toro has a law degree from Pontificia Universidad Católica de Chile (1993), as well as a master’s law degree (MCJ 97’) from New York University. Prior to joining Lan Airlines, Mr. Toro served as General Counsel for Citibank Chile, where he worked and held various positions from 1997 until 2007. He also worked as an international trainee at Shearman & Sterling in New York (1999).

Mr. Enrique Elsaca Hirmas, 44 years old, is Lan Airlines’ General Manager-Chile, a position he assumed in 2008. Between 2004 and 2008, Mr. Elsaca served as Senior Vice President, Strategic Planning. Mr. Elsaca has a degree in industrial engineering from Pontificia Universidad Católica de Chile, as well as a Master in Business Administration from Massachusetts Institute of Technology. Prior to joining Lan Airlines, Mr. Elsaca served as Real Estate and Development Manager of Cencosud, Chile’s second largest retail group. From 1997 to 1999, Mr. Elsaca worked at Booz Allen & Hamilton in Latin America, and from 1991 to 1995; Mr. Elsaca held various positions in Esso Chile, a subsidiary of Exxon.

Mr. Emilio del Real Sota, 46 years old, is Lan Airlines’ Senior Vice President, Human Resources, a position he assumed in August 2005. Mr. del Real has a Psychology degree from Universidad Gabriela Mistral. Between 2003 and 2005, Mr. del Real was the Human Resource Manager of D&S, a Chilean retail company. Between 1997 and 2003 Mr. del Real served in various positions in Unilever, including Human Resource Manager for Chile, and Training and Recruitment Manager and Management Development Manager for Latin America.

144

Mr. Pablo Querol Grinstein, 35 years old, is LAN’s Senior Vice President of Corporate Affairs, a position he assumed in May 2011, replacing Rene Muga. Mr. Querol holds a degree in communications from the Universidad de Ciencias Empresariales y Sociales and holds a management degree from an IAE Business School. Since 2004 Mr. Querol acted as Corporate Affairs Manager for LAN Argentina, where he served as main spokesman to media communications and governmental authorities. Previously, between 1995 and 2004, he was editor of the newspaper La Nación and consultant to numerous companies related to the tourism and real estate industry. Since 2007, he has been director of the Argentinean Chamber of Tourism and the entity that promotes tourism, Destination Argentina. In addition, he is a permanent member of the Professional Council of Public Relations in Argentina, the Chilean-Argentinean Chamber and founder partner of the Buenos Aires Convention and Visitor Bureau.

B. Compensation

For the year ended December 31, 2011, the aggregate amount of compensation we paid to all executives and senior managers was US$90.6 million, which did not include US$20.1 million paid as bonuses. Our variable compensation plan is based on our corporate profits, and team and individual performance.

Under Chilean law, Lan Airlines must disclose in its annual report details of all compensation paid to its directors during the relevant fiscal year, including any amounts that they received from Lan Airlines for functions or employment other than serving as a member of the board of directors, including amounts received as per diem stipends, bonuses and, generally, all other payments. Additionally, pursuant to regulations of the SVS, the annual report must also include the total compensation and severance payments received by managers and principal executives, and the terms of and the manner in which board members and executive officers participate in any stock option plans.

Lan Airlines’ directors are paid 24 UF per meeting (56 UF for the chairman of the board). Lan Airlines also provides certain benefits to its directors and executive officers, such as free and discounted airline tickets and health insurance. We do not have contracts with any of our directors to provide benefits upon termination of employment.

As set forth in further detail in the following table, in 2011 the members of our board of directors currently in office received fees and salaries in the aggregate amount of US$184,639.69.

Board Members	Fees (US$)(1)
Jorge Awad Mehech		47,062.56
Darío Calderón González		13,035.60
José Cox Donoso		13,035.60
Juan José Cueto Plaza		13,035.60
Juan Cueto Sierra		13,035.60
Ramon Eblen Kadis		29,681.76
Bernardo Fontaine Talavera		13,035.60
Carlos Heller Solari		13,035.60
Juan Gerardo Jofre Miranda		29,681.76
Total		184,639.69

⁽¹⁾  Includes fees paid to members of the board of directors’ committee, as described below.

As required by Chilean law, Lan Airlines makes obligatory contributions to the privatized pension fund system on behalf of its senior managers and executives, but it does not maintain any separate program to provide pension, retirement or similar benefits to these or any other employees.

C. Board Practices

Currently our Board of Directors is comprised of nine members. The terms of our current Directors will expire in April 2012. See “—Directors and Senior Management”

145

Board of Directors’ Committee and Audit Committee

Pursuant to Chilean Corporation Law, as amended by Law No. 19,705, Lan Airlines must have a board of directors’ committee composed of no less than three board members. Lan Airlines has established a three-person committee of its board of directors, which, among other duties, is responsible for:

• examining the reports of Lan Airlines’ external auditors, the balance sheets and other financial statements submitted by Lan Airlines’ administrators to the shareholders, and issuing an opinion with respect thereto prior to their presentation to the shareholders for their approval;

• proposing external auditors and rating agencies to the board of directors;

• evaluating and proposing external auditors and rating agencies;

• reviewing internal control reports pertaining to related party transactions;

• examining and reporting on all related-party transactions; and

• reviewing the pay scale of Lan Airlines’ senior management.

Under Chilean law we are required, to the extent possible, to appoint a majority of independent directors to the Board of Directors Committee. The corresponding independence requirements are set forth in Chilean Corporation Law, as amended by Law No. 19,705, and relate to the relationship between the directors and the shareholders that control a corporation. A director is considered independent when he or she can be elected regardless of the voting of the controlling shareholders. See “Item 16A. Corporate Governance.”

Pursuant to U.S. regulations, we are required to have an audit committee of at least three board members, which complies with the independence requirements set forth in Rule 10A-3 under the Exchange Act. Given the similarity in the functions that must be performed by our Board of Directors’ Committee and the audit committee, our Board of Directors’ Committee serves as our Audit Committee for purposes of Rule 10A-3 under the Exchange Act.

As of February 29, 2012, all of the members of our Board of Directors’ Committee, which also serves as our Audit Committee, were independent under Rule 10A-3 of the Exchange Act. As of February 29, 2012, the committee members were Mr. Jorge Awad Mehech, Mr. Gerardo Jofré Miranda and Mr. Ramón Eblen Kadis. We pay each member of the committee 32 UFs per meeting.

D. Employees

The following table sets forth the number of employees in various positions at the Company.

Employees	As of December 31, 2011
	2011(2)		2010(1)		2009
Administrative		4,170		3,940		3,106
Sales		2,750		2,643		2,352
Maintenance		2,918		2,576		2,264
Operations		6,194		5,730		4,852
Cabin crew		3,837		3,561		2,890
Cockpit crew		1,969		1,835		1,380
Total		21,838		20,285		16,844

(1) LAN’s acquisition of Aires in November 2010 provided an additional 1,319 employees to the Company’s total number of employees.

(2) By the end of 2011, approximately 52% of our employees worked in Chile, 46% in other Latin American countries and 2% in the rest of the world.

146

We have a performance-related pay structure for our administrative, management and flight personnel (such as cabin crew members, airport and sales agents, call-center employees, and some back office employees) including performance-based bonuses and pay scales that reward foreign language proficiency among counter, technical and administrative personnel. During 2011, over 92% of our employees were eligible to receive performance related bonus payments that are linked to personal, team and corporate performance.

We provide our employees with medical insurance complementary to the coverage of the private health system, and also grant other benefits, such as free and discounted airline tickets, to our permanent employees.

A stock option compensation plan is offered to key senior executives. For a detailed description of the stock option compensation plan, please see Note 36 to our audited consolidated financial statements for the fiscal year ended December 31, 2011.

As required by Chilean law, we make obligatory contributions to the privatized pension fund system on behalf of our employees, but we do not maintain any separate program to provide pension, retirement or similar benefits to these or any other employees. However, the pilots’ collective bargaining agreement includes a clause that permits resignation with severance payment, in case a pilot reaches a certain age and is still providing services to the company.

Long Term Incentive Compensation Program

On April 5, 2007, the extraordinary shareholders meeting approved a capital increase of 22,090,910 shares to a total of 341,000,000 shares. The same meeting designated 10% of the approved capital increase (2,209,091 shares) for purposes of a proposed employee stock option compensation plan. Those 2,209,091 shares represent a 0.65% of the total share capital after such capital increase. The shareholders’ meeting authorized our board of directors to elaborate the compensation plan. For more detailed information, please see Note 36 to our audited consolidated financial statements. This incentive compensation program is aimed at promoting our interests by encouraging management employees to contribute substantially to our success, by motivating them with stock options.

The general features of this stock option plan are:

(a) The selection of the employees of the Company and its subsidiaries that were included by the Board of Directors in the compensation plan was made after a recommendation by our Executive Committee. A stock option agreement was signed with each selected employee for the number of options in connection to the acquisition of our shares to be allocated to such employee.

(b) Until the shares in the option are subscribed, the optionee has no economic or political rights and is not considered in the quorums of shareholders meetings.

(c) The options allocated to each employee are vested in parts, on the following two dates: (1) 30% on October 29, 2009; and (2) 70% on October 30, 2011, subject to remaining employed by the Company.

(d) The period during which the employee must exercise the options will expire March 31, 2012. If the employee has not exercised or waived the options in that period, the employee will be understood, for all purposes, to have waived the options and, accordingly, all rights, powers, promises or offers in relation to the subscription of cash shares in the Company will be deemed extinguished and it will be understood that the employee has irrevocably waived all rights or powers in relation thereto, releasing us from any obligation.

(e) The price payable for these shares if the respective options are exercised is the equivalent to US$14.50, adjusted by the variation in the Consumer Price Index (“CPI”) published monthly by the U.S. Department of Labor, from the date it was set by our Board of Directors to the date of subscription and payment of the shares. Such price shall be paid in Chilean pesos, at once, in the act of subscription, in cash, by bank check, electronic fund transfer or any other instrument or paper representing money payable on demand, converted at the observed dollar exchange rate published in the Official Gazette on the same date as subscription and payment of the shares. In any case, the per-share price payable by the employee if the option is exercised may be no less than US$14.50.

147

The selection of the employees that participated in the stock option plan was based on, among other criteria that the Board determined at the time of employment with the Company, the position they hold, their importance in earning profits, the responsibility of the position they hold, the amount of equity managed, the ability to work as a team and performance, and the potential for development and importance within the Company given their education and experience.

The original terms of the plan were most recently amended on October 25, 2011 when a new expiration date was established.

Training

Some of our employees, such as the flight operations, maintenance and customer ground operations personnel undergo training when they join the Company and throughout their employment with us. For this training, we invested US$12.5 million in 2009, US$13.5 million in 2010 and US$ 20.6 million in 2011. We generally recruit our pilots from the Academia de Ciencias Aeronáuticas (at the Universidad Técnica Federico Santa María), aeroclubs and the armed forces. Before being promoted to the position of captain, first officers must have logged at least 4,000 flight hours and received the approval of a special pilots’ committee. We provide ground-school training in Santiago, as well as in Lima and Quito for our Peruvian and Ecuadorian crews. We maintain an agreement with CAE (a Canadian firm specializing in flight simulators and training centers) to develop a pilot training center in Santiago de Chile. This training center includes two Airbus A320 and one Boeing 767 Full Flight simulators plus 1 MFTD A320/340 simulator. Our pilot staff also receives simulator training at sites in the United States and Brazil.

Our pilots are rated for only one aircraft type by local aeronautical authorities, and they are not cross-qualified between two or more aircraft types. Chilean regulations require pilots to be licensed as commercial pilots for a first officer position and as an airline transport pilot for a captain position, with specific type, function and special ratings for each aircraft to be flown, and to be medically certified as physically fit. Licenses and medical certifications are subject to periodic reevaluation, including flight simulator recurrent training, ground recurrent training, annual emergency procedures training, safety and security training and recent flying experience. Our pilots receive a variety of training, such as lectures, simulations and gaming and computer based training. Cabin crew must have initial and periodic competency fitness training.

Aircraft mechanics and maintenance supervisory personnel must be licensed by the DGAC and other corresponding authorities in other countries in which we operate. We train our technicians (Mechanics, Specialists, Inspectors and Maintenance Supervisors) in all programs required by both local authority (DGAC) and international authorities and aviation associations, such as the FAA, the European Aviation Safety Agency (“EASA”), IATA rules and regulations, those required by aircraft manufacturers and the training needs that we identify during our annual reviews. The program of study contains initial and continuing training. Initial training is level III ATA SPEC 104 and lasts forty to fifty days depending on the aircraft types and continuing training lasts up to five to six days.

During 2011, we continued training sales and administrative personnel in areas such as service and sales quality. We also continued delivering learning programs to develop leadership skills and others with different methodologies including e-learning.

Labor Relations

We have negotiated longer-term labor contracts with the labor unions in anticipation of their scheduled expirations, which under Chilean law are limited to a period of four years. In general, the expiration of our labor agreements with the several unions that represent our pilots and other personnel are staggered in a way that we avoid being in the position of having to renegotiate contract terms with substantially all of our pilots or other personnel at the same time.

148

Two collective contracts are in place between Lan Airlines and its pilots, both through the pilots’ union. Non-unionized pilots (less than 5% of the pilot corps), have the same benefits, through direct extension of the union’s collective agreement. These contracts were negotiated in February 2009 and expire between August 2012 and January 2013. Lan Cargo is also a party to an employment agreement with its pilots that expires in November 2012. Finally, Lan Express has two collective agreements with its pilots, both unionized and non-unionized. Those contracts expire between September and December 2012.

Lan Airlines and its affiliates have also entered into collective bargaining agreements (CBAs) with many of their employees:

Lan Airlines renewed the CBAs with its maintenance personnel in June 2008 for a period of four years. On March 30, 2011, the collective bargaining agreement with maintenance personnel working for Lan Express, one of LAN’s Chilean subsidiaries, was renewed until March 31, 2015.

LAN’s CBA with the union representing our administrative personnel has been renewed in Februrary 2012, and expires in December 2015, and the CBA with Lan Express administrative personnel expires in April 2013.

The majority of Lan Argentina’s employees belong to industry-wide unions. Currently, labor relations are stable. In 2005, Lan Argentina hired employees from another airline and agreed to maintain their employment conditions and labor stability during a three-year period. The conditions and labor relations that Lan Argentina had to maintain expired on September 2008, a situation that did not generate any conflict for the company. In December 2009, salary agreements were finalized with the five unions in Lan Argentina. These agreements expired on September 2010 and were renewed in September 2011 for one year. In Lan Peru and Lan Ecuador, meanwhile, the employment relationship is smooth and stable. With respect to Lan Ecuador, there is a collective agreement in force since October 2010 with Pilots (non-union), whose duration is 3 years and 6 months. The only union that exists in this country is the Cabin Crew. It still has no legal authority to negotiate collective agreements with the Company. Notwithstanding the foregoing, the Company maintains a relationship with the union continuing to address issues of common interest and welfare. Lan Peru negotiated in 2010 a collective agreement with the union of technical and mechanical, with a duration of 4 years. The next collective bargaining with the union will occur in June 2012.

We believe we generally maintain good relations with our employees and the unions, and expect to continue to enjoy good relations with our employees and the unions in the future. We also believe that we have built a solid base among our employees that will support and facilitate our growth plans. We can provide no assurance, however, that our employee compensation arrangements may not be subject to change or modification after the expiration of the contracts currently in effect, or that we will not be subject to labor-related disruptions due to strikes, stoppages or walk-outs.

E. Share Ownership

As of February 29, 2012, the members of our Board of Directors and our executive officers as a group own 51.43% of our shares. See “Item 7. Controlling Shareholders and Related Party Transactions.”

For a description of stock options granted to our Board of Directors and our executive officers, see “—Compensation—Long Term Incentive Compensation Program”.

ITEM 7. CONTROLLING SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

As of February 29, 2012, the Cueto Group controlled the Company. The Cueto Group is comprised by Mr. Juan Cueto Sierra, Mr. Juan José Cueto Plaza, Mr. Ignacio Cueto Plaza, Mr. Enrique Cueto Plaza and certain other family members.

Beginning in the first quarter of 2010, the Piñera Group (which was comprised by Mr. Sebastián Piñera Echenique and certain members of his family), which owned 26.3% of the voting common shares as of December 31, 2009, commenced to sell its ownership of the Company after Mr. Sebastián Piñera Echenique was elected as the new president of Chile.

149

On March 9, 2010, the Cueto Group acquired an 8.6% stake of the Company from the Piñera Group. As a result of this transaction, the shareholders agreement between the two groups was terminated.

In addition, the Piñera Group sold 9.8% of the Company through two auctions in the SSE, which took place on February 25, 2010 and on March 25, 2010, respectively.

Finally, on March 24, 2010, the Piñera Group signed an agreement to sell an additional 8.0% stake in the Company to Bethia S.A.

As a result of the above, the Cueto Group controls the Company. As of February 29, 2012, the Cueto Group owned 33.90% of the voting common shares. This Controlling Shareholder is entitled to elect four of the nine members of our board of directors and is in a position to direct the management of the Company.

As of February 29, 2012, a second shareholder group, which includes our director Ramón Eblen Cádiz, owned 9.34% of our common shares. Also Bethia Group, which includes our director Carlos Heller Solari, owned 7.96% of LAN’s common shares.

The table below sets forth the beneficial ownership of common shares as of February 29, 2012, broken down between our Controlling Shareholders, other major shareholders (beneficial owners of more than 5% of the Company) and minority shareholders.

	Beneficial ownership (as of February 29, 2012)
	Number of shares of common stock beneficially owned		Percentage of common stock beneficially owned
Shareholder
Cueto Group		115,399,502		33.87	%
Costa Verde Aeronáutica S.A.		90.575.407		26.58	%
Inversiones Mineras del Cantábrico S.A.		7,079,095		2.08	%
Inversiones Nueva Costa Verde Aeronautica Limitada		17.745.000		5.21	%
Eblen Group		31,778,049		9.33	%
Inversiones Andes S.A.		22.288.695		6.54	%
Other		9,489,354		2.78	%
Bethia Group(1)		27.103.273		7.95	%
Axxion S.A.		13.551.637		3.98	%
Axxdos S.A.		13.551.636		3.98	%
Others		166,456,825		48.85	%
Total		340,737,649		100.00	%

(1) Additionally as of February 29, 2012, Mr. Carlos Heller, Bethia´s Vice President owned directly 48,900 common shares of Lan Airlines (0.01% of Lan Airlines’ outstanding shares)

On July 6, 2007, the SVS fined Juan José Cueto Plaza 1,620 UF (approximately US$74,000) in connection with the purchase of Shares that he carried out through Inversiones Mineras del Cantábrico on July 24, 2006. The SVS considered that such purchase had breached an obligation not to acquire Shares until the financial statements of the company became publicly available, in alleged violation of Article 165, paragraph 1 of Law No.18,045 of October 22, 1981. The SVS ruled that, although Mr. Cueto had not used any privileged information, LAN’s financial statements should be considered to be privileged information per se, and thus, created a duty to abstain from trading the securities prior to the disclosure of the financial statements. On July 26, 2007 Juan José Cueto filed an appeal of this fine before the 27° Civil Court of Santiago, which was dismissed on January 8, 2009. The defense of Mr. Cueto filed two legal recourses against the first dismissal, which were rejected by the Court of Appeals of Santiago on March 8, 2010. Against this second dismissal Juan José Cueto filed two additional and separate legal recourses, which as of this date are pending before the Supreme Court of Chile. A final decision is pending.

150

As of February 29, 2012, investors outside of Chile held 3.02% of our capital stock in the form of ADSs, Chilean pension funds held 15.06% of our capital stock and other minority investors held 30.78% in the form of common shares. It is not practicable for us to determine the number of ADSs or common shares beneficially owned in the United States. As of February 29, 2012, we had 1,672 record holders of our common shares. It is not practicable for us to determine the portion of shares held in Chile or the number of record holders in Chile.

All of our shareholders have identical voting rights.

Shareholders’ Agreement

LAN, the TAM controlling shareholders and other parties have entered into shareholders agreements that establish agreements and restrictions relating to corporate governance in an attempt to balance LAN’s interests, as the owner of substantially all of the economic rights in TAM, and the TAM controlling shareholders, as the continuing controlling shareholders of TAM under Brazilian law, by prohibiting the taking of certain specified material corporate actions and decisions without prior supermajority approval of the shareholders and/or the board of directors of Holdco I or TAM. Actions requiring supermajority approval by the board of directors of Holdco I or TAM include, among others, entering into acquisitions or business collaborations, amending or approving budgets, business plans, financial statements and accounting policies, incurring indebtedness, encumbering assets, entering into certain agreements, making certain investments, modifying rights or claims, entering into settlements, appointing executives, creating security interests, issuing, redeeming or repurchasing securities and voting on matters as a shareholder of subsidiaries of TAM. Actions requiring supermajority shareholder approval of Holdco I or TAM include, among others, certain changes to the by-laws of Holdco I, TAM or TAM’s subsidiaries or any dissolution/liquidation, corporate reorganization, payment of dividends, issuance of securities, disposal or encumbrance of certain assets, creation of securities interest or entering into guarantees and agreements with related parties. Please see “Item 4.—Information of the Company—The Transaction Agreements—Shareholders Agreements” for more information.

B. Related Party Transactions

General

We have engaged in a variety of transactions with our affiliates, including entities owned or controlled by certain of our controlling shareholders. In the ordinary course of our business we render to and receive from related companies services of various types, including aircraft leases, aircraft interchanges, freight transportation and reservation services.

It is our policy not to engage in any transaction with or for the benefit of any shareholder or member of the board of directors, or any entity controlled by such a person or in which such a person has a substantial economic interest, unless the transaction is related to our business and the price and other terms are at least as favorable to us as those that could be obtained on an arm’s-length basis from a third party, such transactions, none of which is individually material, are summarized in Note 35 to our audited consolidated financial statements for the fiscal year ended December 31, 2011.

Sale of Blue Express

On January 25, 2011 Lan Cargo S.A. and Inversiones Lan S.A., subsidiaries of LAN Airlines, signed a promise to sell in favor of Bethia S.A. (“Bethia”) 100% of the capital in the LAN subsidiaries Blue Express Intl. Servicios de Transporte Limitada and Blue Express S.A. (together referred to as “Blue Express”), companies engaged in ground courier services, operating brands and certain computer programs. The price stated in the promissory contract was US$54 million subject to any adjustments that might arise as a result of a due diligence to be conducted by Bethia.

151

On April 6, 2011, LAN Cargo S.A. and Inversiones LAN S.A, as sellers, and Servicios de Transporte Limitada and Inversiones Betmin SpA (subsidiary of Bethia S.A.), as buyer, executed: (i) an Assignment of Social Rights; and (ii) a Share Purchase Agreement for the transfer of 100% of the capital in the LAN subsidiaries Blue Express Intl. Servicios de Transporte Limitada and Blue Express S.A., respectively. The final sale value of Blue Express was US$53.5 million.

Bethia S.A. is a related party to LAN in the terms of article 100 (c) of the Securities Market Law 18,045, as it is controlled by Mr. Carlos Heller, member of LAN’s Board of Directors.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Financial Statements and Other Financial Information

See “Item 3. Key Information—Selected Financial Data”, “Item 18. Financial Statements” and pages F-1 through F-129].

Legal and Arbitration Proceedings

We are involved in routine litigation and other proceedings relating to the ordinary course of our business.

In February 2006 the EC, in conjunction with the DOJ, initiated a global investigation of a large number of international cargo airlines (among them Lan Cargo, LAN’s cargo subsidiary) for possible price fixing of cargo fuel surcharges and other fees in the European and United States air cargo markets. On December 26, 2007, the European competition authorities notified Lan Cargo and LAN of the initiation of proceedings against twenty-five cargo airlines, among them Lan Cargo, for allegations of anti-competitive behavior in the airfreight business.

On January 21, 2009, Lan Cargo announced that it had reached a plea agreement with the DOJ in relation to the DOJ’s ongoing investigation regarding price fixing of fuel surcharges and other fees for cargo shipments. Under the plea agreement, Lan Cargo agreed to pay a fine of US$88 million. In addition, ABSA also reached a plea agreement with the DOJ and agreed to pay a fine of US$21 million. These amounts were stipulated to be paid over a five-year payment schedule starting in 2009. As of December 31, 2011, the pending amount to be paid during the next three years is approximately US$54 million and has been recorded within “Other Accounts Payable.”

On November 9, 2010 the EC imposed fines to 11 air carriers for a total amount of €800 million (equivalent to approximately US$1.1 billion). The fine imposed against Lan Cargo and its parent company, LAN Airlines, totaled €8.2 million (equivalent to approximately US$11.0 million). The Company provisioned US$25 million during the fourth quarter of 2007 for such fines, and maintained this provision until the fine was imposed in 2010. This was the lowest fine applied by the European Commission, which includes a significant reduction due to the Company’s cooperation with the Commission during the course of the investigation. In accordance with European Union law, on January 24, 2011 this administrative decision was appealed by Lan Cargo and Lan Airlines to the General Court in Luxembourg. The appeal is still ongoing. Any judgment by the General Court may also be appealed to the Court of Justice of the European Union.

As of December 31, 2010 the Company recorded a US$14.1 million gain (pre-tax) due to the reversal of a portion of the provision related to the investigation in the cargo business carried out by the European Commission. This was as a result of the fine announced in November 2010, which was lower than the amount provided for. This reversal is recorded in Other gains/(losses).

The investigation by the DOJ prompted the filing of numerous civil class actions by freight forwarding and shipping companies against many airlines, including Lan Cargo and Lan Airlines, including fifty-four in the United States. The cases filed in the United States were consolidated in the United States District Court, Eastern District of New York and the original complaint was subsequently amended to include additional airlines, including ABSA. On May 11, 2011, Lan Cargo announced that it had reached a settlement agreement with the class action plaintiffs in

152

relation to this litigation. As per the settlement agreement, Lan Cargo agreed to pay US$59.7 million. In addition, ABSA also reached a settlement agreement with class action plaintiffs and agreed to pay US$6.3 million. The amounts were paid to the plaintiffs’ counsel escrow account in 2011.

In February 2006, the CCB, in conjunction with the DOJ, initiated a global investigation of a large number of international cargo airlines (among them Lan Cargo) for possible price fixing of cargo fuel surcharges and other fees in the Canadian air cargo markets. Given the current stage of the proceeding, it is not possible at this time to anticipate with any precision the outcome of the investigation. The CCB’s investigation prompted the filing of four separate civil class actions by freight forwarding and shipping companies against many airlines, including Lan Cargo and Lan Airlines in Canada. On January 31, 2012, the respective Board of Directors of Lan Airlines and Lan Cargo approved a settlement agreement with the class actions plaintiffs. As per the settlement agreement, Lan Airlines and Lan Cargo agreed to pay the amount of CAD$700,000 (approximately US$701,192 as of March 28, 2012). The settlement agreement and payment are pending court approval.

On April 5, 2008, Brazilian authorities notified ABSA of the initiation of administrative proceedings before the Conselho Administrativo de Defesa Econômica (the Brazilian Antitrust Authority) against several cargo airlines and airline officers, among them ABSA, for allegations of anticompetitive practices regarding fuel surcharges in the air cargo business. Given the current stage of the proceedings, it is not possible at this time to anticipate with any precision the outcome of the civil actions filed against Lan Cargo, although it is expected to be a lengthy process.

In June 2008, the Korean Fair Trade Commission notified LAN of an investigation into the air cargo industry and its non-compliance with the Monopoly Regulation and Fair Trade Act and has requested information and documentation from LAN, which LAN duly submitted. On May 26, 2010 the Korean Fair Trade Commission announced the imposition of penalties against 29 other airlines and excluded LAN from further investigation.

The New Zealand Commerce Commission also initiated an investigation into potential anti-competitive activities in the international air cargo markets and requested information and documentation from LAN, which LAN duly submitted. On December 15, 2008, the New Zealand Commerce Commission announced it would focus its investigation on ten airlines and excluded LAN from further investigation.

In January 2007, we announced that we had provided, through our wholly owned subsidiary, Atlantic Aviation Investments LLC (“AAI”), a total of US$17.1 million in financing to Brazilian company VRG LINHAS AEREAS S.A. (“New Varig”), convertible into shares of New Varig. On March 28, 2007, GOL announced that it was acquiring 100% of the equity participation in New Varig. Pursuant to the terms of the relevant loan agreements, upon the sale of New Varig to GOL, we sought repayment of the principal of the loans plus interest from Varig Logística S.A. (“VarigLog”), the parent company of New Varig. VarigLog failed to respond to our demands for repayment and we subsequently filed a lawsuit in New York State court on August 29, 2007, seeking repayment of the outstanding principal plus interest. On October 10, 2008, the Court granted summary judgment in our favor for the full principal amount of the loans, US$17.1 million and entered a final judgment on December 1, 2008. The Court also held that AAI was entitled to collect the interest due under the loan agreement along with reasonable attorneys’ fees. After a hearing, a special referee appointed by the Court to decide the issue recommended that AAI recover US$1.9 million in accrued interest and attorneys’ fees, and the Court approved that recommendation. VarigLog appealed that decision, and the decision was upheld. On March 3, 2009, VarigLog filed an insolvency proceeding (recuperação judicial) before the bankruptcy court in Brazil, and on March 31, 2009, VarigLog filed a Chapter 15 petition in bankruptcy court in Florida seeking recognition of its Brazilian filing. The Florida court has entered an order, based upon AAI’s stipulation with VarigLog pursuant to which there would be no stay against the continuation and commencement of legal actions by AAI against VarigLog and any of its affiliates but AAI would not be able to take any action against two discrete VarigLog assets located in the United States. AAI continues its enforcement efforts to recover the amounts owed to it by VarigLog under the loan agreements.

In July 2009, as a result of VarigLog’s continued failure to repay the amount owed to AAI, we instituted a second lawsuit in New York State court against MatlinPatterson Global Advisers LLC, MatlinPatterson Global Opportunities Partners II LP, MatlinPatterson Global Opportunities (Cayman) II LP and Volo Logistics LLC (collectively, the “MP Entities”), seeking to hold them liable as the alter egos of VarigLog and asserting separate contract-based claims related to AAI’s loans to VarigLog. If AAI succeeds in its alter ego claim, the MP Entities would be liable for VarigLog’s debts, and obligated to repay what VarigLog has been adjudged to owe AAI by the

153

prior decisions of the New York courts. The Court denied in large part the MP Entities motion to dismiss AAI’s complaint on April 23, 2010. Thereafter, the MP Entities answered AAI’s complaint and filed counter-claims against AAI and its direct and indirect parents, LAN Pax Group S.A. (“LAX Pax”) and LAN Airlines S.A. (“LAN Airlines”), seeking declaratory relief and damages for breach of contract and tortious interference with contract. AAI and LAN Airlines moved to dismiss all of the counterclaims. AAI also moved for summary judgment on one of its breach of contract claims in September 2010. In May 2011, the Court granted summary judgment in favor of AAI as to the MP Entities’ liability for breach of contract. In the same decision, the Court dismissed the majority of the MP Entities’ counterclaims. The MP Entities have separately appealed both the Court’s decision granting AAI summary judgment and the decision to dismiss the majority of the MP Entities’ counterclaims. In February 2012, the Appellate Court unanimously affirmed the lower Court’s grant of summary judgment in favor of AAI on the issue of liability. The MP Entities are seeking permission from the Court to further appeal that decision. If the Appellate Court's affirmance of the lower Court's grant of summary judgment is undisturbed, AAI will resume proceedings before the lower Court to fix the amount of damages the MP Entities owe AAI.

Dividend Policy

In accordance with the Chilean Corporation Law, Lan Airlines must distribute cash dividends equal to at least 30% of its annual consolidated net income calculated in accordance with IFRS, unless otherwise decided by a unanimous vote of the holders of all issued shares and unless and except to the extent it has accumulated losses. If there is no net income in a given year, Lan Airlines can elect but is not legally obligated to distribute dividends out of retained earnings. The board of directors may declare interim dividends out of profits earned during such interim period. Pursuant to Lan Airlines’ by-laws, the annual cash dividend is approved by the shareholders at the annual ordinary shareholders’ meeting held between February 1 and April 30 of the year following the year with respect to which the dividend is proposed. All outstanding common shares are entitled to share equally in all dividends declared by Lan Airlines, unless the shares have not been fully paid by the shareholder after being subscribed.

Holders of ADSs will be entitled to receive dividends on the underlying common shares to the same extent as holders of common shares. Holders of ADRs on the applicable record dates will be entitled to receive dividends paid on the common shares represented by the ADSs evidenced by such ADRs. Dividends payable to holders of ADSs will be paid by us to the depositary in Chilean pesos and remitted by the depositary to such holders net of foreign currency conversion fees and expenses of the depositary and will be subject to Chilean withholding tax currently imposed at a rate of 35% (subject to credits in certain cases as described under “Item 10. Additional Information—Taxation—Cash Dividends and Other Distributions”). Owners of the ADSs will not be charged any dividend remittance fee by the depositary with respect to cash dividends.

Chilean law requires that holders of shares of Chilean companies that are not residents of Chile register as foreign investors under one of the foreign investment regimes established by Chilean law in order to have dividends, sale proceeds or other amounts with respect to their shares remitted outside Chile through the Formal Exchange Market (Mercado Cambiario Formal). Under our Foreign Investment Contract, the depositary, on behalf of ADS holders, will be granted access to the Formal Exchange Market to convert cash dividends from pesos to U.S. dollars and to pay such U.S. dollars to ADS holders outside Chile.

B. Significant Changes

None.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

The principal trading market for our common shares is the SEE. The common shares have been listed on the SEE under the symbol “LAN” since 1989, and the ADSs have been listed on the NYSE under the symbol “LFL” since November 7, 1997. The common shares also trade on the Bolsa de Valores de Valparaíso and the Bolsa Electrónica de Chile. The outstanding ADSs are identified by the CUSIP number 501723100. The following table sets forth, for the periods indicated, the high and low closing sale prices on the SEE for the common shares and the high and low closing prices on the NYSE for the common shares represented by ADSs. The information set forth in the table below reflects actual historical amounts and has not been restated in constant Chilean pesos.

154

Period	Ch$ per Common Share				US$ per ADS
	Low		High		Low		High
2007(1)		5,839.90		8,997.00		13.03		84.15
2008		4,350.00		7,110.00		6.90		14.87
2009		7,798.10		8,664.30		15.77		16.90
2010
Quarters:
First Quarter		8,120.00		9,470.00		15.60		18.36
Second Quarter		9,200.00		10,550.00		16.65		20.00
Third Quarter		10,000.00		15,900.00		18.74		30.50
Fourth Quarter		14,200.00		15,600.00		29.07		32.68
Annual:
Annual 2010		14,790.00		15,600.00		30.79		32.68
2011
Quarters:
First		11,755.00		15,150.00		24.30		31.39
Second		9,200.00		10,550.00		25.15		29.57
Third		10,000.00		15,900.00		20.56		31.91
Fourth		14,200.00		15,600.00		18.65		25.98
Months:
September 2011		10,960,00		13,600.00		20.56		29.45
October 2011		14,200.00		15,238.00		18.65		25.98
November 2011		15,600.00		14,500.00		21.45		25.34
December 2011		11,970.00		12,490.00		22.83		24.49
Annual:
Annual 2011		14,790.00		15,600.00		18.65		31.91
2012
Months:
January 2012		13,250.00		15,150.00		23.18		25.34
February 2012		12,000.00		14,730.00		25.13		27.92
March 2012 (through March 28, 2012)		12,948.00		14,300.00		26.25		29.34

Source: Santiago Stock Exchange and the New York Stock Exchange

⁽¹⁾  In August 2007, the ADR to common share ratio was changed from 5:1 to 1:1.

As of February 29, 2012, a total of 340,737,649 common shares were outstanding, including 10,283,898 common shares represented by ADSs.

B. Plan of Distribution

Not applicable.

C. Markets

Trading

The Chilean stock market, which is regulated by the SVS under Law 18,045 of October 22, 1981, as amended, which we refer to as the Securities Market Law, is one of the most developed among emerging markets, reflecting the particular economic history and development of Chile. The Chilean government’s policy of privatizing state-owned companies, implemented during the 1980s, led to an expansion of private ownership of shares, resulting in an increase in the importance of stock markets. Privatization extended to the social security system, which was

155

converted into a privately managed pension fund system. These pension funds have been allowed, subject to certain limitations, to invest in stocks and are currently major investors in the stock market. Some market participants, including pension fund administrators, are highly regulated with respect to investment and remuneration criteria, but the general market is less regulated than the U.S. market with respect to disclosure requirements and information usage.

The SSE is Chile’s principal exchange and accounts for approximately 86.87% of securities traded in Chile. Approximately 12.91% of equity trading is conducted on the Chilean Electronic Stock Exchange, an electronic trading market created by banks and non-member brokerage houses. The remaining equity trading is conducted on the Valparaíso Stock Exchange.

Equities, closed-end funds, fixed-income securities, short-term and money market securities, gold and U.S. dollars are traded on the SSE. In 1991, the SSE initiated a futures market with two instruments: U.S. dollar futures and Selective Shares Price Index, or IPSA, futures. Securities are traded primarily through an open voice auction system; a firm offers system or daily auctions. Trading through the open voice system occurs on each business day between 9:30 a.m. to 4:30 p.m. The SSE has an electronic system of trade, called Telepregón HT, which operates continuously for stocks trading in high volumes from 9:30 a.m. to 4:00 p.m. (or 5:00 p.m., depending on the period of the year). The Chilean Electronic Stock Exchange operates continuously from 9:30 a.m. to 4:30 p.m. (or 5:30 p.m., depending on the period of the year) on each business day. In February 2000, the SSE Off-Shore Market began operations. In the Off-Shore Market, publicly offered foreign securities are traded and quoted in U.S. dollars.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

This Item reflects recent legal amendments effected by Chilean Law No. 20,382 on Corporate Governance, which was enacted on October 20, 2009, and came into effect on January 1, 2010, and Chilean Law No. 20,552, which modernize and encourage competition in the financial system, enacted on November 6, 2011 and into effect on December 17, 2011.

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Set forth below is information concerning our share capital and a brief summary of certain significant provisions of our by-laws and Chilean law. This description contains all material information concerning the common shares but does not purport to be complete and is qualified in its entirety by reference to our by-laws, the Chilean Corporation Law and the Securities Market Law, each referred to below. For additional information regarding the common shares, reference is made to our by-laws, a copy of which is included as Exhibit 1.1 to this annual report on Form 20-F.

156

Organization and Register

Lan Airlines is a publicly held stock corporation (sociedad anónima abierta) incorporated under the laws of Chile. Lan Airlines was incorporated by a public deed dated December 30, 1983, an abstract of which was published in the Chilean Official Gazette (Diario Oficial de la República de Chile) No. 31.759 on December 31, 1983, and registered on page 20,341, No. 11,248 of the Chilean Real Estate and Commercial Registrar (Registro de Comercio del Conservador de Bienes Raices y Comercio de Santiago) for the year 1983. Our corporate purpose, as stated in our by-laws, is to provide a broad range of transportation and related services, as more fully set forth in Article Four thereof.

General

Shareholders’ rights in a Chilean company are generally governed by the company’s by-laws and the Chilean Corporation Law. Article 22 of the Chilean Corporation Law states that the purchaser of shares of a company implicitly accepts its by-laws and any prior agreements adopted at shareholders’ meetings. Additionally, the Chilean Corporation Law regulates the government and operation of corporations (“sociedades anónimas,” or S.A.) and provides for certain shareholder rights. Article 137 of the Chilean Corporation Law provides that the provisions of the Chilean Corporation Law take precedence over any contrary provision in a corporation’s by-laws. The Chilean Corporation Law and our by-laws also provide that all disputes arising among shareholders in their capacity as such or between us or our administrators and the shareholders may either be submitted to arbitration in Chile or to the courts of Chile at the election of the plaintiff initiating the action. Despite the foregoing a recent legal amendment has forbidden certain individuals (directors, senior managers, administrators and main executives of the corporation, and any shareholder that directly or indirectly holds shares whose book or market value exceed 5,000 UF at the moment of filing of the action) from submitting such action before the ordinary courts, thus obligating them to proceed with arbitration in all situations. Finally, Decree-Law No. 3,500 on Pension Fund Administrators, which allows pension funds to invest in the stock of qualified corporations, indirectly affects corporate governance and prescribes certain rights of shareholders. The Chilean Corporation Law sets forth the rules and requirements under which a corporation is deemed to be “publicly held.” Article 2 of the Chilean Corporation Law defines publicly held corporations as corporations that register their shares with the Registro de Valores (Securities Registry) of the SVS, either voluntarily or pursuant to a legal obligation. In addition, Article 5 of the Chilean Securities Market Law indicates which corporation’s shares must be registered with the Securities Registry:

• one with 500 or more shareholders; and

• one in which 100 or more shareholders own at least 10% of the subscribed capital (excluding any direct or indirect individual holdings exceeding 10%).

The framework of the Chilean securities market is regulated by the SVS under the Securities Market Law and the Chilean Corporation Law, which imposes certain disclosure requirements, restricts insider trading, prohibits price manipulation and protects minority investors. In particular, the Securities Market Law establishes requirements for public offerings, stock exchanges and brokers and outlines disclosure requirements for corporations that issue publicly offered securities.

Ownership Restrictions

Under Articles 12 and 20 of the Securities Market Law and Circular 289 issued by the SVS in 2009, certain information regarding transactions in shares of publicly held corporations must be reported to the SVS and the Chilean stock exchanges on which the shares are listed. Since the ADRs are deemed to represent the shares underlying the ADSs, transactions in ADRs will be subject to those reporting requirements. Among other matters, the beneficial owners of ADSs that directly or indirectly hold 10% or more of the subscribed capital of Lan Airlines, or that reach or exceed such percentage through an acquisition, are required to report to the SVS and the Chilean stock exchanges, the day following the event:

• any acquisition or sale of shares; and

157

• any acquisition or sale of contracts or securities the price or performance of which depends on the price variation of the Lan Airlines’ shares.

These obligations are extended (i) to certain individuals (immediate family, next of kin and others) if the ADSs holder is a natural person; (ii) to any entity controlled by the holder, if the ADSs is an legal entity,; and (iii) to groups, if a holder has any joint action agreement with other holders and the group reaches or exceeds the cited threshold.

In addition, majority shareholders must state in their report whether their purpose is to acquire control of the company or if they are making a financial investment.

Under Article 54 of the Securities Market Law and under SVS regulations, persons or entities that intend to acquire control, whether directly or indirectly, of a publicly traded company, must follow certain notice requirements, regardless of the acquisition vehicle or procedure or whether the acquisition will be made through direct subscriptions or private transactions. In the first place, the potential acquiror must send a written communication to the target corporation, any companies controlling or controlled by the target corporation, the SVS and the Chilean stock exchanges on which the target’s securities are listed, stating, among other things, the person or entity purchasing or selling and the price and conditions of any negotiations. Subsequently, the potential acquiror must also inform the public of its planned acquisition by means of a publication in two Chilean newspapers with national distribution and by uploading such notice to the acquiror’s website, if available. Both requirements shall be met at least ten business days prior to the date on which the acquisition transaction is to close, and in any event, as soon as negotiations regarding the change of control have been formalized or when confidential information or documents concerning the target are delivered to the potential acquiror. The notices must state, among other things, the person or entity purchasing or selling and the price and conditions of any negotiations.

In addition to the foregoing, Article 54A of the Securities Market Law requires that within two business days of the completion of the transactions pursuant to which a person has acquired control of a publicly traded company, a notice shall be published in the same newspapers in which the notice referred to above was published and notices shall be sent to the same persons mentioned in the preceding paragraphs.

Consequently, a beneficial owner of ADSs intending to acquire control of Lan Airlines will be subject to the foregoing reporting requirements.

The provisions of the aforementioned articles do not apply whenever the acquisition is being made through a tender or exchange offer.

Title XXV of the Securities Market Law on tender offers and SVS regulations provide that the following transactions shall be carried out through a tender offer:

• an offer which allows to take control of a publicly traded company, unless the shares are being sold by a controlling shareholder of such company at a price in cash which is not substantially higher than the market price and the shares of such company are actively traded on a stock exchange;

• an offer for all the outstanding shares of a publicly traded company upon acquiring two-thirds or more of its voting shares (this offer must be made at a price not lower than the price at which appraisal rights may be exercised, that is, book value if the shares of the company are not actively traded or, if the shares of the company are actively traded, the weighted average price at which the stock has been traded during the two months immediately preceding the acquisition); and

• an offer for a controlling percentage of the shares of a publicly traded company if the acquiror intends to take control of the company (whether publicly-traded or privately held) controlling such publicly traded company, to the extent that the latter represents 75.0% or more of the consolidated net assets of the former.

Article 200 of the Securities Market Law prohibits any shareholder that has taken control of a publicly traded company from acquiring, for a period of twelve months from the date of the transaction that granted it control of the

158

publicly traded company, a number of shares equal to or higher than 3.0% of the outstanding issued shares of the target without making a tender offer at a price per share not lower than the price paid at the time of taking control. Should the acquisition from the other shareholders of the company be made on the floor of a stock exchange and on a pro rata basis, the controlling shareholder may purchase a higher percentage of shares, if so permitted by the regulations of the stock exchange.

Title XV of the Securities Market Law sets forth the basis for determining what constitutes a controlling power, a direct holding and a related party.

Capitalization

Under Chilean law, the shareholders of a company, acting at an extraordinary shareholders’ meeting, have the power to authorize an increase in the company’s share capital. When an investor subscribes issued shares, the shares are registered in that investor’s name even without payment, and the investor is treated as a shareholder for all purposes except with regard to receipt of dividends and return of capital, provided that the shareholders may, by amending the by-laws, also grant the right to receive dividends of distribution of capital despite not having paid for the subscribed shares. The investor becomes eligible to receive dividends once it has paid for the shares, or, if it has paid for only a portion of such shares, it is entitled to receive a corresponding pro rata portion of the dividends declared with respect to such shares, unless the company’s by-laws provide otherwise. If an investor does not pay for shares for which it has subscribed on or prior to the date agreed upon for payment, the company is entitled under Chilean law to auction the shares on the appropriate stock exchange, and it has a cause of action against the investor to recover the difference between the subscription price and the price received for the sale of those shares at auction. However, until such shares are sold at auction, the investor continues to exercise all the rights of a shareholder (except the right to receive dividends and return of capital, as noted above). Regarding shares issued but not paid for within the period determined by the extraordinary shareholders’ meeting for their payment (which period cannot exceed three years from the date of such shareholders’ meeting), until January 1, 2010 they were canceled and no longer available for issuance by us. As of January 1, 2010, the board of directors of Lan Airlines has a legal obligation to initiate the necessary legal actions to collect the unpaid amounts, unless the shareholders’ meeting which authorized the capital increase, allowed the board to abstain from taking such action by a vote of two thirds of the issued shares, in which case the former rule still applies. Once the foregoing legal actions are exhausted, the board of directors shall propose to the shareholders’ meeting the appropriate capital adjustment measures, to be decided by simple majority. Fully paid shares are not subject to further calls or assessments or to liabilities of Lan Airlines.

As of February 29, 2012, our share capital consisted of 340.381.831 common shares, all of which were subscribed and fully paid. Chilean law recognizes the right to issue common and preferred shares. To date, we have issued and are authorized by our shareholders to issue only common shares. Each share of stock is entitled to one vote. Pursuant to an employee compensation plan approved by extraordinary shareholders’ meetings dated April 5, 2007 and October 29, 2009, the issuance of certain shares has been authorized but that has not been made effective in full, as such issuance is subject to the exercising of rights granted to certain employees that expire on March 31, 2012.

Preemptive Rights and Increases in Share Capital

The Chilean Corporation Law requires Chilean companies to offer existing shareholders the right to purchase a sufficient number of shares to maintain their existing percentage of ownership in a company whenever that company issues new shares for cash, except for up to 10% of the capital increase which may be destined to employee compensation pursuant to article 24 of the Corporation Law. Under this requirement, any preemptive rights will be offered by us to the depositary as the registered owner of the common shares underlying the ADSs, but holders of ADSs and shareholders located in the United States will not be allowed to exercise preemptive rights with respect to new issuances of shares by us unless a registration statement under the Securities Act is effective with respect to those common shares or an exemption from the registration requirements thereunder is available.

We intend to evaluate at the time of any preemptive rights offering the costs and potential liabilities associated with the preparation and filing of a registration statement with the SEC, as well as the indirect benefits of enabling the exercise by the holders of ADSs and shareholders located in the United States of preemptive rights and any other

159

factors we consider appropriate at the time. No assurances can be given that any registration statement would be filed. If preemptive rights are not made available to ADS holders, the depositary may sell those holders’ preemptive rights and distribute the proceeds thereof if a secondary market for such rights exists and a premium can be recognized over the cost of such sale. In the event that the depositary does not sell such rights at a premium over the cost of any such sale, all or certain holders of ADRs may receive no value for the preemptive rights. The inability of holders of ADSs to exercise preemptive rights in respect of common shares underlying their ADSs could result in a change in their percentage ownership of common shares following a preemptive rights offering.

Under Chilean law, preemptive rights are freely exercisable, transferable or waived by shareholders during a thirty-day period commencing upon publication of the official notice announcing the start of the preemptive rights period in the newspaper designated by the shareholders’ meeting. The preemptive right of the shareholders is the pro rata amount of the shares registered in their name in the shareholders’ registry of Lan Airlines as of the fifth business day prior to the date of publication of the notice announcing the start of the preemptive rights period. During such thirty-day period (except for shares as to which preemptive rights have been waived), Chilean companies are not permitted to offer any newly issued common shares for sale to third parties. For that thirty-day period and an additional thirty-day period, Chilean publicly held corporations are not permitted to offer any unsubscribed common shares for sale to third parties on terms that are more favorable to the purchaser than those offered to shareholders. At the end of such additional thirty-day period, Chilean publicly held corporations are authorized to sell non-subscribed shares to third-parties on any terms, provided they are sold on a Chilean stock exchange.

Directors

Our by-laws provide for a board of nine directors. Compensation to be paid to directors must be approved by vote at the annual shareholders’ meeting. We hold elections for all positions on the board of directors every two years. Under our by-laws, directors are elected by cumulative voting. Each shareholder has one vote per share and may cast all of his or her votes in favor of one nominee or may apportion his or her votes among any number of nominees. These voting provisions currently ensure that a shareholder owning more than 10% of our outstanding shares is able to elect at least one representative to our board of directors.

Under the Chilean Corporation Law, transactions of a publicly-traded company with a “related” party must be conducted on an arm’s-length basis and must satisfy certain approval and disclosure requirements which are different from the ones that apply to a privately-held company. The conditions apply to the publicly-traded company and to all of its subsidiaries.

These transactions include any negotiation, act, contract or operation in which the publicly-traded company intervenes together with either (i) parties which are legally deemed related pursuant to article 100 of the Chilean Securities Market Law, (ii) a director, senior manager, administrator, main executive or liquidator of the company, either on their own behalf or on behalf of a third party, including those individuals’ spouses or close relatives, (iii) companies in which the foregoing individuals own at least 10% (directly or indirectly), or in which they serve as directors, senior managers, administrators or main executives (iv) parties indicated as such in the publicly-traded company’s by-laws, or identified by the directors’ committee, or (v) those who have served as directors, senior managers, administrators, main executives or liquidators of the counterparty in the last eighteen months and are now serving in one of those positions at the publicly-traded company.

Corporations may enter into transactions with related parties if (i) the transaction is in the interest of the corporation, (ii) the transaction is made on an arm’s-length basis at market conditions, (iii) the individuals involved in the transactions report them immediately to the board, (iv) the transaction is approved after a reasoned explanation by the majority of the board, excluding those directors or liquidators that are involved in the transaction (who shall, nonetheless, render an opinion on the matter if required by the board), (v) the decisions of the board is disclosed at the next shareholders’ meeting, and (vi) in case the majority of the board is disqualified to vote, the majority of the non-involved directors have approved the transaction, or two thirds of the voting shares have approved the transaction).

If as noted in (vi) above, the transaction is to be approved by the shareholder’s meeting, the following additional rules apply: (i) the board shall appoint an independent appraiser that shall report to the shareholders on the

160

transaction; (ii) the director’s committee or the non-involved directors may appoint a second independent appraiser; (iii) the appraiser’s reports shall be made available for fifteen days; (iv) the receipt and availability of the reports shall be disclosed as a material fact; (iv) directors shall render an opinion on the transaction within five business days after receiving the reports.

Transactions which do not meet the foregoing requirements are valid and enforceable, but neither the corporation nor its shareholders shall have a cause of action to sue the infringing party for reimbursement on behalf of the corporation, for a total of the benefits reported to the interested party, in addition to indemnification for the damages caused. In such proceedings, the defendant shall prove that the transaction met the legal requirements.

The Chilean Corporation Law sets forth a number of exceptions to the foregoing rules. In the following situations, transactions with related parties may be carried out without complying with the foregoing rules: (i) if a transaction does not involve a substantial amount (if it does not exceed 1.0% of the net worth of the company and does not exceed the equivalent of 2,000 UF or approximately US$92,000 as of the date of this annual report on Form 20F) unless such a transaction exceeds 20,000 UF (for this calculation all similar transactions carried out within a consecutive 12-month period between the same parties or for the same subject matter, shall be deemed as a single transaction), (ii) transactions which according to the policies determined by the board of directors, are deemed to be within the ordinary course of business (the determination of such policies shall be disclosed as a material fact and made available to shareholders), and (iii) if the counterparty is an entity in which the publicly-traded company has, directly or indirectly, at least a 95.0% ownership. As per the exemption indicated in (ii) above, on December 29, 2009, the Board of Directors of LAN determined the cited policies setting forth the transactions that fall within the ordinary course of business. That determination was publicly disclosed on the same day and is currently available on LAN’s website under the “Corporate Governance” section.”

Shareholders’ Meetings and Voting Rights

The Chilean Corporation Law requires that an ordinary annual meeting of shareholders be held within the first four months of each year after being called by the board of directors (generally they are held in April, but in any case following the preparation of our financial statements, including the report of our auditors, for the previous fiscal year). Lan Airlines’ by-laws further provide that the ordinary annual meeting of shareholders must take place between February 1 and April 30. The shareholders at the ordinary annual meeting approve the annual financial statements, including the report of our auditors, the annual report, the dividend policy and the final dividend on the prior year’s profits, elect the board of directors (in our case, every two years or earlier if a vacancy occurs) and approve any other matter that does not require an extraordinary shareholders’ meeting. The most recent extraordinary meeting of our shareholders was held on December 21, 2011, and the most recent ordinary annual meeting of our shareholders was held on April 29, 2011.

Extraordinary shareholders’ meetings may be called by the board of directors, if deemed appropriate, and ordinary or extraordinary shareholders’ meetings must be called by the board of directors when requested by shareholders representing at least 10.0% of the issued voting shares or by the SVS. In addition, as from January 1, 2010 there are two new rules in this regard: (i) the SVS may directly call for an extraordinary shareholders’ meeting in case of a publicly-traded companies, and (ii) any kind of shareholders’ meeting may be self-convened and take place if all voting shares attend, regardless of the fulfillment of the notice and other type of procedural requirements.

Notice to convene the ordinary annual meeting or an extraordinary meeting is given by means of three notices which must be published in a newspaper of our corporate domicile (currently Santiago, Chile) designated by the shareholders at their annual meeting and, if the shareholders fail to make such designation, the notice must be published in the Chilean Official Gazette pursuant to legal requirements. The first notice must be published not less than fifteen days and not more than twenty days in advance of the scheduled meeting. Notice also must be mailed not less than fifteen days in advance of the meeting to each shareholder and to the SVS and the Chilean stock exchanges. Currently, we publish our official notices in the newspaper La Tercera (available online at www.latercera.com).

The quorum for a shareholders’ meeting is established by the presence, in person or by proxy, of shareholders representing a majority of our issued common shares. If that quorum is not reached, the meeting can be reconvened within forty-five days, and at the second meeting the shareholders present are deemed to constitute a quorum regardless of the percentage of the common shares that they represent.

161

Only shareholders registered with us on the fifth business day prior to the date of a meeting are entitled to attend and vote their shares. A shareholder may appoint another individual (who need not be a shareholder) as his or her proxy to attend and vote on his or her behalf. Proxies addressed to us that do not designate a person to exercise the proxy are taken into account in order to determine if there is a sufficient quorum to hold the meeting, but the shares represented thereby are not entitled to vote at the meeting. The proxies must fulfill the requirements set forth by the Chilean Corporation Law and its regulatory norms. Every shareholder entitled to attend and vote at a shareholders’ meeting has one vote for every share subscribed.

The following matters can only be considered at an extraordinary shareholders’ meeting:

• our dissolution;

• a merger, transformation, division or other change in our corporate form or the amendment of our by-laws;

• the issuance of bonds or debentures convertible into shares;

• the conveyance of 50% or more of our assets (whether or not it includes our liabilities);

• the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;

• the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;

• the conveyance of shares of a subsidiary which entails the transfer of control;

• granting of a security interest or a personal guarantee in each case to secure the obligations of third parties, unless to secure or guarantee the obligations of a subsidiary, in which case only the approval of the board of directors will suffice; and

• other matters that require shareholder approval according to Chilean law or the by-laws.

The matters referred to in the first seven items listed above may only be approved at a meeting held before a notary public, who shall certify that the minutes are a true record of the events and resolutions of the meeting.

The by-laws establish that resolutions are passed at shareholders’ meetings by the affirmative vote of an absolute majority of those voting shares present or represented at the meeting. However, under the Chilean Corporation Law, the vote of a two-thirds majority of the outstanding voting shares is required to approve any of the following actions:

• a change in our corporate form, division or merger with another entity;

• amendment to our term of existence, if any;

• our early dissolution;

• change in our corporate domicile;

• decrease of our capital stock;

• approval of contributions and the assessment thereof whenever consisting of assets other than money;

162

• any modification of the authority reserved for the shareholders’ meetings or limitations on the powers of the board of directors;

• decrease in the number of members of the board of directors;

• the conveyance of 50% or more our assets (whether or not it includes our liabilities);

• the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;

• the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;

• the conveyance of shares of a subsidiary which entails the transfer of control;

• the form that dividends are paid in;

• granting a security interest or a personal guarantee in each case to secure obligations of third parties that exceeds 50% of our assets, unless to secure or guarantee the obligations of a subsidiary, in which case only approval of the board of directors will suffice;

• the acquisition of our own shares, when, and on the terms and conditions, permitted by law;

• all other matters provided for in the by-laws; and

• the correction of any formal defect in our incorporation or any amendment to our by-laws that refers to any of the matters indicated in the first thirteen items listed above;

• the institution of the right of the controlling shareholder who has purchases at least 95% of the shares, to purchase shares of the outstanding minority shareholders pursuant to the procedure set forth in article 71 bis of the Corporation Law;

• the approval or ratification of transactions with related parties, as per article 147 of the Corporation Law (described above).

Amendments to the by-laws that have the effect of establishing, modifying or eliminating any special rights pertaining to any series of shares require the consenting vote of holders of two-thirds of the shares of the affected series. As noted above, Lan Airlines does not have special series of shares.

In general, Chilean law does not require a publicly held corporation to provide the level and type of information that the U.S. securities laws require a reporting company to provide to its shareholders in connection with a solicitation of proxies. However, shareholders are entitled to examine the books of the company and its subsidiaries within the fifteen-day period before the scheduled meeting. No later than the first notice summoning an ordinary shareholder’s meeting, the board of directors of a publicly held corporation shall send to every shareholder notice by regular mail, containing a reference to the issues that will be discussed, together with instructions to obtain all the appropriate documentation regarding those issues, in addition to being obligated to publish them in our website, and also a copy of the annual report and the financial statements of the company. However, the SVS may authorize companies that have a large number of shareholders to limit the sending of such documents only to those shareholders who have a number of shares exceeding a certain number, and, in any case, to any shareholder that has required of the company such sending. Shareholders who do not fall into this category but who request it must be sent a copy of our annual report. In addition to these requirements, we regularly have provided, and currently intend to continue to provide, together with the notice of shareholders’ meeting, a proposal for the final annual dividend for shareholder approval. See “—Dividend and Liquidation Rights” below.

163

The Chilean Corporation Law provides that, whenever shareholders representing 10% or more of the issued voting shares so request, a Chilean company’s annual report must include such shareholders’ comments and proposal in relation to the company’s affairs, together with the comments and proposals set forth by the directors’ committee. Similarly, the Chilean Corporation Law provides that whenever the board of directors of a publicly held corporation convenes an ordinary meeting of the shareholders and solicits proxies for that meeting, or distributes information supporting its decisions or other similar material, it is obligated to include as an annex to its annual report any pertinent comments and proposals that may have been made by shareholders owning 10% or more of the company’s voting shares who have requested that such comments and proposals be included, together with the comments and proposals set forth by the directors’ committee.

Dividend and Liquidation Rights

In accordance with the Chilean Corporation Law, Lan Airlines must distribute an annual cash dividend equal to at least 30% of its annual net income calculated in accordance with IFRS, unless otherwise decided by a unanimous vote of the holders of all issued shares, and unless and except to the extent it has accumulated losses. If there is no net income in a given year, Lan Airlines can elect but is not legally obligated to distribute dividends out of retained earnings. All outstanding common shares are entitled to share equally in all dividends declared by Lan Airlines, unless the shares have not been fully paid by the shareholder after being subscribed.

For all dividend distributions agreed by the board of directors in excess of the mandatory minimum of 30% noted in the preceding paragraph, Lan Airlines may grant an option to its shareholders to receive those dividends in cash, or in shares issued by either Lan Airlines or other corporations. Shareholders who do not expressly elect to receive a dividend other than in cash are legally presumed to have decided to receive the dividend in cash. A U.S. holder of ADSs may, in the absence of an effective registration statement under the Securities Act or an available exemption from the registration requirement thereunder, effectively be required to receive a dividend in cash. See “—Preemptive Rights and Increases in Share Capital” above.

Dividends that are declared but not paid within the appropriate time period set forth in the Chilean Corporation Law (as to minimum dividends, thirty days after declaration; as to additional dividends, the date set for payment at the time of declaration) are adjusted to reflect the change in the value of the UF. The UF is a daily indexed, Chilean peso-denominated accounting unit designed to discount the effect of Chilean inflation and it is based on the previous month’s inflation rate as officially determined. Such dividends also accrue interest at the then-prevailing rate for UF-denominated deposits during such period. The right to receive a dividend lapses if it is not claimed within five years from the date such dividend is payable. After that period, the amount not claimed is given to a non-profit organization, the Junta Nacional de Cuerpos de Bomberos de Chile (the National Corporation of Firefighters).

In the event of Lan Airlines’ liquidation, the holders of fully paid common shares would participate pro rata in the distribution of assets remaining after payment of all creditors. Holders of shares not fully paid will participate in such distribution in proportion to the amount paid.

Approval of Financial Statements

The board of directors is required to submit our consolidated financial statements to the shareholders for their approval at the annual ordinary shareholders’ meeting. If the shareholders reject the financial statements, the board of directors must submit new financial statements not later than sixty days from the date of that meeting. If the shareholders reject the new financial statements, the entire board of directors is deemed removed from office and a new board is to be elected at the same meeting. Directors who approved such financial statements are disqualified for re-election for the ensuing period.

Right of Dissenting Shareholders to Tender Their Shares

The Chilean Corporation Law provides that, upon the adoption at an extraordinary meeting of shareholders of any of the resolutions or if it takes place any of the situations enumerated below, dissenting or affected shareholders acquire the right to withdraw and to compel the company to repurchase their shares, subject to the fulfillment of certain terms and conditions. However, such right shall be suspended if we are declared bankrupt or are subject to a

164

creditor’s agreement pursuant to Title XII of Book IV of the Commerce Code. In the case of holders of ADRs, however, in order to exercise such rights, holders of ADRs would be required to first withdraw the common shares represented by the ADRs pursuant to the terms of the deposit agreement. Such holders of ADRs would need to perfect the withdrawal of the common shares on or before the fifth business day prior to the date of the meeting.

“Dissenting shareholders” are defined as those who attend a shareholders’ meeting and vote against a resolution which results in the withdrawal right, or, if absent at such a meeting, those who state in writing to the company their opposition to such resolution within the following thirty days. Dissenting shareholders must perfect their withdrawal rights by tendering their stock to the company within thirty days after adoption of the resolution.

The price paid to a dissenting shareholder of a publicly held corporation is the weighted average of the sales prices for the shares as reported on the Chilean stock exchanges on which the shares are quoted for the two-month period preceding the event giving rise to the withdrawal right. If, because of the volume, frequency, number and diversity of the buyers and sellers, the SVS determines that the shares are not shares actively traded on a stock exchange (acciones de transacción bursátil), the price paid to the dissenting shareholder is the book value. Book value for this purpose equals paid capital plus reserves and profits, less losses, divided by the total number of subscribed shares (whether entirely or partially paid). For the purpose of making this calculation, the last annual balance sheet is used and adjusted to reflect inflation up to the date of the shareholders’ meeting that gave rise to the withdrawal right.

The resolutions and situations that result in a shareholder’s right to withdraw are the following:

• the transformation of the company into an entity that is not a publicly held corporation governed by the Chilean Corporation Law;

• the merger of the company with or into another company;

• the conveyance of 50% or more of the assets of the company, whether or not such sale includes the company’s liabilities;

• the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;

• the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;

• the conveyance of shares of a subsidiary which entails the transfer of control;

• the creation of preferential rights for a class of shares or an extension, amendment or reduction to those already existing, in which case the right to withdraw only accrues to the dissenting shareholders of the class or classes of shares adversely affected;

• the correction of any formal defect in the incorporation of the company or any amendment to the company’s by-laws that grants the right to withdraw;

• the granting of security interests or personal guarantees to secure or guarantee third parties’ obligations exceeding 50% of the company’s assets, except with regard to subsidiaries;

• resolutions of the shareholders’ meeting approving the decision to make private a public corporation in the case the requirements set forth in “—General” cease to be met;

• if a publicly-traded company ceases to be obligated to register its shares in the Securities Registry of the SVS, and an extraordinary shareholders’ meeting agrees to de-register the shares and finalize its disclosure obligations mandated by the Corporation Law;

165

• if the controlling shareholder of a publicly-traded company reaches over 95% of the shares (in such case, the right must be exercised within 30 days of the date in which the threshold is reached, circumstance that must be communicated by means of a publication); and

• such other causes as may be established by the company’s by-laws (no such additional resolutions currently are specified in our by-laws).

In addition, shareholders of publicly held corporations have the right to withdraw if a person acquires two-thirds or more of the outstanding shares of such corporation with the right to vote (except as a result of other shareholders not having subscribed and paid a capital increase) and does not make a tender offer for the remaining shares within thirty days after acquisition.

Under Article 69(bis) of the Chilean Corporation Law, the right to withdraw also is granted to shareholders (other than pension funds that administer private pension plans under the national pension law), under certain terms and conditions, if a company were to become controlled by the Chilean government, directly or through any of its agencies, and if two independent rating agencies downgrade the rating of its stock from first class because of certain actions specified in Article 69(bis) undertaken by the company or the Chilean government that affect negatively and substantially the earnings of the company. Shareholders must perfect their withdrawal rights by tendering their shares to the company within thirty days of the date of the publication of the new rating by two independent rating agencies. If the withdrawal right is exercised by a shareholder invoking Article 69(bis), the price paid to the dissenting shareholder shall be the weighted average of the sales price for the shares as reported on the stock exchanges on which the company’s shares are quoted for the six-month period preceding the publication of the new rating by two independent rating agencies. If, as previously described, the SVS determines that the shares are not actively traded on a stock exchange, the price shall be the book value calculated as described above.

There is no legal precedent as to whether a shareholder that has voted both for and against a proposal (such as the depositary) may exercise withdrawal rights with respect to the shares voted against the proposal. As such, there is doubt as to whether holders of ADRs who have not surrendered their ADRs and withdrawn common shares on or before the fifth business day prior to the shareholder meeting will be able to exercise withdrawal rights either directly or through the depositary with respect to the shares represented by ADRs. Under the provisions of the deposit agreement the depositary will not exercise these withdrawal rights.

The circumstance indicated above regarding ownership in excess of 95% by the controlling shareholder creates not only a withdrawal right for the remaining minority shareholders, but as of January 1, 2010, it also creates a “squeeze out” right by the controlling shareholder with respect to those same shareholders (granting a call option by means of which the controlling shareholder may buy-out the existing ownership participations pursuant to the provisions of article 71 bis of the Corporation Law).

Registration and Transfers

The Depósito Central de Valores, (“DCV”), acts as Lan Airlines’ registration agent. In the case of jointly owned common shares, an attorney-in-fact must be appointed to represent the joint owners in dealings with us.

Material Contracts

Boeing

Boeing 767-300 Fleet

On May 9, 1997, we entered into the Aircraft General Terms Agreement with The Boeing Company (“AGTA”), applicable to all Boeing aircraft contracted for purchase from The Boeing Company.

On January 30, 1998, we entered into Purchase Agreement No. 2126 with The Boeing Company (“Purchase Agreement No. 2126”) to acquire two Boeing 767-300 passenger aircraft.

166

On November 11, 2004, we entered into supplemental agreement No. 16 to the Purchase Agreement No. 2126 to acquire one additional Boeing 767-300 freighter aircraft and three Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$140,000,000.

On April 28, 2005, we entered into supplemental agreement No. 20 to the Purchase Agreement No. 2126 to acquire two additional Boeing 767-300 freighter aircraft and one Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$300,000,000.

On July 20, 2005, we entered into supplemental agreement No. 21 to the Purchase Agreement No. 2126 to acquire three Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$410,000,000.

On March 31, 2006, we entered into supplemental agreement No. 22 to the Purchase Agreement No. 2126 to acquire three Boeing 767-300 aircraft. Furthermore, we converted two Boeing 767-300 freighter aircraft to two Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$430,000,000.

On December 14, 2006, we entered into supplemental agreement No. 23 to the Purchase Agreement No. 2126 to acquire three additional Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$460,000,000.

On November 10, 2008, we entered into supplemental agreement No. 24 to the Purchase Agreement No. 2126 to acquire four additional Boeing 767-300 passenger aircraft and two purchase rights for Boeing 767-300 aircraft. Two of these aircraft were delivered in 2011, while the other two aircraft have a scheduled delivery date in 2012. The estimated gross value (at list prices) of these aircraft was US$636 million.

On March 22, 2010, we entered into supplemental agreement No. 28 to the Purchase Agreement No. 2126, whereby we agreed to accelerate the delivery of ten 787-8 aircraft, substitute four aircraft from 787-916 to 787-816 and substitute three 767-316ER to 767-316F freighter aircraft. Moreover, on November 10, 2010, we entered into supplemental agreement No. 29 to the Purchase Agreement No. 2126, whereby we agreed to accelerate the delivery of three Aircraft and substitute those three aircraft from 767-316F to 767-316ER.

On February 15, 2011, we entered into supplemental agreement No. 30 to the Purchase Agreement No. 2126 to acquire three additional Boeing 767-300 passenger aircraft. Delivery is scheduled to take place in 2012. The estimated gross value (at list prices) of these aircraft was US$510 million.

On May 10, 2011, we entered into supplemental agreement No. 31 to the Purchase Agreement No. 2126 to acquire five additional Boeing 767-300 passenger aircraft and four purchase rights for Boeing 767-300 passenger aircraft. Delivery is scheduled to take place in 2012. The estimated gross value (at list prices) of these aircraft was US$870 million.

On December 22, 2011 we entered into supplemental agreement No. 32 to the Purchase Agreement No. 2126 to exercise two purchase options for two additional Boeing 767-300 passenger aircraft, while the remaining purchase options were deleted. Delivery is scheduled to take place in 2012. The estimated gross value (at list prices) of these aircraft was US$340 million.

Boeing 787-8/9 Fleet

On October 29, 2007, we entered into Purchase Agreement No. 3256 with the Boeing Company (“Purchase Agreement No. 3256”) to acquire eighteen Boeing 787-8 aircraft and eight Boeing 787-9 aircraft to be delivered between 2012 and 2016. This purchase agreement provides us with the option of purchasing fifteen additional aircraft to be delivered in 2017 and 2018. The estimated gross value (at list prices) of the Boeing aircraft for which we had firm commitments to take delivery under this contract is US$3.2 billion.

167

On March 22, 2010, we entered into supplemental agreement No. 1 to the Purchase Agreement No. 3256 to advance the schedule delivery date of ten Boeing 787-8 aircraft and substitute four Boeing 787-9 aircraft into four Boeing 787-8 aircraft.

On July 8, 2010, we entered into supplemental agreement No. 2 to the Purchase Agreement No. 3256 to advance the schedule delivery date of two Boeing 787-8 aircraft.

Boeing 777 Freighter Fleet

On July 3, 2007, we entered into Purchase Agreement No. 3194 with the Boeing Company (“Purchase Agreement No. 3194”) to acquire two Boeing 777 freighter aircraft with schedule deliveries dates in 2011 and 2012. The estimated gross value (at list prices) of the Boeing aircraft for which we had firm commitments to take delivery under this contract was US$545 million.

On March 22, 2010, we entered into letter agreement 6-1162-KSW-6454R2 to the Purchase Agreement No. 3194 to transfer two purchase rights from Purchase Agreement No. 2126 to Purchase Agreement No. 3194.

On November 2, 2010, we entered into supplemental agreement No. 2 to the Purchase Agreement No. 3194, to exercise one of the two options for a Boeing 777 freighter aircraft with schedule delivery date in 2012. The estimated gross value (at list prices) of this aircraft was US$280 million.

On September 22, 2011, we entered into supplemental agreement No. 3 to the Purchase Agreement No. 3194 to advance the schedule delivery date of one firm Boeing 777 freighter aircraft during 2012.

Airbus

On March 20, 1998, we entered into the Second A320 Family Purchase Agreement with Airbus S.A.S. (“Second A320 Family Purchase Agreement”) to acquire five Airbus 320 family aircraft.

On November 14, 2003, we entered into amendment No. 1 to the Second A320 Family Purchase Agreement to exercise three purchase rights for Airbus 319 aircraft, among other things.

On October 4, 2005, we entered into amendment No. 2 to the Second A320 Family Purchase Agreement to acquire twenty five additional Airbus 320 family aircraft and fifteen purchase rights for Airbus A320 family aircraft.

On March 6, 2007, we entered into amendment No. 3 to the Second A320 Family Purchase Agreement to exercise fifteen purchase rights for fifteen Airbus A320 family aircraft.

On December 23, 2009, we entered into amendment No. 5 to the Second A320 Family Purchase Agreement to acquire thirty additional Airbus A320 family aircraft. The estimated gross value (at list prices) of these aircraft was US$2.0 billion.

According to clause 12.2 of the Second A320 Family Purchase Agreement, applicable to all subsequent amendments, in case of a failure, as defined in such agreement, a service life policy for a period of 12 years after delivery of any given aircraft shall apply.

On May 10, 2010, we entered into amendment No. 6 to the Second A320 Family Purchase Agreement to convert the aircraft type of three aircraft and advance the scheduled delivery date of thirteen aircraft.

On May 19, 2010, we entered into amendment No. 7 to the Second A320 Family Purchase Agreement to advance the scheduled delivery date of three aircraft.

On September 23, 2010, we entered into amendment No. 8 to the Second A320 Family Purchase Agreement to convert the aircraft type of one aircraft and advance the scheduled delivery date of four aircraft.

168

On December 21, 2010, we entered into amendment No. 9 to the Second A320 Family Purchase Agreement to acquire fifty additional Airbus A320 family aircraft. The estimated gross value (at list prices) of these aircraft was US$2,600,000,000.

On June 10, 2011, we entered into amendment No. 10 to the Second A320 Family Purchase Agreement to convert the aircraft type of three aircraft, to select sharklets for some aircraft and to notify delivery dates for some aircraft.

On November 3, 2011, we entered into amendment No. 11 to the Second A320 Family Purchase Agreement to convert the aircraft type of three aircraft and defer the schedule delivery date of four aircraft.

On June 22, 2011, we entered into A320 NEO Purchase Agreement (“A320 NEO Purchase Agreement”) to acquire twenty Airbus 320 NEO family aircraft with schedule delivery dates in 2017 and 2018. The estimated gross value (at list prices) of these aircraft is US$1.7 billion.

Between April and August 2011, we entered into Buyback Agreements No. 3001, 3030, 3062, 3214 and 3216 with Airbus Financial Services for the sale of five A318 aircraft for approximately US$107 million.

For more information, see “Item 4. Information on the Company—Fleet—Fleet Leasing and Financing Arrangements”.

GE Commercial Aviation

On April 30, 2007, we also entered into an Aircraft Lease Common Terms Agreement with GE Commercial Aviation Services Limited and two Aircraft Lease Agreements with Wells Fargo Bank Northwest N.A., as owner trustee, for the lease of two Boeing B777-200LRF aircraft. These aircraft were delivered in 2009 and the leases shall remain in place for a term of 96 months.

For more information, see “Item 4. Information on the Company—Fleet—Fleet Leasing and Financing Arrangements”.

GE Engine Services

On December 17, 2010, we entered into a Digital Services Agreement with GE Engine Services, LLC, for the provision of operational analysis, performance and maintenance services of aircraft engines.

CFM International

On December 17, 2010, we entered into General Terms Agreement No. CFM-1-2377460475 (the “GTA”) and Letter Agreement No. 1 to GTA with CFM International, Inc. (“CFM”) for the sale and support by CFM of spare engines, related equipment and spare parts. Moreover, on December 17, 2010, we entered into a Rate Per Flight Hour Engine Shop Maintenance Services Agreement with CFM for the provision by CMF of maintenance services over our aircraft engines.

General Electric Company

On July 11, 2011 we entered into Letter Agreement No. 12 to the General Terms Agreements No. 6-9576 with General Electric Company for the purchase of four new CF6 80CB6F engines with delivery on 2013 and one purchase right for a CF6 80CB6F engine.

Pratt & Whitney Engine Leasing

On July 28, 2011, we entered into Used PW6122A Five Engine Purchase Agreement with Pratt & Whitney Engine Leasing, LLC for the sale of five PW6122A engines.

169

Proposed Merger Agreements

On January 18, 2011, we and Costa Verde Aeronáutica and Mineras del Cantábrico (we refer to these entities together as the “LAN controlling shareholders”) entered into an implementation agreement and an exchange offer agreement (we refer to these agreements together as the “transaction agreements”) with TAM S.A., TAM Empreendimentos e Participações S.A. (we refer to this entity as the “TAM controlling shareholder”) and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (we refer to these individuals together as the “Amaro family”), which set forth the terms and conditions of a proposed business combination of LAN and TAM. For more information, see “Item 4. Information on the Company—The Transaction Agreements”. On January 12, 2012 the transaction agreements were extended until June 30, 2012.

On January 25, 2012, the Company, LAN controlling shareholders Costa Verde Aeronáutica S.A. and Mineras del Cantábrico S.A., and TEP Chile S.A. entered into a Shareholders Agreement, which sets forth the parties’ agreement concerning the governance, management and operation of the LATAM Group, and voting and transfer of their respective LAN common shares and TEP Chile’s voting shares of Holdco I, following the effective time of the proposed combination with TAM.

On January 25, 2012, we entered into a Shareholders Agreement with TEP Chile S.A., which sets forth our agreement concerning the governance, management and operation of the LATAM Group following the effective time of the proposed combination with TAM.

On January 25, 2012, the Company, TEP Chile and Holdco I S.A. entered into a Shareholders Agreement, which sets forth our agreement concerning the governance, management and operation of Holdco I, and voting and transfer of voting shares of Holdco I, following the effective time of the proposed combination with TAM.

On January 25, 2012, the Company, TAM S.A., TEP Chile S.A. and Holdco I S.A. entered into a Shareholders Agreement, which sets forth our agreement concerning the governance, management and operation of TAM and its subsidiaries following the effective time of the proposed combination with TAM.

For more information, see “Item 4. Information on the Company—Shareholders Agreements”.

Sale of Blue Express

On January 25, 2011 Lan Cargo S.A. and Inversiones Lan S.A., subsidiaries of LAN Airlines, signed a promise to sell in favor of Bethia S.A. (“Bethia”) 100% of the capital in the LAN subsidiaries Blue Express Intl. Servicios de Transporte Limitada and Blue Express S.A. (together referred to as “Blue Express”), companies engaged in ground courier services, operating brands and certain computer programs. The price stated in the promissory contract was US$ 54 million subject to any adjustments that might arise as a result of a due diligence to be conducted by Bethia.

On April 6, 2011, LAN Cargo S.A. and Inversiones LAN S.A, as sellers, and Servicios de Transporte Limitada and Inversiones Betmin SpA (subsidiary of Bethia S.A.), as buyer, executed: (i) an Assignment of Social Rights; and (ii) a Share Purchase Agreement for the transfer of 100% of the capital in the LAN subsidiaries Blue Express Intl. Servicios de Transporte Limitada and Blue Express S.A., respectively. The final sale value of Blue Express was approximately US$53.5 million.

D. Exchange Controls

Foreign Investment and Exchange Controls in Chile

The Central Bank of Chile is responsible, among other things, for monetary policies and exchange controls in Chile. Equity investments, including investments in shares of stock by persons who are non-Chilean residents, have been generally subject in the past to various exchange control regulations restricting the repatriation of their investments and the earnings thereon.

170

Article 47 of the Central Bank Act and former Chapter XXVI of the Central Bank Foreign Exchange Regulations regulated the foreign exchange aspects of the issuance of ADSs by a Chilean company until April 2001. According to former Chapter XXVI, the Central Bank of Chile and the depositary had to enter into an agreement in order to gain access to the formal exchange market. The issuers of the shares underlying the ADSs and the custodian could also be parties to these agreements and we are party to such agreement.

On April 16, 2001, the Central Bank of Chile agreed that, effective April 19, 2001:

• prior foreign exchange restrictions would be eliminated: and

• a new Compendium of Foreign Exchange Regulations (Compendio de Normas de Cambios Internacionales) would be applied.

The main objective of these amendments, as declared by the Central Bank of Chile, is to facilitate movement of capital in and out of Chile and to encourage foreign investment.

In connection with the change in policy, the Central Bank of Chile eliminated the following restrictions:

• a reserve requirement with the Central Bank of Chile for a period of one year (this mandatory reserve was imposed on foreign loans and funds brought into Chile to purchase shares other than those acquired in the establishment of a new company or in the capital increase of the issuing company; the reserve requirement was gradually decreased from 30% of the proposed investment to 0%);

• the requirement of prior approval by the Central Bank of Chile for certain operations;

• mandatory return of foreign currency to Chile; and

• mandatory conversion of foreign currency into Chilean pesos.

Under the new regulations, only the following limitations apply to these operations:

• the Central Bank of Chile must be provided with information related to certain operations; and

• certain operations must be conducted with the Formal Exchange Market.

The Central Bank of Chile also eliminated Chapter XXVI of the Compendium of Foreign Exchange Regulations, which regulated the establishment of an ADR facility by a Chilean company. Pursuant to the new rules, it is no longer necessary to seek the Central Bank of Chile’s prior approval in order to establish an ADR facility nor to enter into a foreign investment contract with the Central Bank of Chile. The establishment of an ADR facility is now regarded as an ordinary foreign investment, and simply requires that the Central Bank of Chile be informed of the transaction pursuant to Chapter XIV of the amended Compendium of Foreign Exchange Regulations and that the foreign currency transactions related thereby be conducted through the Formal Exchange Market.

However, all contracts executed under the provisions of former Chapter XXVI (including the foreign investment contract among Lan Airlines, the Central Bank of Chile and the ADS depositary, or the “Foreign Investment Contract”), remain in full force and effect and continue to be governed by the provisions, and continue to be subject to the restrictions, set forth in former Chapter XXVI at the time of its abrogation. Our Foreign Investment Contract guarantees ADS investors access to the Formal Exchange Market to convert amounts from Chilean pesos into U.S. dollars and repatriate amounts received with respect to deposited common shares or common shares withdrawn from deposit or surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying common shares and any rights arising from them).

The guarantee of access to the Formal Exchange Market under the Foreign Investment Contract requires compliance of the following conditions:

• the funds to purchase the common shares underlying the ADSs are brought into Chile and converted into Chilean pesos through the Formal Exchange Market;

171

• the purchase of the underlying common shares is made on a Chilean stock exchange; and

• within five business days from conversion of the funds into Chilean pesos, the Central Bank of Chile is informed that the conversion funds were used to purchase the underlying common shares.

The following is a summary of material provisions of the Foreign Investment Contract, a form of which was filed as an exhibit to the registration statement on Form F-1 (File No. 333-7750) that we filed on October 10, 1997 in connection with our November 6, 1997 offering. This summary is not complete and is qualified in its entirety by reference to former Chapter XXVI and the Foreign Investment Contract.

Under former Chapter XXVI and the Foreign Investment Contract, the Central Bank of Chile agreed to grant to the depositary, on behalf of ADR holders, and to any investor not residing or domiciled in Chile who withdraws common shares upon surrender of ADRs, access to the Formal Exchange Market to convert Chilean pesos into U.S. dollars (and to remit those dollars outside Chile) in respect of common shares represented by ADSs or withdrawn shares, including amounts received as:

• cash dividends;

• proceeds from the sale in Chile of withdrawn shares or from shares distributed as a result of a liquidation, merger or consolidation of Lan Airlines (subject to receipt by the Central Bank of Chile of a certificate from the holder of the withdrawn shares or the distributed shares (or from an institution authorized by the Central Bank of Chile) that the holder’s residence and domicile are outside of Chile, and a certificate from a Chilean stock exchange (or from a brokerage or securities firm established in Chile) that the withdrawn shares or the distributed shares were sold on a Chilean stock exchange);

• proceeds from the sale in Chile of preemptive rights to subscribe for additional common shares;

• proceeds from the liquidation, merger or consolidation of Lan Airlines;

• proceeds from the sale in Chile of common shares received as a dividend; and

• other distributions, including those in respect of any recapitalization resulting from holding common shares represented by ADSs or withdrawn shares.

Former Chapter XXVI provided that access to the Formal Exchange Market in connection with dividend payments is conditioned on our certifying to the Central Bank of Chile that a dividend payment has been made and that any applicable tax has been withheld. We agreed to provide this certification. former Chapter XXVI also provides that access to the Formal Exchange Market in connection with the sale of withdrawn shares, or distribution on them, is conditioned upon receipt by the Central Bank of Chile of a certification by the depositary or custodian, as the case may be, that the common shares have been withdrawn in exchange for delivery of the appropriate ADRs and receipt of a waiver of the benefit of the Foreign Investment Contract with respect to them (except in connection with the proposed sale of the common shares) until the withdrawn shares are redeposited.

Former Chapter XXVI and the Foreign Investment Contract provided that a person who brings foreign currency into Chile to purchase common shares pursuant to the Foreign Investment Contract must convert that foreign currency into Chilean pesos on the date of entry into Chile, and must invest in common shares within five banking business days in order to receive the benefits of the Foreign Investment Contract. If a person does not invest in common shares within that period, that person can access the Formal Exchange Market to reacquire foreign currency, provided that the request is presented to the Central Bank of Chile within seven banking business days of the initial conversion into pesos. Common shares acquired as described above may be deposited in exchange for ADRs and will receive the benefits of the Foreign Investment Contract, subject to:

• receipt by the Central Bank of Chile of a certificate from the depositary that the common shares have been deposited and that the related ADRs have been issued; and

172

• receipt by the custodian of a declaration from the person making the deposit waiving the benefits of the Foreign Investment Contract with respect to the deposited common shares.

Access to the Formal Exchange Market under any of the circumstances described above is not automatic. Pursuant to former Chapter XXVI, such access required approval of the Central Bank of Chile based on a request presented through a banking institution established in Chile. The Foreign Investment Contract provides that if the Central Bank of Chile has not acted on the request within seven banking days, the request is deemed approved.

Under current Chilean law, the Foreign Investment Contract cannot be changed unilaterally by the Central Bank of Chile. We cannot guarantee, however, that additional Chilean restrictions applicable to the holders of ADRs, the disposition of the common shares underlying ADSs or the repatriation of the proceeds from an acquisition, a disposition or a dividend payment, will not be imposed or required in the future, nor could we make an assessment as to the duration or impact, were any such restrictions to be imposed or required. On May 10, 2007, the Council of the Central Bank of Chile agreed to grant the Chilean companies that increased their capital stock between the date of the agreement and August 31, 2007 the option to request, on a one-time only basis, the application of Chapter XXVI to those shares issued and actually paid before August 31, 2008 (assuming prior fulfillment of the requirements of the Central Bank of Chile).

On May 10, 2007, the Board of the Central Bank of Chile resolved to interpret the regulations regarding the former Chapter XXVI in connection with the access granted to the Formal Exchange Market. These regulations allowed entities that carry out capital increases by means of the issuance of cash shares before August 31, 2007 to apply the aforementioned regulation to their capital increases, but only once and only if those shares can be fully subscribed and paid by August 31, 2008, among other conditions. Consequently, capital increases carried out after August 31, 2007 will have no guaranteed access to the Formal Exchange Market. Furthermore, there is no assurance that (i) additional Chilean restrictions may be inapplicable to the holders of ADRs, (ii) the disposition of underlying shares or the repatriation of the proceeds from such disposition will be subject to restrictions in the future, and (iii) we cannot assess the duration or impact of such restrictions if imposed. Furthermore, the Central Bank of Chile interpreted in December 9, 2004, that new shares issued by Chilean banking institutions in connection with a merger of an issuer of ADSs that has previously executed a Foreign Investment Contract with the Central Bank of Chile with another company, are not covered by the terms of such Foreign Investment Contract. The Central Bank of Chile granted to Chilean banking institutions only and for a term of 90-days from December 9, 2004, the option to subject to the Foreign Investment Contract any shares issued as a result of a merger after the execution of such contract.

Therefore, any shares to be issued by LAN pursuant to the exchange offer and the mergers will not be covered by the Foreign Investment Contract. Based on the foregoing, and in order for all ADS to be subject to the same exchange control regime, LAN’s Board of Directors has resolved to enter into a termination agreement with respect to the Foreign Investment Contract. ADR holders will be notified about this termination in accordance to Section 16 of the depositary agreement. See item 3. “D Risks Relating to Exchange Offer and Mergers involving TAM S.A.” for a description of the exchange offer and the mergers.

Upon termination of the Foreign Investment Contract, the ADR program will be governed by Chapter XIV of the Compendium on “Regulations applicable to Credits, Deposits, Investments and Capital Contributions from Abroad”. According to Chapter XIV, the establishment of an ADR program is regarded as an ordinary foreign investment, and it is not necessary to seek the Central Bank of Chile’s prior approval in order to establish an ADR facility. The establishment of an ADR facility only requires that the Central Bank of Chile be informed of the transaction, and that the foreign currency transactions related thereby be conducted through the Formal Exchange Market.

Investment in Our Shares and ADRs after the mergers

Investments made in shares of our common stock after the mergers will be subject to the following requirements:

• any foreign investor acquiring shares of our common stock who brought funds into Chile for that purpose must bring those funds through an entity participating in the Formal Exchange Market;

• any foreign investor acquiring shares of our common stock to be converted into ADSs or deposited into an ADR program who brought funds into Chile for that purpose must bring those funds through an entity participating in the Formal Exchange Market;

• in both cases, the entity of the Formal Exchange Market through which the funds are brought into Chile must report such investment to the Central Bank of Chile;

• all remittances of funds from Chile to the foreign investor upon the sale of the acquired shares of our common stock or from dividends or other distributions made in connection therewith must be made through the Formal Exchange Market;

• all remittances of funds from Chile to the foreign investor upon the sale of shares underlying ADSs or from dividends or other distributions made in connection therewith must be made through the Formal Exchange Market; and

• all remittances of funds made to the foreign investor must be reported to the Central Bank of Chile by the intervening entity of the Formal Exchange Market.

When funds are brought into Chile for a purpose other than to acquire shares to convert them into ADSs or deposit them into an ADR program and subsequently such funds are used to acquire shares to be converted into ADSs or deposited into an ADR program such investment must be reported to the Central Bank of Chile by the custodian within 10 days following the end of each month within which the custodian is obligated to deliver periodic reports to the Central Bank of Chile.

When funds to acquire shares of our common stock or to acquire shares to convert them into ADSs or deposit them into an ADR program are received by us abroad (i.e., outside of Chile), such investment must be reported to the Central Bank of Chile directly by the foreign investor or by an entity participating in the Formal Exchange Market within ten days following the end of the month in which the investment was made.

All payments in foreign currency in connection with our shares of common stock or ADSs made from Chile through the Formal Exchange Market must be reported to the Central Bank of Chile by the entity participating in the transaction. In the event there are payments made outside of Chile, the foreign investor must provide the relevant information to the Central Bank of Chile directly or through an entity of the Formal Exchange Market within the first ten calendar days of the month following the date on which the payment was made.

There can be no assurance that additional Chilean restrictions applicable to the holders of ADSs, the disposition of shares of our common shares underlying ADSs or the conversion or repatriation of the proceeds from such disposition will not be imposed in the future, nor can we assess the duration or impact of such restriction if imposed.

This summary does not purport to be complete and is qualified by reference to Chapter XIV of the Central Bank of Chile’s Foreign Exchange Regulations, a copy of which is available in Spanish and English versions at the Central Bank’s website at www.bcentral.cl.

Voting Rights

Holders of our ADSs, which represent common shares, may instruct the depositary to vote the shares underlying their ADRs. If we ask holders for instructions, the depositary will notify such holders of the upcoming vote and arrange to deliver our voting materials to such holders. The materials will describe the matters to be voted on and explain how holders may instruct the depositary to vote the shares or other deposited securities underlying their ADSs as they direct by a specified date. For instructions to be valid, the depositary must receive them on or before the date specified as “Vote Cut-Off Date.” The depositary will try, as far as practical, subject to Chilean law and the provisions of our by-laws, to vote or to have its agents vote the shares or other deposited securities as holders instruct. Otherwise, holders will not be able to exercise their right to vote unless they withdraw the shares. However, holders may not know about the meeting far enough in advance to withdraw the shares. We will use our best efforts to request that the depositary notify holders of upcoming votes and ask for their instructions.

If the depositary does not receive voting instructions from a holder by the specified date, it will consider such holder to have authorized and directed it to give a discretionary proxy to a person designated by our board of directors to vote the number of deposited securities represented by such holder’s ADSs. The depositary will give a discretionary proxy in those circumstances to vote on all questions to be voted upon unless we notify the depositary that:

• we do not wish to receive a discretionary proxy;

• we think there is substantial shareholder opposition to the particular question; or

• we think the particular question would have an adverse impact on our shareholders.

The depositary will only vote or attempt to vote as such holder instructs or as described above.

We cannot assure holders that they receive the voting materials in time to ensure that they can instruct the depositary to vote their shares. This means that holders may not be able to exercise their right to vote and there may be nothing they can do if their shares are not voted as they requested.

173

Exchange Rates

Prior to 1989, Chilean law permitted the purchase and sale of foreign exchange only in those cases explicitly authorized by the Central Bank of Chile. The Central Bank Act liberalized the rules that govern the ability to buy and sell foreign currency. The Central Bank Act empowers the Central Bank of Chile to determine that certain purchases and sales of foreign currency specified by law must be carried out exclusively in the Formal Exchange Market, which is made up of the banks and other entities authorized by the Central Bank of Chile. All payments and distributions with respect to the ADSs must be conducted exclusively in the Formal Exchange Market.

For purposes of the operation of the Formal Exchange Market, the Central Bank of Chile sets a reference exchange rate (dólar acuerdo). The Central Bank of Chile resets the reference exchange rate monthly, taking internal and external inflation into account, and adjusts the reference exchange rate daily to reflect variations in parities between the Chilean peso, the U.S. dollar, the Japanese yen and the European euro.

The observed exchange rate (dólar observado) is the average exchange rate at which transactions were actually carried out in the Formal Exchange Market on a particular day, as certified by the Central Bank of Chile on the next banking day.

Prior to September 3, 1999, the Central Bank of Chile was authorized to buy or sell dollars in the Formal Exchange Market to maintain the observed exchange rate within a specified range above or below the reference exchange rate. On September 3, 1999, the Central Bank of Chile eliminated the exchange band. As a result, the Central Bank of Chile may buy and sell foreign exchange in the Formal Exchange Market in order to maintain the observed exchange rate at a level the Central Bank of Chile determines.

Purchases and sales of foreign exchange may be effected outside the Formal Exchange Market through the Informal Exchange Market (Mercado Cambiario Informal) established by the Central Bank in 1990. There are no limits on the extent to which the rate of exchange in the Informal Exchange Market can fluctuate above or below the observed exchange rate.

Although our results of operations have not been significantly affected by fluctuations in the exchange rates between the peso and the U.S. dollar because our functional currency is the U.S. dollar, we are exposed to foreign exchange losses and gains due to exchange rate fluctuations. Even though the majority of our revenues are denominated in or pegged to the U.S. dollar, the Chilean government’s economic policies affecting foreign exchange and future fluctuations in the value of the peso against the U.S. dollar could adversely affect our results of operations and an investor’s return on an investment in ADSs.

E. Taxation

The following discussion relates to Chilean income tax laws presently in force, including Ruling No. 324 of January 29, 1990 of the Chilean Internal Revenue Service (“Chilean IRS”) and other applicable regulations and rulings, all of which are subject to change. The discussion summarizes the principal Chilean income tax consequences of an investment in the ADSs or common shares by a person who is neither domiciled in, nor a resident of, Chile or by a legal entity that is not organized under the laws of Chile and does not have a branch or a permanent establishment located in Chile (such an individual or entity is referred to herein as a Foreign Holder). For purposes of Chilean tax law, an individual holder is a resident of Chile if such person has resided in Chile for more than six consecutive months in one calendar year or for a total of six months, whether consecutive or not, in two consecutive tax years. In addition, an individual is considered domiciled in Chile in case he or she resides in Chile with the actual or presumptive intent of staying in the country. The discussion is not intended as tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation.

Under Chilean law, provisions contained in statutes such as tax rates applicable to foreign investors, the computation of taxable income for Chilean purposes and the manner in which Chilean taxes are imposed and collected may only be amended by another statute. In addition, the Chilean tax authorities enact rulings and regulations of either general or specific application and interpret the provisions of Chilean tax law. Chilean tax may not be assessed retroactively against taxpayers who act in good faith relying on such rulings, regulations and

174

interpretations, but Chilean tax authorities may change these rulings, regulations and interpretations prospectively. On February 4, 2010, representatives of the governments of the United States and Chile signed an income tax treaty. The new treaty will have to be approved by the U.S. Senate.

Cash Dividends and Other Distributions

Cash dividends we pay with respect to the ADSs or common shares held by a Foreign Holder will be subject to a 35% Chilean withholding tax, which we withhold and pay over to the Chilean tax authorities and which we refer to as the Withholding Tax. A credit against the Withholding Tax is available based on the level of corporate income tax we actually paid on the income to be distributed (referred to herein as the First Category Tax); however, this credit does not reduce the Withholding Tax on a one-for-one basis because it also increases the base on which the Withholding Tax is imposed. If we register net income but taxable losses, no credit against the Withholding Tax will be available. In addition, if we distribute less than all of our distributable income, the credit for First Category Tax we pay is proportionately reduced. In 2011 the First Category Tax rate was 20%., and 18.5% for fiscal year 2012. From 2013 onwards, the rate of First Category Tax will revert back to 17%. In general, the example below illustrates the effective Withholding Tax burden on a cash dividend received by a Foreign Holder, assuming a Withholding Tax rate of 35%, an First Category Tax rate of 17%, and a distribution of 30% of the consolidated net income of the Company after payment of the First Category Tax:

The Company’s taxable income	100.00
First Category Tax (17% of Ch$100)	(17	)
Net distributable income	83.00
Dividend distributed (30% of net distributable income)	24.9
First category increase	5.1
Withholding Tax (35% of the sum of Ch$24.9 dividend plus Ch$5.1 First Category Tax paid)	(10.5	)
Credit for 17% of First Category Tax	5.1
Net tax withheld	(5.4	)
Net dividend received	19.5
Effective dividend withholding rate	21.69	%

In general, the effective dividend Withholding Tax rate, after giving effect to the credit for the First Category Tax, can be calculated using the following formula:

(Withholding Tax rate) – (First Category Tax effective rate)

1 – (First Category Tax effective rate)

Under Chilean income tax law, dividends generally are assumed to have been paid out of our oldest retained profits for purposes of determining the level of First Category Tax that we paid. The effective rate of Withholding Tax to be imposed on dividends we pay will vary depending upon the amount of First Category Tax we paid (if any) on the earnings to which the dividends are attributed, according to the Company’s Taxable Profit Fund. The Effective Withholding Tax rate for dividends attributed to earnings from 1991 until 2001, for which the First Category Tax rate was 15%, which result in a effective rate of 23.5%. For 2002, the First Category Tax rate was 16.0%, which results in an effective rate of 22.62%. In 2003, the First Category Tax rate was 16.5%, which results in an effective rate of 22.16%, from 2004 until 2010, the First Category Tax rate was 17%, which results in an effective rate of Withholding Tax of 21.69%, In 2011 the First category Tax rate was 20%, which results in a effective rate of Withholding Tax of 18,75%. In 2012 the First category Tax rate will be 18,5%, which results in a effective rate of Withholding Tax of 20,25%. From 2013 onwards the First category Tax rate will be 17%, which results in a effective rate of Withholding Tax of 21,69%

For dividends attributable to our profits during years when the First Category Tax was 10% (before 1991), the effective rate will be 27.8%. However, whether the First Category Tax is 10%, 15%, 16%, 16.5% or 17%, the effective overall combined tax rate imposed on our distributed profits will be 35%. In the event that profits from previous years are not sufficient to cover a particular dividend, and the dividend is attributable to the current year, we will generally withhold tax from the dividend at the full 35% rate. If as of December 31 of the year in which the dividend is paid, the withholding is determined to be excessive taking into account First Category Tax, holders may file for a refund.

175

Dividend distributions made in property would be subject to the same Chilean tax rules as cash dividends based on the fair market value of such property. Stock dividends and the distribution of preemptive rights are not subject to Chilean taxation.

Capital Gains

Gain from the sale or other disposition by a Foreign Holder of ADRs evidencing ADSs outside Chile will not be subject to Chilean taxation. The deposit and withdrawal of common shares in exchange for ADRs will not be subject to any Chilean taxes.

Gain recognized on a sale or disposition of common shares (as distinguished from sales or exchanges of ADRs evidencing ADSs representing such common shares) may be subject to both the First Category Tax and the Withholding Tax (the former being creditable against the latter) if:

• the Foreign Holder has held the common shares for less than one year since exchanging ADSs for the Shares;

• the Foreign Holder acquired and disposed of the common shares in the ordinary course of its business or as a habitual trader of shares; or

• the Foreign Holder and the purchaser of the common shares are “related parties” or has an interest in the latter within the meaning of Article 17, Number 8, of the Chilean Income Tax Law.

In all other cases, gain on the disposition of common shares will be subject only to a flat capital gains tax which is assessed at the same rate as the First Category Tax as sole income tax (currently imposed at a rate 20% for 2011, 18.5% for 2012 and 17% from 2013 onwards) and no withholding tax will apply. The sale of shares of common stock by a Foreign Holder to an individual or entity resident or domiciled in Chile is subject to a provisional withholding. Such a provisional withholding will be equal to (i) 5% of the total (sale price) amount, without any deduction, paid to, credited to, account for, put at the disposal of, or corresponding to, the Foreign Holder if the transaction is subject to the First Category Tax, as a sole tax. Unless the gain subject to taxation can be determined, case in which the withholding is equal to 17%, 20% or 18,5%, whichever is applicable, on the gain, or (ii) 20% of the total amount (the sale price without any deduction), paid to, credited to, account for, put at the disposal of, or corresponding to, the Foreign Holder if the transaction is subject to the general tax regime, that is, the First Category Tax, and the Withholding Tax, with a credit of the First Category Tax already paid. The Foreign Holder would be entitled to request a tax refund for any amounts withheld in excess of the taxes actually due, in April of the following year upon filing its corresponding tax return. Gain recognized in the transfer of common shares that have a high presence in the stock exchange, however, is not subject to capital gains tax in Chile, provided that the common shares are transferred in a local stock exchange, in other authorized stock exchanges or within the process of a public tender of common shares governed by the Securities Market Law.

Chile’s Internal Revenue Service Ruling Nº224 (issued on January 30, 2008) confirmed that capital gains stemming from the sale of shares with high stock-market presence acquired through the exchange of American Depositary Receipts (ADRs) for shares is not subject to capital gains tax in Chile. Such exemption is applicable provided that the purchase of such ADR certificates has been made at stock exchanges duly authorized by SVS (which includes the New York Stock Exchange).

The common shares must also have been acquired either in a stock exchange, within the process of a public tender of common shares governed by the Securities Market Law, in an initial public offer of common shares resulting from the formation of a corporation or a capital increase of the same, or in an exchange of convertible bonds. Shares are considered to have a high presence in the stock exchange when they:

• are registered in the Securities Registry;

• are registered in a Chilean Stock exchange; and

176

• have an adjusted presence equal to or above 25%.

To calculate the adjusted presence of a particular share, the aforementioned regulation first requires a determination of the number of days in which the operations regarding the stock exceeded, in Chilean pesos, the equivalent of 200 UF (US$9,219 as of March 28, 2012) within the previous 180 business days of the stock market. That number must then be divided by 180, multiplied by 100, and expressed in a percentage value. This tax regime does not apply if the transaction involves an amount of shares that would allow the acquirer to take control of the publicly traded corporation, in which case the ordinary tax regime referred to in the previous paragraph will apply, unless the transfer is part of a tender offer governed by the Securities Market Law or the transfer is done on a Chilean stock exchange, without substantially exceeding the market price.

Capital gains obtained in the sale of shares that are publicly traded and have a high presence in a stock exchange are also exempt from capital gains tax in Chile when the sale is made by “foreign institutional investors” such as mutual funds and pension funds, provided that the sale is made in a stock exchange or in accordance with the provisions of the Securities Market Law, or in any other form authorized by the SVS. To qualify as a foreign institutional investor, an entity must be formed outside of Chile, not have a domicile in Chile, and must be at least one of the following:

• a fund that offers its common shares or quotas publicly in a country with investment grade public debt, according to a classification performed by an international risk classification entity registered with the SVS;

• a fund registered with a regulatory agency or authority from a country with investment grade public debt, according to a classification performed by an international risk classification entity registered with the SVS, provided that its investments in Chile constitute less than 30% of the share value of the fund, including deeds issued abroad representing Chilean securities, such as ADRs of Chilean companies;

• a fund whose investments in Chile represent less than 30% of the share value of the fund, including deeds issued abroad representing Chilean securities, such as ADRs of Chilean companies, provided that not more than 10% of the share value of the fund is directly or indirectly owned by Chilean residents;

• a pension fund that is formed exclusively by natural persons that receive pensions out of an accumulated capital in the fund;

• a Foreign Capital Investment Fund, as defined in Law No. 18,657, in which case all quota holders shall be Chilean residents or domestic institutional investors; or

• any other foreign institutional investor that complies with the requirements set forth in general regulations for each category of investor or prior information from the SVS and the Chilean IRS.

The foreign institutional investor must not directly or indirectly participate in the control of the corporations issuing the shares it invests in, nor possess or participate in 10% or more of the capital or the profits of such corporations.

Another requirement for the exemption is that the foreign institutional investor must execute a written contract with a bank or a stock broker incorporated in Chile. In this contract, the bank or stock broker must undertake to execute purchase and sale orders, verify the applicability of the tax exemption or tax withholding and inform the Chilean IRS of the investors it works with and the transactions it performs. Finally, the foreign institutional investor must register with the Chilean IRS by means of a sworn statement issued by such bank or stock broker.

The tax basis of common shares received in exchange for ADRs will be the acquisition value of the common shares on the date of exchange duly adjusted for local inflation. The valuation procedure set forth in the deposit agreement, which values common shares which are being exchanged at the highest price at which they trade on the SSE on the date of the exchange, will determine the acquisition value for this purpose. Consequently, the surrender of ADRs for common shares and the immediate sale of the common shares for the value established under the

177

Deposit Agreement will not generate a capital gain subject to taxation in Chile, provided that the sale of the common shares is made on the same date on which the exchange of ADRs for common shares is recorded, or if the price of the common shares at the exchange date, as determined above, is higher than the price at which the common shares are sold.

The exercise of preemptive rights relating to the common shares will not be subject to Chilean taxation. Any gain on the sale of preemptive rights relating to the common shares will be subject to both the First Category Tax and the Withholding Tax (the former being creditable against the latter).

Other Chilean Taxes

There are no Chilean inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of ADSs by a Foreign Holder, but such taxes generally will apply to the transfer at death or by gift of the common shares by a Foreign Holder. There are no Chilean stamp, issue, registration or similar taxes or duties payable by Foreign Holders of ADSs or common shares.

Withholding Tax Certificates

Upon request, we will provide to Foreign Holders appropriate documentation evidencing the payment of the Withholding Tax (net of the applicable First Category Tax).

United States Federal Income Tax Considerations

The following is a summary of certain U.S. federal income tax considerations that may be relevant to the purchase, ownership and disposition of our common shares and ADSs by a beneficial owner that is: (i) an individual citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) a trust if (a) a United States court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (b) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person or (iv) an estate that is subject to U.S. federal income tax on its income regardless of its source. For purposes of this discussion, we refer to these owners of common shares and ADSs as U.S. Holders.

This summary is not a comprehensive discussion of all of the tax considerations that may be relevant to your decision to purchase ADSs or common shares. In particular, this discussion is directed only to U.S. Holders that will hold ADSs or common shares as capital assets and it does not address any special U.S. federal income tax consequences that may be applicable to U.S. Holders that are subject to special treatment under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), including, but not limited to banks or other financial institutions, regulated investment companies, entities that are treated for U.S. federal income tax purposes as partnerships or other pass-through entities, tax-exempt organizations, insurance companies, brokers or dealers in securities or foreign currencies, traders in securities electing to mark to market, holders that own or are treated as owning 10% or more of our voting common stock, holders that acquired ADSs or common shares pursuant to the exercise of an employee stock option or otherwise as compensation, persons holding ADSs or common shares as part of a hedging or conversion transaction or a straddle, or persons whose functional currency is not the U.S. dollar. If a partnership holds ADSs or common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A prospective investor who is a partner of a partnership holding our ADSs or common shares should consult its own tax advisor.

The discussion below is based upon the provisions of the Code, its legislative history, existing and proposed U.S. treasury regulations, rulings and court decisions as of the date hereof, and such authorities may be repealed, revoked or modified (with possible retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below. In addition, this section is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreements relating to the ADRs and any related agreements will be performed in accordance with their terms.

178

HOLDERS AND/OR PROSPECTIVE PURCHASERS OF ADSs OR COMMON SHARES SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE CHILEAN, U.S. FEDERAL INCOME OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR COMMON SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY NON-U.S., STATE OR LOCAL TAX LAWS.

The following summary assumes that ADSs and common shares are not stock of a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2010 or 2011 taxable year. In addition, based on our audited financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2012 taxable year. However, there can be no assurance in this regard because the PFIC determination is made annually and is based on the portion of our assets and income that is characterized as passive under the PFIC rules.

ADRs

In general, if you are a U.S. Holder of ADRs evidencing our ADSs, you will be treated, for U.S. federal income tax purposes, as the beneficial owner of the underlying common shares that are represented by those ADSs and evidenced by those ADRs.

Taxation of Dividends

Distributions of cash or property (other than common stock, if any, distributed pro rata to all of our shareholders, including holders of ADSs) paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) with respect to ADSs or common shares, including the net amount of the Chilean Withholding Tax withheld on the distribution (after taking into account the credit for the First Category Tax), will be included in a U.S. holder’s gross income as ordinary income on the date on which you receive the dividends, in the case of common shares, or the date the depositary receives the dividends, in the case of common shares represented by ADSs, and will not be eligible for the dividends-received deduction allowed to corporations under the Code. Dividends paid in Chilean pesos generally will be included in a U.S. holder’s gross income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date the U.S. Holder receives the dividends, in the case of common shares, or the date the depositary receives the dividends, in the case of common shares represented by ADSs. U.S. Holders are encouraged to consult their own tax advisers regarding the treatment of foreign currency gain or loss, if any, on any Chilean pesos received which are converted into U.S. dollars after they are received. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits as determined for U.S. federal income tax purposes, such excess amounts will be treated first as a nontaxable return of capital to the extent of such U.S. Holder’s tax basis in the ADSs or common shares and, thereafter, as capital gain.

We do not maintain calculations of earnings and profits under U.S. federal income tax principles. Accordingly, U.S. Holders should assume that any distribution made by us (other than common stock distributed pro rata to all our shareholders, as discussed above) will be treated as a dividend for U.S. federal income tax purposes.

Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by a noncorporate U.S. Holder in taxable years before January 1, 2013 with respect to the ADSs will be subject to taxation at a maximum rate of 15% if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if:

• the ADSs are readily tradable on an established securities market in the United States; and

179

• we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a PFIC.

The ADSs are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Because our common shares are not expected to be listed on any U.S. securities market, the U.S. dollar amount of dividends received with respect to our common shares (including dividends received by a noncorporate U.S. Holder in taxable years beginning before January 1, 2013) will be subject to taxation at ordinary income tax rates. Subject to generally applicable limitations and conditions under the Code, Chilean Withholding Tax withheld from dividends (after taking into account the credit for the First Category Tax, when it is available) will be treated as a foreign source income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability or for deduction in computing such U.S. Holder’s U.S. federal taxable income. If the amount of Chilean Withholding Tax initially withheld from a dividend is determined to be excessive, however (as described above under “—Taxation—Chilean Taxation—Cash Dividends and Other Distributions”), the excess tax will not be creditable or deductible. For purposes of calculating the foreign tax credit, dividends paid on the common shares will generally constitute foreign source “passive income.” U.S. Holders are not allowed foreign tax credits for withholding taxes imposed in respect of certain short-term or hedged positions in securities and may not be allowed foreign tax credits in respect of arrangements in which their expected economic profit is insubstantial. U.S. Holders are encouraged to consult their tax advisers with regard to the availability of foreign tax credits and the application of the foreign tax credit limitations in light of their particular circumstances.

U.S. Holders that receive distributions of additional common shares or rights to subscribe for common shares as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax in respect of the distributions.

Taxation of Capital Gains or Losses

If you are a U.S. Holder, gain or loss realized on the sale, exchange or other taxable disposition of ADSs or common shares, generally will be capital gain or loss and generally will be long-term capital gain or loss if the ADSs or common shares have been held for more than one year. Long-term capital gain realized by a noncorporate U.S. Holder generally is subject to preferential tax rates. The deductibility of capital losses is subject to significant limitations.

Any gain or loss recognized by a U.S. Holder on such a sale, exchange or other taxable disposition will generally be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. Accordingly, in the case of a disposition of common shares (which, unlike a disposition of ADSs, could be taxable in Chile), a U.S. Holder may not be able to use the foreign tax credit arising from any Chilean tax imposed on the disposition of the common shares (see “—Taxation—Chilean Taxation—Capital Gains”) unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources, in the appropriate income category. The calculation and availability of foreign tax credits and, in the case of a U.S. Holder that elects to deduct foreign income taxes, the availability of deductions, involves the application of complex rules that depend on a U.S. Holder’s particular circumstances. U.S. Holders are encouraged to consult their own tax advisors with regard to the availability of foreign tax credits and the application of the foreign tax credit limitations in light of their particular situation.

Deposits and withdrawals of common shares by U.S. Holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

180

H. Documents on Display

We are subject to the information requirements of the Exchange Act, as amended. In accordance with these requirements, we file reports, including annual reports on Form 20-F and other information with the SEC. These materials, including this annual report and the exhibits hereto, may be inspected and copied at the SEC’s public reference rooms in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. In addition, some of our SEC filings, including those filed on and after February 19, 2002, are also available to the public through the SEC’s website at www.sec.gov.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we furnish our shareholders with annual reports containing financial statements audited by our independent auditors and make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. We file such quarterly reports with the SEC within two months of each quarter of our fiscal year, and we file annual reports on Form 20-F within the time period required by the SEC, which is currently six months from December 31, the end of our fiscal year.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

Given the nature of its business, LAN is exposed mainly to three market risks:

• Jet fuel price fluctuations;

• Interest rate fluctuations; and

• Exchange rate fluctuations.

The level of exposure to these risks is periodically assessed to determine the extent to which LAN should hedge against them and the most effective mechanisms to implement the hedge. LAN purchases derivative instruments in foreign markets to offset market risk exposure, typically utilizing a mixture of call options, collar structures and fixed price swaps agreements. LAN does not hold derivative contracts for trading purposes.

Risk of Fluctuations in Jet Fuel Prices

Jet fuel price fluctuations are largely dependent on supply and demand for crude oil, OPEC decisions, refinery capacities, stock levels of crude oil and geopolitical factors. In order to minimize the risk of jet fuel price fluctuations, LAN hedges against such risk using derivative instruments.

Because jet fuel is not traded in organized futures exchanges, there are limited options to hedge against jet fuel price fluctuations. However, LAN deems financial derivative instruments in other commodities such as crude oil or heating oil, useful for decreasing its exposure to jet fuel price increases.

LAN uses swaps, calls and collars to hedge against fuel prices fluctuations. Swap contracts allow us to eliminate the volatility risk by fixing the price. In a typical swap contract, LAN is compensated if the market price is above the fixed price at certain predetermined dates or needs to make disbursements if the market price is below the fixed price in those dates. Call options give us protection against rise in prices. Call option are only exercised when the market price is above the predetermined strike price thus providing LAN with protection with no downside risk. Collars are a combination of call and put options that limit the range of possible positive or negative outcomes to a specific price range. Above the predetermined ceiling price, LAN is compensated for the difference between the market price and the ceiling price. For any price below the predetermined floor price, LAN has to disburse the difference between the market price and the floor price.

181

We are exposed to fuel hedging transaction losses if the counterparties default. To manage this credit risk, we select counterparties based on their credit ratings and monitor our relative market position on a daily basis. For more information see “Item 3. Key Information—Risk Factors—Risks Related to Our Operations and the Airline Industry—Our operations are subject to fluctuations in the supply and cost of jet fuel which could materially impact our business” .

During 2011, 2010 and 2009 we entered into a mix of swaps, calls, zero cost collars and collars option contracts on WTI with investment banks and other financial entities for notional fuel purchases. In 2011, 397.8 million gallons were purchased, which represented 69.8% of our total annual fuel consumption; in 2010, 282.7 million gallons were purchased, which represented 55.5% of our fuel consumption; and in 2009, 205.2 million gallons were purchased, which represented 45.7% of our total fuel consumption. The combined result of these contracts was a gain of US$39.9 million in 2011, compared to a gain of US$1 million in 2010 and a loss of US$128.7 million in 2009. As of December 31, 2011, the fair value of our outstanding fuel related derivative contracts was estimated to be US$30.6 million (asset).

	Fair value by quarter, as of December 31, 2011
	1Q12	2Q12	3Q12	Total
	(in US$ millions)
Fair value of outstanding fuel derivative contracts	10.5	12.5	7.6	30.6

Gains and losses on the hedging contracts outlined above are recognized as a cost of sales in the income statement when the fuel subject to the hedge is consumed. Premiums paid related to fuel derivative contracts are recorded as prepaid expenses (current assets) and amortized over the respective contract periods.

Under IFRS, the fair value of the hedging derivatives is booked as a non-current asset or liability if the remaining maturity of the item hedged is over 12 months, and as a current asset or liability if the remaining term of the item hedged is less than 12 months. The fair value of the derivative contracts is deferred within an equity reserve account. Please see Note 2.10 to our audited consolidated financial statements.

Sensitivity analysis

In order to protect the Company from increases in fuel prices, a portion of the fuel consumption is hedged using a mixture of protective instruments (call, collars) and fixing instruments (swaps). To keep the Company competitive, a portion of the fuel consumption is not hedged, as a drop in fuel prices affects the Company through a reduction in costs.

As the current positions do not represent changes in cash flows but a variation in the exposure to the market value, the Company’s current hedge positions have no impact on income (they are booked as cash flow hedge contracts, so a variation in fuel prices has an impact on the Company’s net equity).

The following table shows the sensitivity analysis of the financial instruments reflecting reasonable changes in fuel prices and their effect on equity. The term used for the projection was December 31, 2012, the final date of the last current fuel hedge contract. The calculations were made considering a parallel movement of US$5 per barrel in the curve of the WTI crude futures benchmark price at the end of December 2011, 2010 and 2009.

The Company seeks to reduce the risk of increases in fuel price in order to maintain its competitivity, therefore hedging instruments like swaps, options and collars are used to partially hedge against these fuel price fluctuations.

	Position as of December 31 (effect on equity),
WTI benchmark price	2011		2010		2009
(US$ per barrel)	(millions of US$)
+5		+16.5		+16.7		+14.6
-5		-13.8		-15.7		-13.6

182

During the periods presented, the Company has not recorded amounts for ineffectiveness in the consolidated income statement pursuant to IAS 39 (IFRS principles for recognizing and measuring financial instruments).

Given the fuel hedge structure as of December 31, 2011, which considers a hedge-free portion, a vertical fall by US$5 in the WTI benchmark price (the monthly daily average) for each month would have meant savings of approximately US$42.5 million in the cost of the Company’s total fuel consumption. A vertical increase by US$5 in the WTI benchmark price (the monthly daily average) for each month would have meant an additional cost of approximately US$39.5 million of the Company’s total fuel consumption.

Risk of Fluctuations in Interest Rates

As of December 31, 2011, LAN’s debt amounted to US$3,516 million in interest bearing loans. LAN uses swaps and caps to reduce the impact of an increase of interest rates. As of December 31, 2011, 82% of our outstanding debt was effectively at fixed rate either as fixed rate loans or variable rate loans hedged using a floating to fix rate derivative instrument.

Given the percentage of our outstanding debt that is hedged and the instruments that we use to hedge, an increase in interest rates has no material impact on LAN’s costs. Under an interest rate swap contract, given the case of decreases in interest rates, LAN has to pay compensation equal to the difference between the fixed and floating rate times the outstanding debt under the specific contract. However, under such contracts the interest rate has a floor preventing LAN from incurring major financial losses.

In May 2001, we entered into six swap contracts in order to hedge our floating rate-exposure on US$331 million of our debt. Pursuant to these contracts, we pay or receive, depending on the case, the difference between the agreed fixed rate and the floating rate, calculated on the notional amount of each contract. In October 2005, the Company entered into two interest rate swap contracts in order to hedge the LIBOR exposure of the financing of two Airbus A319 aircraft delivered in 2005.

In July 2003, we purchased four interest rate cap contracts for a total notional amount of US$127.7 million. These caps are intended to limit the Company’s exposure arising from variable-rate debt. These contracts qualify as cash flow hedges with no ineffectiveness associated to them due to the fact that all critical terms of the debt and the caps match perfectly. As of December 31, 2011, the fair value of these contracts has been estimated at US$9.7 thousand.

The premiums paid on the cap were allocated to individual caplets and recognized in the income statement throughout the term of each contract. Under IAS 39 these derivatives qualify as cash flow hedges even though some ineffectiveness exists as the notional amount over which some caps are calculated is different from the one used to determine the interest and lease payments on the aircraft. For IFRS purposes, there was no amount of ineffectiveness recorded in earnings because the change in fair value of the perfect hypothetical option was greater than the change in the fair value of the Company’s option.

In the first half of 2006, the Company also entered into ten fixed-floating interest rate swap contracts in order to hedge the variable interest payments on the unhedged portion of existing debt of approximately US$46.7 million. Additionally, in May 2006 the Company entered into thirty-two forward starting interest rate swap contracts in order to hedge the LIBOR exposure of the financing of thirty-two A320-Family Aircraft to be delivered between 2006 and 2009. Out of these thirty-two contracts, twenty-five were contracted directly with the debt provider, while the remaining seven swaps were contracted with a different institution. In 2009 all of the thirty-two aircraft were delivered to the Company. Out of the thirty-two abovementioned contracts, twenty-five were converted into fixed interest rate debt.

In June 2006 the Company entered into eleven forward starting interest rate swap contracts in order to hedge the LIBOR exposure of the financing of 11 Boeing 767-300 ER aircraft to be delivered between 2006 and 2009. All of those aircraft have already been delivered to the Company, and the corresponding swap and loan were restructured into fixed rate debt.

183

In August 2007 the Company entered into three forward starting interest rate swaps contracts in order to hedge the LIBOR exposure of the debt financing of three Boeing 767-300 ER aircraft to be delivered in 2009. This debt allows for conversion of the variable interest rate loan into fixed interest rate debt by capital markets financing after the arrival of the aircraft. As of December 31, 2011, the three aircraft had been delivered to the Company. The first aircraft was refinanced through a fixed interest rate bond issued in December 2009, the second was refinanced through a fixed interest rate bond issued in June 2010 and the third was refinanced through a fixed interest rate bond issued in April 2010. In September 2007, the Company entered into another three forward starting interest rate swaps contracts in order to hedge the LIBOR exposure of the financing of three Airbus A320-Family Aircraft to be delivered in 2010.

In June 2008, the Company entered into 14 forward starting interest rate swaps contracts in order to hedge the LIBOR exposure of the financing of 12 A320-Family Aircraft that were delivered in 2010 and 2011, two Boeing 767-300 aircraft that were delivered in 2011 and two Boeing 787-8 to be delivered in 2012.

As of December 31, 2011, the fair value of all the aforementioned interest rate swaps was estimated to be a negative US$159.4 million.

Under IFRS, the positive fair value of these interest rate swaps is reflected in the balance sheet as hedging assets and the negative fair value of these agreements is reflected as hedging liabilities.

The utilization of the aforementioned hedging instruments, combined with fixed interest rate financing for two Boeing 767-300 F aircraft delivered in 2001, 17 Boeing 767-300 Passenger and Freighter aircraft delivered in 2005, 2006, 2007, 2008 and 2009 and 32 Airbus A320-Family Aircraft delivered in 2006, 2007, 2008 and 2009, has enabled the Company to have a predictable interest rate costs, reducing the cash volatility. As of December 2011, the average interest rate of our entire outstanding interest-bearing long-term debt rate was 4.5%.

The following table summarizes our principal payment obligations on our interest-bearing long-term debt and capital leases as of December 31, 2011 and the related average interest rates. The average interest rates for U.S. dollar liabilities are calculated based on the prevailing interest rate on December 31, 2011 for each loan.

	Principal payment obligations by year of expected maturity(1)
	Average interest rate(2)			2012		2013		2014		2015		2016		Thereafter 2017
	(in US$ millions)
Liabilities
U.S. dollars		4.5	%		509.7		840.6		342.2		323.0		317.7		1215.2

⁽¹⁾  At cost.

⁽²⁾  Average interest rate means the average prevailing interest rate on December 31, 2011 on our debt after giving effect to hedging arrangements.

The following table shows the sensitivity of changes in financial obligations that are not hedged against interest-rate variations. These changes are considered reasonably possible based on current market conditions.

	Position as of December 31 (effect on pre-tax  earnings)
	2011		2010		2009
	(in US$ millions)
Increase (decrease) in Libor
+100 basis points		-3.06		-1.18		-0.87
-100 basis points		+3.06		+1.18		+0.87

Changes in market conditions produce a change in the valuation of current financial instruments hedging against fluctuations in interest rates, causing an effect on the Company’s equity (because they are booked as cash-flow hedges). These changes are considered reasonably possible based on current market conditions. The calculations were made vertically increasing (decreasing) 100 basis points of the three-month Libor futures curve.

184

	Position as of December 31 (effect on equity)
	2011		2010		2009
	(millions of US$)
Increase (decrease) in three month Libor
Future rates
+100 basis points		+40.70		+42.39		+49.64
-100 basis points		-43.20		-45.35		-53.23

During the periods presented, the company has not recorded amounts for ineffectiveness in the consolidated income statement pursuant to IAS 39.

There are market-related limitations in the method used for the sensitivity analysis. These limitations derive from the fact that the levels indicated by the futures curves may not be necessarily met and may change in each period.

Risk of Variation in Foreign Currency Exchange Rates

LAN sells most of its services in U.S. dollars (or prices equivalent to the U.S. dollar), and a large part of its expenses are denominated in U.S. dollars (or its equivalents), particularly fuel costs, aeronautic charges, aircraft leases, insurance and aircraft components and accessories. Of the Total expenses, the main item denominated in local currencies is Remunerations. During 2011, 78% of our operating revenues and 53% of our operating expenses were denominated in U.S. dollars. However, because we conduct business in local currencies in several countries, we face the risk of variations in foreign currency exchange rates. A depreciation of the Chilean peso, the Brazilian real, the Argentine peso, the Mexican peso, the Peruvian nuevo sol, the Venezuelan bolivar or the euro against the U.S. dollar could have an adverse effect on us as part of our revenues and receivables are denominated in those currencies. LAN has entered into currency forward contracts in order to convert its deposit in Chilean pesos to U.S. dollars. As of December 31, 2011 we had foreign exchange forward contracts for a notional amount of US$110 million with a market negative value of US$0.3 million.

During the first half of 2009, the Company entered into cross currency swaps for a notional amount of US$ 171 million, in order to hedge significant variation of the cash flows associated to the current interest rate and the dolar-peso exchange rate of the bank loan. As of December 31, 2011 these contracts ceased to exist.

Our foreign currency exchange exposure pertaining to our balance sheet as of December 31, 2011 was as follows

	US dollars MUS$		% of total			Chilean pesos MUS$		% of total			Other currencies $ MUS$		% of total			Total MUS$
Current assets		868,113		64.62	%		230,279		17.14	%		244,959		18.23	%		1,343,351
Other assets		6,123,678		97.12	%		8,412		0.13	%		173,218		2.75	%		6,305,308
Total assets		6,991,791		91.41	%		238,691		3.12	%		418,177		5.47	%		7,648,659
Current liabilities		1,980,849		85.30	%		80,937		3.49	%		260,293		11.21	%		2,322,079
Long-term liabilities		3,834,840		99.11	%		6,684		0.17	%		27,684		0.72	%		3,869,208
Total liabilities and shareholders’ equity		7,244,983		94.72	%		98,739		1.29	%		304,937		3.99	%		7,648,659

For more information on Market Risk, see Note 3 “Financial Risk Management” to our audited consolidated financial statements.

185

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

In the United States, our common shares trade in the form of ADS. Since August 2007, each ADS represents one common share, issued by The Bank of New York Mellon, as Depositary pursuant to a Deposit Agreement. ADSs commenced trading on the NYSE in 1997. In October 2011 our Depositary bank changed from The Bank of New York Mellon to JP Morgan Chase Bank, N.A. (“JP Morgan”).

Fees and Charges for ADR Holders

The Bank of New York Mellon, and since October 2011 JP Morgan, as depositary, collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of the distributable property to pay the fees. The depositary may also collect its annual fee for depositary services by deductions from cash distributions, by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

Persons depositing or withdrawing shares must pay:	For:
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Ÿ	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
	Ÿ	Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
US$.02 (or less) per ADS	Ÿ	Any cash distribution to ADS registered holders
A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs	Ÿ	Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders
US$.02 (or less) per ADSs per calendar year	Ÿ	Depositary services
Registration or transfer fees	Ÿ	Transfer and registration of shares on the depositary’s share register to or from the name of the depositary or its agent when investors deposit or withdraw shares
Expenses of the depositary	Ÿ	Cable, telex and facsimile transmissions
	Ÿ	Conversion of foreign currencies into U.S. dollars
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, such as stock transfer taxes, stamp duty or withholding taxes	Ÿ	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	Ÿ	As necessary

186

Fees and Direct and Indirect Payments Made by the Depositary to the Foreign Issuer

Past Fees and Payments

During 2011, the Company received from the depositary $766,020 for continuing annual stock exchange listing fees, standard out-of-pocket maintenance costs for the ADRs (consisting of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls), payments related to applicable performance indicators relating to the ADR facility, underwriting fees and legal fees.

Future Fees and Payments

JP Morgan, as the new depositary bank, has agreed to reimburse the Company for certain of our reasonable expenses related to our ADS program and incur by us in connection with the program. The reimbursements include direct payments (legal and accounting fees incurred in connection with preparation of Form 20-F and ongoing SEC compliance and listing requirements, listing fees, investor relations expenses, advertising and public relations expenses and fees payable to service providers for the distribution of hard copy materials to beneficial ADR holders in the Depositary Trust Company, such as information related to shareholders’ meetings and related voting instruction cards); and indirect payments (third-party expenses paid directly and fees waived).

187

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that the disclosure controls and procedures, as of December 31, 2011, were effective in providing reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.

Management’s annual report on internal control over financial reporting

The management of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as amended.

The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate. Lan Airlines’ management, including the Chief Executive Officer and the Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 based on the criteria established in Internal Control - “Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and, based on such criteria, Lan Airlines’ management has concluded that, as of December 31, 2011, the Company’s internal control over financial reporting is effective. The Company’s internal control over financial reporting effectiveness as of December 31, 2011 has been audited by PricewaterhouseCoopers Consultores, Auditores y Companía Limitada, an independent registered public accounting firm, as stated in their report included herein.

188

(c) Attestation report of the registered public accounting firm. See page F-2 of our audited consolidated financial statements.

(d) Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. RESERVED

A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has designated Jorge Awad Mehech, as an “audit committee financial expert” within the meaning of this Item 16A. See “Item 6. Directors, Senior Management and Employees—Directors”.

B. CODE OF ETHICS

We have adopted a code of ethics and conduct, as defined in Item 16B of Form 20-F under the Exchange Act. Our code of ethics applies to our senior management, including our chief executive officer, our chief financial officer and our chief accounting officer, as well as to other employees. Our code is freely available online at our website, www.lan.com, under the heading “Corporate Governance” in the Investor Relations page. In addition, upon written request, by regular mail, to the following address: Lan Airlines S.A., Investor Relations Department, attention: Investor Relations, Av. Presidente Riesco 5711, Piso 20, Comuna Las Condes, Santiago, Chile, or by e-mail at investor.relations@lan.com, we will provide any person with a copy of it without charge. If we amend the provisions of our code of ethics that apply to our senior management or to other persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website.

C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors, PricewaterhouseCoopers, during the fiscal years ended December 31, 2009, 2010 and 2011:

	2011		2010		2009
Audit fees		1,823.0		1,478.0		1,431.4
Audit-related fees		0		427.0		0.0
Tax fees		229.0		149.0		0.0
Other fees		590.0		14.0		37.7
Total fees		2,642.0		2,068.0		1,469.1

Audit-related fees in the above table are fees billed by PricewaterhouseCoopers for due diligence and other audit related services.

Other fees in the above table are fees billed by PricewaterhouseCoopers primarily for training services in IFRS. During 2011 these fees increased due to additional services related to the preparation of the F4 Form, proformas, and others.

Board of Directors’ Committee Pre-Approval Policies and Procedures

Since January 2004, LAN complies with the SEC regulation regarding what type of additional services PricewaterhouseCoopers is authorized to offer to us. In addition to this, our Board of Directors’ Committee decided to automatically authorize those accepted services for an amount of up to 10% of the fees charged by the auditing firm, and for an amount of up to 50% when adding all those services together. In case the amount is larger than that, then it will need the approval of the Board of Directors’ Committee.

189

D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

None.

G. CORPORATE GOVERNANCE

New York Stock Exchange Corporate Governance Comparison

Pursuant to Section 303A.11 of the Listed Company Manual of the NYSE, we are required to provide a summary of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards. We are a Chilean corporation with shares listed on the SSE, the Chilean Electronic Exchange and the Valparaiso Stock Exchange and ADSs on the NYSE. Our corporate governance practices are governed by our bylaws, the Chilean Corporation Law and the Securities Market Law.

The table below discloses the significant differences between our corporate governance practices and the NYSE standards.

NYSE Standards	Our Corporate Governance Practice
Director Independence. Majority of board of directors must be independent. §303A.01	Under Chilean law, we are not required to have a majority of independent directors on our board.
	Our board of directors’ committee (all of whom are members of our board of directors) is composed of three directors, two of whom must be independent if we have a sufficient number of independent directors on our board.
	The definition of independence applicable to us pursuant to the Chilean Corporation Law differs in certain respects from the definition applicable to U.S. issuers under the NYSE rules.
	Pursuant to Law No. 20,382 on Corporate Governance, which came into effect on January 1, 2010, we are also required to have at least one independent director. Until January 1, 2010, under the Chilean Corporation Law, a director was deemed to be independent if such member would have been elected as a Director at the Shareholders Meeting after excluding the votes of any controlling shareholder or party related to it.

190

NYSE Standards	Our Corporate Governance Practice
	Starting on January 1, 2010, directors are deemed to be independent if they have not fallen within any of the following categories during the 18 months prior to their election: (i) had a relevant relationship, interest or dependence on us, our subsidiaries, controlling shareholders, main executives, or had served any of the foregoing in a senior position; (ii) had a close family relationship with any of the individuals indicated in (i); (iii) had served in a non-profit organization which received significant funds from the individuals indicated in (i); (iv) had been a partner or shareholder (with a direct or indirect participation in excess of 10%) in, or had a senior position at a company which has rendered significant services to, the individuals indicated in (i); (v) had been a partner or shareholder (with a direct or indirect participation in excess of 10%) in, or had a senior position at, our main competitors, suppliers or clients. In addition, the election of such an independent director is subject to a procedure set forth by the cited Corporation Law.
Executive Sessions. Non-management directors must meet regularly in executive sessions without management. Independent directors should meet alone in an executive session at least once a year. §303A.03	There is no similar requirement under our bylaws or under applicable Chilean law.
Audit committee. Audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act, as amended, and the more stringent requirements under the NYSE standards is required. §§303A.06, 303A.07	We are in compliance with Rule 10A-3. We are not required to satisfy the NYSE independence and other audit committee standards that are not prescribed by Rule 10A-3.
Nominating/corporate governance committee. Nominating/corporate governance committee of independent directors is required. The committee must have a charter specifying the purpose, duties and evaluation procedures of the committee. § 303A.04	We are not required to have, and do not have, a nominating/corporate governance committee.
Compensation committee. Compensation committee of independent directors is required, which must approve executive officer compensation. The committee must have a charter specifying the purpose, duties and evaluation procedures of the committee. §303A.05	We are not required to have a compensation committee. Pursuant to the Chilean Corporation Law, our board of directors’ committee must approve our senior management and employee’s compensation.
Equity compensation plans. Equity compensation plans require shareholder approval, subject to limited exemptions.	Under the Chilean Corporation Law, equity compensation plans require shareholder approval.
Code of Ethics. Corporate governance guidelines and a code of business conduct and ethics is required, with disclosure of any waiver for directors or executive officers. §303A.10	We have adopted a code of ethics and conduct applicable to our senior management, including our chief executive officer, our chief financial officer and our chief accounting officer, as well as to other employees. Our code is freely available online at our website, www.lan.com, under the heading “Corporate

191

NYSE Standards

Our Corporate Governance Practice

Governance” in the Investor Relations informational page. In addition, upon written request, by regular mail to Lan Airlines S.A., Investor Relations Department, attention: Investor Relations, Av. Presidente Riesco 5711, Piso 20, Comuna Las Condes, Santiago, Chile or by e-mail at Investor.Relations@lan.com, we will provide any person with a copy of our code of ethics without charge. We are required by Item 16B of Form 20-F to disclose any waivers granted to our chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions.

The disclosure of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards is also posted on our website and can be accessed at www.lan.com.

H. Mine Safety Disclosure

Not applicable.

192

PART III

ITEM 17. FINANCIAL STATEMENTS

See “Item 18. Financial Statements”.

ITEM 18. FINANCIAL STATEMENTS

See our consolidated Financial Statements beginning on page F-1. The following is an index of the financial statements.

Consolidated Financial Statements for Lan Airlines and its Subsidiaries

	Page
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm		F-1-B-1
Consolidated Statements of Financial Position at December 31, 2010 and 2011		F-1-1
Consolidated Statement of Comprehensive Income for the years ended December  31, 2009, 2010 and 2011		F-1-4
Statement of Changes in net equity for the year ended December 31, 2009, 2010 and 2011		F-1-5
Consolidated Statements of Cash Flows – Direct Method for the years ended December  31, 2009, 2010 and 2011		F-1-7
Notes to Consolidated Financial Statements at December 31, 2011		F-1-8

ITEM 19. EXHIBITS

Documents filed as exhibits to this annual report:

Exhibit No.	Description
1.1	Amended By-laws of Lan Airlines S.A.
2.1	Second Amended and Restated Deposit Agreement, dated as of October 28, 2011, between the Company and JPMorgan Chase Bank, N.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).
2.2	Foreign Investment Contract among the Central Bank of Chile, LanChile S.A. and Citibank, N.A., as depositary, relating to the foreign exchange treatment of holders of ADSs (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on June 14, 2004).
2.3	Amendment to the Agreement made according to Former Chapter XXVI of Title I of the Compendium of Foreign Exchange Regulations of the Central Bank of Chile, dated as of October 28, 2011, among the Company, the Central Bank of Chile, The Bank of New York Mellon and JP Morgan Chase Bank, N.A.
4.1	Second A320 Family Purchase Agreement, dated March 20, 1998, between the Company and Airbus Industrie relating to Airbus A320-Family Aircraft (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on June 24, 2001 and portions of which have been omitted pursuant to a request for confidential treatment).
4.1.1	Amendment No. 1 dated as of November 14, 2003 and Amendment No. 2 dated as of October 4, 2005, to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (as successor to Airbus Industrie) (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 30, 2006 and portions of which have been omitted pursuant to a request for confidential treatment).
4.1.2	Amendment No. 3 dated as of March 6, 2007, to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 30, 2006 and portions of which have been omitted pursuant to a request for confidential treatment).

1

Exhibit No.	Description
4.1.3	Amendment No. 5 dated as of December 23, 2009, to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 29, 2010 and portions of which have been omitted pursuant to a request for confidential treatment).
4.1.4	Amendments No. 6, 7, 8 and 9 (dated as of May 10, 2010, May 19, 2010, September 23, 2010 and December 21, 2010, respectively), to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.1.5	Amendments No. 10 and 11 (dated as of June 10, 2011 and November 8, 2011, respectively), to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.2	Purchase Agreement No. 2126 dated as of January 30, 1998, between the Company and The Boeing Company as amended and supplemented, relating to Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on December 21, 2004 and portions of which have been omitted pursuant to a request for confidential treatment).
4.2.1	Supplemental Agreements No. 16, 19, 20, 21 and 22 (dated as of November 11, 2004, January 21, March 10, April 1, April 28, and July 20, 2005, and March 31, 2006, respectively) to the Purchase Agreement No. 2126 dated January 30, 1998, between the Company and The Boeing Company, relating to Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft, (incorporated by reference to our amended annual report filed on Form 20-F (File No. 001-14728) filed on May 7, 2007 and portions of which have been omitted pursuant to a request for confidential treatment).
4.2.2	Supplemental Agreement No. 23 dated as of March 6, 2007, to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on April 23, 2007 and portions of which have been omitted pursuant to a request for confidential treatment).
4.2.3	Supplemental Agreement No. 24 dated as of November 10, 2008, to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company. Portions of this document have been omitted pursuant to a request for confidential treatment. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 25, 2009 and portions of which have been omitted pursuant to a request for confidential treatment).
4.2.4.	Supplemental Agreements No. 28 and 29 (dated as of March 22, 2010 and November 10, 2010, respectively), to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company. Portions of these documents have been omitted pursuant to a request for confidential treatment. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.2.5	Supplemental Agreements No. 30, 31 and 32 (dated as of February 15, 2011, May 10, 2011 and December 22, 2011, respectively), to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.3	Aircraft Lease Common Terms Agreement between GE Commercial Aviation Services Limited and Lan Cargo S.A., dated as of April 30, 2007, and Aircraft Lease Agreements between Wells Fargo Bank Northwest N.A., as owner trustee, and Lan Cargo S.A., dated as of April 30, 2007 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 7, 2007 and portions of which have been omitted pursuant to a request for confidential treatment).

2

Exhibit No.	Description
4.4	Purchase Agreement No 3194 between the Company and The Boeing Company relating to Boeing Model 777-Freighter aircraft dated as of July 3, 2007 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 25, 2008 and portions of which have been omitted pursuant to a request for confidential treatment).
4.4.1	Supplemental Agreement No. 2 dated as of November 2, 2010, to the Purchase Agreement No 3194 between the Company and The Boeing Company, dated as of July 3, 2007. (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.4.2	Supplemental Agreement No. 3 dated as of September 24, 2011, to the Purchase Agreement No 3194 between the Company and The Boeing Company, dated as of July 3, 2007. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.5	Purchase Agreement No. 3256 between the Company and The Boeing Company relating to Boeing Model 787-8 and 787-9 aircraft dated as of October 29, 2007 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on June 25, 2008 and portions of which have been omitted pursuant to a request for confidential treatment).
4.5.1	Supplemental Agreements No. 1 and 2 (dated March 22, 2010 and July 8, 2010, respectively) to the Purchase Agreement No. 3256 dated October 29, 2007, as amended, between the Company and The Boeing Company (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.6	General Terms Agreement No. CFM-1-2377460475 and Letter Agreement No. 1 to General Terms Agreement No. CFM-1-2377460475 between the Company and CFM International, Inc., both dated December 17, 2010 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.7	Rate Per Flight Hour Engine Shop Maintenance Services Agreement between the Company and CFM International, Inc., dated December 17, 2010 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.8	Digital Services Agreement, dated December 17, 2010 between the Company and GE Engine Services, LLC (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011 and portions of which have been omitted pursuant to a request for confidential treatment).
4.9	Implementation Agreement, dated as of January 18, 2011, among the Company, Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM Empreedimentos e Participações S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011).
4.9.1	Extension Letter to the Implementation Agreement and Exchange Offer Agreement dated January 12, 2012 among the Company, Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM Empreedimentos e Participações S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).
4.10	Exchange Offer Agreement, dated as of January 18, 2011, among Lan Airlines S.A., Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM Empreedimentos e Participações S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728) filed on May 5, 2011).
4.11	Shareholders Agreement, dated as of January 25, 2012, among Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A. and TEP Chile S.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).

3

Exhibit No.	Description
4.12	Shareholders Agreement, dated as of January 25, 2012, between the Company and TEP Chile S.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).
4.13	Shareholders Agreement, dated as of January 25, 2012, among the Company, TEP Chile S.A. and Holdco I S.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).
4.14	Shareholders Agreement, dated as of January 25, 2012, among the Company, TEP Chile S.A., Holdco I S.A. and TAM S.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984) filed on November 15, 2011).
4.15	Letter Agreement No. 12 (GTA No. 6-9576), dated July 11, 2011, between the Company and the General Electric Company. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.16	Used PW6122A Five Engine Purchase Agreement, dated July 21, 2011, between the Company and Pratt & Whitney Engine Leasing, LLC. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.17	Promise to Sell dated as of January 25, 2011, among Lan Cargo S.A., Inversiones Lan S.A. and Bethia S.A.
4.18	Assignment of Social Rights, dated as of April 6, 2011, between Lan Cargo S.A., Inversiones Lan S.A., Servicios de Trasportes Limitada and Inversiones Betmin SpA.
4.19	Share Purchase Agreement, dated as of April 6, 2011, between Lan Cargo S.A. and Inversiones Betmin SpA.
4.20	A320 NEO Purchase Agreement, dated as of June 22, 2011, between the Company and Airbus S.A.S. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.21	Buyback Agreement No. 3001 relating to One (1) Airbus A318-100 Aircraft MSN 3001, dated as of April 14, 2011, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.22	Buyback Agreement No. 3030 relating to One (1) Airbus A318-100 Aircraft MSN 3003, dated as of August 10, 2011, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.23	Buyback Agreement No. 3062, to One (1) Airbus A318-100 Aircraft MSN 3062, dated as of May 13, 2011, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.24	Buyback Agreement No. 3214, to One (1) Airbus A318-100 Aircraft MSN 3214, dated as of June 9, 2011, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.25	Buyback Agreement No. 3216, to One (1) Airbus A318-100 Aircraft MSN 3216, dated as of July 13, 2011, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.
4.26	Aircraft General Terms Agreement Number AGTA-LAN, dated May 9, 1997, between the Company and The Boeing Company. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.

4

Exhibit No.	Description
8.1	List of subsidiaries of the Company
12.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1	Certifications of Chief Financial Officer and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1	Consent of PricewaterhouseCoopers.

5

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

CONTENTS

CLP	–  CHILEAN PESO
ARS	–  ARGENTINE PESO
US$	–  UNITED STATES DOLLAR
THUS$	–  THOUSANDS OF UNITED STATES DOLLARS
COP	–  COLOMBIAN PESO

Management’s Report on Internal Control over Financial Reporting

The management of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as amended.

The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate. Lan Airlines’ management, including the Chief Executive Officer and the Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 based on the criteria established in Internal Control—“Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and, based on such criteria, Lan Airlines’ management has concluded that, as of December 31, 2011, the Company’s internal control over financial reporting is effective. The company’s internal control over financial reporting effectiveness as of December 31, 2011 has been audited by PricewaterhouseCoopers Consultores, Auditores y Companía Limitada, an independent registered public accounting firm, as stated in their report included herein.

/s/     Enrique Cueto Plaza	/s/    Alejandro de la Fuente Goic
Enrique Cueto Plaza	Alejandro de la Fuente Goic
Chief Executive Officer	Chief Financial Officer

February 14, 2012

F-1-A

PricewaterhouseCoopers

RUT: 81.513.400-1

Santiago – Chile

AV. Andres Bello 2711 - Pisos 2,3, 4Y 5

LasCondes

Teléfono: (56) (2) 940 0000

www.pwc.cl

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Lan Airlines S.A.

In our opinion, the accompanying balance sheets and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Lan Airlines S.A. and its subsidiaries at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-1-B-1

Lan Airlines S.A.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/    PricewaterhouseCoopers

Santiago, Chile

February 14, 2012

F-1-B-2

Contents of the notes to the consolidated financial statements of Lan Airlines S.A. and Subsidiaries.

Notes

			Page
1	General information			F-1-8
2	Summary of significant accounting policies			F-1-11
	2.1.	Preparation		F-1-11
	2.2.	Consolidation		F-1-13
	2.3.	Foreign currency transactions		F-1-14
	2.4.	Property, plant and equipment		F-1-14
	2.5.	Intangible assets		F-1-15
	2.6.	Goodwill		F-1-15
	2.7.	Borrowing costs		F-1-15
	2.8.	Losses for impairment of non-financial assets		F-1-15
	2.9.	Financial assets		F-1-16
	2.10.	Derivative financial instruments and hedging activities		F-1-17
	2.11.	Inventories		F-1-18
	2.12.	Trade and other accounts receivable		F-1-18
	2.13.	Cash and cash equivalents		F-1-18
	2.14.	Capital		F-1-18
	2.15.	Trade and other accounts payables		F-1-18
	2.16.	Interest-bearing loans		F-1-19
	2.17.	Deferred taxes		F-1-19
	2.18.	Employee benefits		F-1-19
	2.19.	Provisions		F-1-20
	2.20.	Revenue recognition		F-1-20
	2.21.	Leases		F-1-21
	2.22.	Non-current assets (or disposal groups) classified as held for sale		F-1-21
	2.23.	Maintenance		F-1-21
	2.24.	Environment costs		F-1-21
3	Financial risk management			F-1-21
	3.1.	Financial risk factors		F-1-21
	3.2.	Capital risk management		F-1-29
	3.3.	Estimates of fair value		F-1-30
4	Accounting estimates and judgments			F-1-31
5	Segmental Information			F-1-32
6	Cash and cash equivalents			F-1-33
7	Financial instruments			F-1-34
	7.1.	Financial instruments by category		F-1-34
	7.2.	Financial instruments by currency		F-1-36
8	Trade, other accounts receivable and non-current accounts receivable			F-1-37
9	Accounts receivable from/payable to related entities			F-1-39
10	Inventories			F-1-40
11	Other financial assets			F-1-40
12	Other non financial assets			F-1-42
13	Non-current assets (or disposal groups) classified as held for sale			F-1-43
14	Investments in subsidiaries			F-1-44
15	Equity accounted investments			F-1-46
16	Intangible assets other than goodwill			F-1-47

Notes

		Page
17	Goodwill		F-1-48
18	Property, plant and equipment		F-1-49
19	Income taxes		F-1-56
20	Other financial liabilities		F-1-59
21	Trade and other accounts payables		F-1-63
22	Other provisions		F-1-65
23	Other current non-financial liabilities		F-1-66
24	Employee benefits		F-1-67
25	Non-current accounts payable		F-1-68
26	Equity		F-1-69
27	Revenue		F-1-72
28	Costs and expenses by nature		F-1-73
29	Gains (losses) on the sale of non-current assets not classified as held for sale		F-1-74
30	Other income, by function		F-1-74
31	Foreign currency and exchange rate differences		F-1-75
32	Earnings per share		F-1-79
33	Contingencies		F-1-80
34	Commitments		F-1-86
35	Transactions with related parties		F-1-90
36	Share-based payments		F-1-92
37	The environment		F-1-93
38	Subsequent events		F-1-93
39	Business combinations		F-1-94

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	As of December 31, 2011		As of December 31, 2010
		ThUS$		ThUS$
ASSETS
Current Assets
Cash and cash equivalents	6 - 7		374,407		631,052
Other financial assets	7 - 11		227,803		245,451
Other non-financial assets	12		26,660		18,820
Trade and other accounts receivable	7 - 8		537,406		481,350
Accounts receivable from related entities	7 - 9		838		50
Inventories	10		72,787		53,193
Tax assets			98,789		97,656
Total current assets other than non-current assets (or disposal groups) classified as held for sale			1,338,690		1,527,572
Non-current assets (or disposal groups) classified as held for sale	13		4,661		5,497
Total current assets			1,343,351		1,533,069
Non-current Assets
Other financial assets	7 - 11		21,833		21,587
Other non-financial assets	12		58,163		32,508
Accounts receivable	7 - 8		7,491		7,883
Equity accounted investments	15		991		593
Intangible assets other than goodwill	16		64,923		45,749
Goodwill	17		163,777		157,994
Property, plant and equipment	18		5,927,982		4,948,430
Deferred tax assets	19		60,148		38,084
Total non-current assets			6,305,308		5,252,828
Total assets			7,648,659		6,785,897

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-1

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	As of December 31, 2011			As of December 31, 2010
		ThUS$			ThUS$
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Other financial liabilities	7 - 20		582,257			542,624
Trade and other accounts payables	7 - 21		645,086			645,571
Accounts payable to related entities	7 - 9		367			184
Other provisions	22		7,363			753
Tax liabilities			29,369			15,736
Other non-financial liabilities	23		1,057,637			939,151
Total current liabilities			2,322,079			2,144,019
Non-current liabilities
Other financial liabilities	7 - 20		3,109,136			2,562,348
Accounts payable	7 - 25		354,930			425,681
Other provisions	22		22,385			32,120
Deferred tax liabilities	19		369,625			312,012
Employee benefits	24		13,132			9,657
Total non-current liabilities			3,869,208			3,341,818
Total liabilities			6,191,287			5,485,837
EQUITY
Share capital	26		473,907			453,444
Retained earnings	26		1,116,798			949,214
Other equity interests	26		8,492			5,463
Other reserves	26		(153,873	)		(111,307	)
Equity attributable to owners of the parent			1,445,324			1,296,814
Non-controlling interests			12,048			3,246
Total equity			1,457,372			1,300,060
Total liabilities and equity			7,648,659			6,785,897

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-2

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME BY FUNCTION

		For the year ended December 31,
	Note	2011			2010			2009
		ThUS$			ThUS$			ThUS$
Revenue	27		5,585,440			4,390,502			3,519,162
Cost of sales			(4,078,598	)		(3,012,698	)		(2,522,778	)
Gross margin			1,506,842			1,377,804			996,384
Other income	30		132,804			132,826			136,351
Distribution costs			(479,829	)		(383,517	)		(326,964	)
Administrative expenses			(405,716	)		(331,831	)		(269,588	)
Other expenses			(214,411	)		(172,428	)		(100,483	)
Other gains/(losses)			(33,039	)		5,438			(11,728	)
Financial income			14,453			14,946			18,183
Financial costs	28		(139,077	)		(155,279	)		(153,109	)
Equity accounted earnings	15		458			132			315
Foreign exchange gains/(losses)	31		(256	)		13,792			(11,237	)
Result of indexation units			131			149			(605	)
Income before taxes			382,360			502,032			277,519
Income tax expense	19		(61,789	)		(81,107	)		(44,487	)
NET INCOME FOR THE YEAR			320,571			420,925			233,032
Income attributable to owners of the parent			320,197			419,702			231,126
Income attributable to non-controlling interests			374			1,223			1,906
Net income for the year			320,571			420,925			233,032
EARNINGS PER SHARE
Basic earnings per share (US$)	32		0.94335			1.23882			0.68221
Diluted earnings per share (US$)	32		0.94260			1.23534			0.68221

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-3

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

			For the year ended December 31,
	Note		2011			2010			2009
			ThUS$			ThUS$			ThUS$
NET INCOME				320,571			420,925			233,032
Components of other comprehensive income, before taxes
Currency translation differences
Gains (losses) on currency translation, before tax		31		(10,864	)		708			1,442
Other comprehensive income, before taxes, currency translation differences				(10,864	)		708			1,442
Cash flow hedges
Gains (losses) on cash flow hedges before tax		20		(40,368	)		(17,855	)		252,508
Other comprehensive income, before taxes, cash flow hedges				(40,368	)		(17,855	)		252,508
Other components of other comprehensive income, before taxes				(51,232	)		(17,147	)		253,950
Income tax relating to other comprehensive income [abstract]
Income tax related to currency translation differences in other comprehensive income		19		1,846			(120	)		1,008
Income tax related to cash flow hedges in other comprehensive income		19		6,862			3,035			(42,925	)
Amount of income taxes related to components of other comprehensive income				8,708			2,915			(41,917	)
Other comprehensive income				(42,524	)		(14,232	)		212,033
Total comprehensive income				278,047			406,693			445,065
Comprehensive income attributable to owners of the parent				277,631			405,549			441,977
Comprehensive income attributable to non-controlling interests				416			1,144			3,088
TOTAL COMPREHENSIVE INCOME				278,047			406,693			445,065

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-4

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Other reserves
	Note	Share capital			Other equity interests		Reserve for exchange on translation differences			Cash flow hedging reserve			Retained earnings			Equity attributable to owners of the parent			Non- controlling interests		Total equity
		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Equity previously reported January 1, 2011			453,444			5,463		(4,257	)		(107,050	)		949,214			1,296,814			3,246		1,300,060
Total increase (decrease) in equity
Comprehensive income
Gain (losses)	26		—			—		—			—			320,197			320,197			374		320,571
Other comprehensive income			—			—		(9,060	)		(33,506	)		—			(42,566	)		42		(42,524	)
Total comprehensive income			—			—		(9,060	)		(33,506	)		320,197			277,631			416		278,047
Transactions with shareholders
Equity issuance	26-36		23,135			—		—			—			—			23,135			—		23,135
Dividends	26		—			—		—			—			(151,981	)		(151,981	)		—		(151,981	)
Increase (decrease) through transfers and other changes, equity	26-36		(2,672	)		3,029		—			—			(632	)		(275	)		8,386		8,111
Total transactions with shareholders			20,463			3,029		—			—			(152,613	)		(129,121	)		8,386		(120,735	)
Closing balance as of December 31, 2010			473,907			8,492		(13,317	)		(140,556	)		1,116,798			1,445,324			12,048		1,457,372

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-5

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
						Other reserves
	Note	Share capital		Other equity interests		Currency translation reserve			Cash flow hedging reserve			Retained earnings			Equity attributable to owners of the parent			Non- controlling interests			Total equity
		ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Equity previously reported January 1, 2010			453,444		2,490		(4,924	)		(92,230	)		740,047			1,098,827			7,099			1,105,926
Total increase (decrease) in equity
Comprehensive income
Gain (losses)	26		—		—		—			—			419,702			419,702			1,223			420,925
Other comprehensive income			—		—		667			(14,820	)		—			(14,153	)		(79	)		(14,232	)
Total comprehensive income			—		—		667			(14,820	)		419,702			405,549			1,144			406,693
Transactions with shareholders
Dividends	26		—		—		—			—			(210,406	)		(210,406	)		—			(210,406	)
Increase (decrease) through transfers and other changes, equity	26-36		—		2,973		—			—			(129	)		2,844			(4,997	)		(2,153	)
Total transactions with shareholders			—		2,973		—			—			(210,535	)		(207,562	)		(4,997	)		(212,559	)
Closing balance as of December 31, 2010			453,444		5,463		(4,257	)		(107,050	)		949,214			1,296,814			3,246			1,300,060

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-6

LAN AIRLINES S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS DIRECT – METHOD

			For the year ended December 31,
	Note		2011			2010			2009
			ThUS$			ThUS$			ThUS$
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services				5,966,464			4,831,963			3,871,189
Other cash receipts from operating activities				52,012			46,336			40,319
Payments for operating activities
Payments to suppliers for goods and services				(4,286,394	)		(3,058,168	)		(2,475,716	)
Payments to and on behalf of employees				(883,297	)		(633,686	)		(636,603	)
Other payments for operating activities				(84,000	)		(18,000	)		(19,000	)
Interest paid				(6,766	)		(387	)		—
Interest received				11,428			11,438			13,542
Income taxes refunded (paid)				626			(11,098	)		10,304
Other cash inflows (outflows)				(7,499	)		(43,061	)		41,792
Net cash flows from operating activities				762,574			1,125,337			845,827
Cash flows used in investing activities
Cash flows from disposal of subsidiaries				47,337			1,491			1,568
Cash flows used for acquisition of subsidiaries				(3,541	)		(12,000	)		(921	)
Cash flows used for in the purchase of non-controlling interests				—			—			(2,439	)
Other cash receipts from sales of equity or debt instruments of other entities				9,201			12,915			8,743
Other payments to acquire equity or debt instruments of other entities				(72	)		(60,000	)		(58,983	)
Amounts raised from sale of property, plant and equipment				93,787			577			10,777
Purchases of property, plant and equipment				(1,367,025	)		(1,029,158	)		(538,576	)
Amounts raised from sale of intangible assets				6,189			—			—
Purchases of intangible assets				(27,615	)		(19,236	)		(12,888	)
Dividends received				89			111			414
Interest received				2,848			4,048			2,637
Other cash inflows (outflows)				545			812			—
Net cash flow used in investing activities				(1,238,257	)		(1,100,440	)		(589,668	)
Cash flows from (used in) financing activities
Amounts raised from issuance of shares				23,153			—
Amounts raised from long-term loans				969,252			687,792			671,425
Amounts raised from short-term loans				334,500			—			—
Loans Repayments				(883,402	)		(554,539	)		(261,705	)
Payments of finance lease liabilities				(59,990	)		(54,034	)		(62,858	)
Dividends paid				(192,133	)		(155,407	)		(139,937	)
Interest paid				(119,086	)		(128,722	)		(129,323	)
Other cash inflows (outflows)				146,849			80,181			21,588
Net cash flows from (used in) financing activities				219,143			(124,729	)		99,190
Net increase (decrease) in cash and cash equivalents before effect of exchanges rate change				(256,540	)		(99,832	)		355,349
Effects of variation in the exchange rate on cash and cash equivalents				(105	)		(613	)		(24,824	)
Net increase (decrease) in cash and cash equivalents				(256,645	)		(100,445	)		330,525
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		6		631,052			731,497			400,972
CASH AND CASH EQUIVALENTS AT END OF YEAR		6		374,407			631,052			731,497

The accompanying Notes 1 to 39 form an integral part of these consolidated financial statements.

F-1-7

LAN AIRLINES S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2011

NOTE 1 – GENERAL INFORMATION

Lan Airlines S.A. (the “Company” or “LAN”) is a public company registered with the Chilean Superintendency of Securities and Insurance (SVS), under No.306, whose shares are quoted in Chile on the Valparaíso Stock Exchange, the Chilean Electronic Exchange and the Santiago Stock Exchange; it is also quoted on the New York Stock Exchange (NYSE) in the form of American Depositary Receipts (ADRs). Its principal business is passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia and Ecuador and a series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. In addition, the Company has subsidiaries operating in the freight business in Mexico, Brazil and Colombia.

On August 13, 2010, LAN Airlines S.A. and TAM S.A. (TAM) announced they have signed a non-binding Memorandum of Understanding (MOU) in which the companies agree to proceed with their intention of carrying out their operations jointly under one parent company, to be named LATAM Airlines Group. The proposed partnership of LAN with TAM would be within the world’s 10 largest airline groups. LATAM will provide transport services for passengers and cargo to more than 115 destinations in 23 countries, operating with a fleet of over 300 aircraft, with over 40,000 employees. Both airlines will continue operating independently with their current operating licenses and brands. Within the group, TAM will continue operating as a Brazilian company with its own structure. The current holding of LAN Airlines S.A. will operate as an independent business unit within the group. On October 20, 2010, LAN and TAM announced that the operating subsidiaries of TAM had presented the structure of the transaction to the Brazilian Civil Aviation Agency (ANAC), which was approved by this agency on March 1, 2011.

On January 18, 2011 the parties of the MOU (1) and Mrs. Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Olivera Amaro and Joao Francisco Amaro (“Amaro Family”), as the only shareholders of TEP, signed (a) an Implementation Agreement and (b) a binding Exchange Offer Agreement (“Contracts Signed”) containing the final terms and conditions of the proposed partnership between LAN and TAM.

(1) On August 13, 2010 LAN reported as a significant matter to the Superintendency of Securities and Insurance that LAN, Costa Verde Aeronáutica S.A. and Inversiones Mineras del Cantábrico S.A. (the last two, “Cueto subsidiaries”), TAM S.A. (“TAM”) and TAM Empreendimentos e Participacoes S.A. (“TEP”) signed a non-binding Memorandum of Understanding (“MOU”) for which the primary terms were outlined.

On September 21, 2011, the Court of Defense of Free Competition (“TDLC”) approved the merger between LAN and TAM, establishing fourteen mitigation measures. On October 3, 2011, LAN and TAM filed an appeal to the Supreme Court objecting three of the mitigation measures.

On December 21, 2011, the Board of LAN cited a special meeting of shareholders, citation was performed November 11, 2011, in which LAN shareholders approved, among others, the following matters:

(a) The merger of LAN with Sister Holdco S.A. and Holdco II S.A. and companies (the “Absorbed Companies”), two companies specially constituted for the purpose of the association between LAN and TAM;

(b)The change of name and the other transactions contemplated in contracts.

F-1-8

(c) The increase in capital by US$ 1,465,372,970.09 by issuing 147,355,882 common shares without par value of which:

(i) US$ 1,417,639,617.60 through the issue of 142,555,882 shares, which are intended to be exchanged for shares of the Absorbed Companies as a result of the proposed Merger, at a rate of 0.9 new shares of LAN for each share that is fully subscribed and paid for each of the absorbed companies, and that belongs to shareholders other than LAN. LAN shares that holds in the acquired companies at the time to perfect the Merger, shall have no effect;

(ii) US$ 47,733,352.49 through the issuance of 4,800,000 shares, which will go towards compensation plans for employees of the Company and its subsidiaries, as provided in Article 24 of the Corporations Law.

The Company is located in Santiago, Chile, at Avenida Américo Vespucio Sur 901, Renca.

Corporate Governance practices of the Company are set in accordance with Securities Market Law 18,045 the Corporations Law 18,046 and its regulations, and the regulations of the SVS and the laws and regulations of the United States of America and the U.S. Securities and Exchange Commission (SEC) with respect to the issuance of ADRs, and the Federal Republic of Brazil and the Comissão de Valores Mobiliários (“CVM”) of that country, as it pertains to the issuance of Brazilian Depositary Receipts (“BDRs”).

The Board of the Company is composed of nine members who are elected every two years by the ordinary shareholders meeting. The Board meets in regular monthly sessions and in extraordinary sessions as the corporate needs demand. Of the nine board members, three form part of its Directors’ Committee which fulfills both the role foreseen in the Corporations Law and the functions of the Audit Committee required by the Sarbanes Oxley Act of the United States of America and the respective regulations of the SEC.

The majority shareholder of the Company is the Cueto Group, which through Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A. and Inversiones Nueva Costa Verde Aeronáutica Limitada, owns 33.91% of the shares issued by the Company, and is the controller of the Company in accordance with the provisions of the letter b) of Article 97 and Article 99 of the Securities Market Law, given that despite not meeting the majority of votes at shareholders’ meeting or having the power to elect a majority of the directors of the Company, there is a decisive influence in its administration.

As of December 31, 2011, the Company had a total of 1,682 registered shareholders, and 2.99% of the Company’s share capital was in the form of ADRs.

For the year ended December 31, 2011 the Company had an average of 20,870 employees, ending the year with a total of 21,838 people, with 4,170 in administration, 2,918 in maintenance, 6,194 in operations, 3,837 cabin crew, 1,969 pilots, and 2,750 in sales.

F-1-9

The significant operating subsidiaries included in these consolidated financial statements are as follows:

				As of December 31, 2011						As of December 31, 2010
Tax No.	Company	Country of origin	Functional Currency	Direct ownership interest		Indirect ownership interest		Total ownership interest		Direct ownership interest		Indirect ownership interest		Total ownership interest
				%		%		%		%		%		%
96.518.860-6	Lantours Division de Servicios Terrestres S.A. (*)	Chile	US$		99.9900		0.0100		100.0000		99.9900		0.0100		100.0000
96.763.900-1	Inmobiliaria Aeronáutica S.A.	Chile	US$		99.0100		0.9900		100.0000		99.0100		0.9900		100.0000
96.969.680-0	Lan Pax Group S.A. and Subsidiaries	Chile	US$		99.8361		0.1639		100.0000		99.8361		0.1639		100.0000
Foreign	Lan Peru S.A.	Peru	US$		49.0000		21.0000		70.0000		49.0000		21.0000		70.0000
Foreign	Lan Chile Investments Limited and Subsidiaries	Caymán Islands	US$		99.9900		0.0100		100.0000		99.9900		0.0100		100.0000
93.383.000-4	Lan Cargo S.A.	Chile	US$		99.8939		0.0041		99.8980		99.8939		0.0041		99.8980
Foreign	Connecta Corporation	U.S.A	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Prime Airport Services Inc. and Subsidiary	U.S.A	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.951.280-7	Transporte Aéreo S.A.	Chile	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.634.020-7	Ediciones Ladeco América S.A.	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Aircraft International Leasing Limited	U.S.A	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.631.520-2	Fast Air Almacenes de Carga S.A.	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.631.410-9	Ladeco Cargo S.A.	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Laser Cargo S.R.L.	Argentina	ARS		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Lan Cargo Overseas Limited and Subsidiaries	Bahamas	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.969.690-8	Lan Cargo Inversiones S.A. and Subsidiary	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.801.150-2	Blue Express INTL S.A. and Subsidiary	Chile	CLP		0.0000		0.0000		0.0000		0.0000		100.0000		100.0000
96.575.810-0	Inversiones Lan S.A. and Subsidiaries	Chile	CLP		99.7100		0.0000		99.7100		99.7100		0.0000		99.7100

(*) Comercial Masterhouse S.A., in July 2010, changed its name to Lantours División de Servicios Terrestres S.A.

F-1-10

Additionally, the Company has proceeded to consolidate certain special purpose entities according to standards issued by the Standing Interpretations Committee of the International Accounting Standards: Consolidation – Special Purpose Entities (“SIC 12”) and private investment funds in which the parent company and subsidiaries are contributors.

All the entities controlled have been included in the consolidation.

Changes in the scope of consolidation between January 1, 2010 and December 31, 2011, are detailed below:

(1) Incorporation or acquisition of companies

• Florida West Technical Services LLC., direct subsidiary of Prime Airport Services S.A., in April 2010, changed its name to Lan Cargo Repair Station, LLC.

• Aerovías de Integración Regional, AIRES S.A., indirect subsidiary of Lan Pax Group S.A., in November 2010, was acquired through the purchase of companies Akemi Holdings S.A. and Saipan Holdings S.A. (See Note 39)

• AEROASIS S.A., direct subsidiary of Lan Pax Group S.A, was acquired in February 2011. (See Note 39)

(2) Disposal of companies

• Blue Express INTL Ltda. and subsidiary, direct subsidiary of Lan Cargo S.A., were sold according to a purchase agreement signed on April 6, 2011.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following describes the principal accounting policies adopted in the preparation of these consolidated financial statements.

2.1. Preparation

The consolidated financial statements of Lan Airlines S.A. are for the year ended December 31, 2011 and have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations.

The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.

The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to use its judgment in applying the Company’s accounting policies. Note 4 shows the areas that imply a greater degree of judgment or complexity or the areas where the assumptions and estimates are significant to the consolidated financial statements.

F-1-11

(a) At the date of these consolidated financial statements, the following accounting pronouncements were adopted by the Company, with application effective as of January 1, 2011:

Standards and amendments	Mandatory application: annual periods beginning on or after
Amendment to IAS 32: Financial instruments: Presentations	02/01/2010
IFRS 3 revised: Business combinations	07/01/2010
Amendment to IAS 27: Consolidated and separate financial statements	07/01/2010
IFRS 1: First-time adoptions	07/01/2010
Amendment to IFRS 1: First-time adoptions	07/01/2011
IFRS 7: Financial instruments: Disclosures	01/01/2010
Amendment to IFRS 7: Financial Instruments: Disclosures	07/01/2011
Amendment to IAS 34: Interim financial reporting	01/01/2011
Amendment to IAS 1: Presentation of financial statements	01/01/2011
IAS 24 revised: Related party disclosures	01/01/2011

Interpretation	Mandatory application: annual periods beginning on or after
IFRIC 19: Extinguishing financial liabilities with equity Instruments		07/01/2010
Amendment to IFRIC 13: Customer loyalty programs		01/01/2011
Amendment to IFRIC 14: Pre-payments of a minimum funding requirement		01/01/2011

The adoption of the standards, amendments and interpretations described above have not had a significant impact on the Company’s consolidated financial statements.

(b) Accounting pronouncements with applications effective as of January 1, 2012 and following:

Standards and amendments	Mandatory application: annual periods beginning on or after
Amendment to IAS 12: Income taxes	01/01/2012
Amendment to IAS 1: Presentation of financial statements	07/01/2012
IAS 28: Investments in associates and joint ventures	01/01/2013
IAS 27: Separate financial statements	01/01/2013
IFRS 10: Consolidated financial statements	01/01/2013
IFRS 11: Joint arrangements	01/01/2013
IFRS 12: Disclosures of interests in other entities	01/01/2013
IFRS 13: Fair value measurement	01/01/2013
Amendment to IAS 19: Employee benefits	01/01/2013
IFRS 9: Financial instruments	01/01/2015

Interpretation	Mandatory application: annual periods beginning on or after
IFRIC 20: Stripping costs in the production phase of mine		01/01/2013

The Company’s management believes that the adoption of the standards, amendments and interpretations described above would not have had a significant impact on the Company’s consolidated financial statements in the year of their first application. The Company has not early adopted any of the above standards.

F-1-12

2.2. Consolidation

(a) Subsidiaries

Subsidiaries are all the entities (including special-purpose entities) over which the Company has the power to control the financial and operating policies, which are generally accompanied by a holding of more than half of the voting rights. In evaluating whether the Company controls another entity, the existence and effect of potential voting rights that are currently exercisable or convertible are considered. The subsidiaries are consolidated from the date on which control is passed to the Company and they are excluded from the consolidation on the date they cease to be so controlled.

The Company uses the acquisition-cost method or purchase accounting for the purchase of subsidiaries. The cost of acquisition is the fair value of the assets delivered, the equity instruments issued and the liabilities incurred or assumed on the exchange date. The identifiable assets acquired and the liabilities and contingent liabilities assumed in a business combination are initially valued at their fair value on the date of acquisition, regardless of the extent of the non-controlling interests. The excess of the acquisition cost over the fair value of the Company’s holding in the net identifiable assets acquired is shown as goodwill. If the cost is less than the fair value of the net assets of the acquired subsidiary, the difference is recorded directly in the consolidated statement of income (Note 2.6).

Inter-company transactions, balances and unrealized gains on transactions between the Company’s entities are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment loss of the asset transferred. When necessary in order to ensure uniformity with the policies adopted by the Company, the accounting policies of the subsidiaries are modified.

(b) Transactions with non-controlling interests

The Company applies the policy of considering transactions with non-controlling interests, when not related to loss of control, as equity transactions without an effect on income.

(c) Investees or associates

Investees or associates are all entities over which Lan Airlines S.A. and Subsidiaries have a significant influence but has no control, this usually arises from a holding of between 20% and 50% of the voting rights. Investments in associates are booked using the equity method and are initially recorded at their cost.

The participation of Lan Airlines S.A. and Subsidiaries in the losses or gains after the acquisition of its investees or associates is shown in results, and its participation in post acquisition movements in reserves of investees or associates are shown in reserves.

Post-acquisition movement is adjusted against the carrying amount of the investment. When the participation of Lan Airlines S.A. and Subsidiaries in the losses of an investee or associate is equal to or more than its holding in it, including any other non guaranteed account receivable, Lan Airlines S.A. and Subsidiaries will not show the additional losses unless it has incurred obligations or made payments on behalf of the investee or associate.

Gains or losses for dilution in investees or associates are shown in the consolidated statement of income.

F-1-13

2.3. Foreign currency transactions

(a) Presentation and functional currencies

The items included in the financial statements of each of the entities of Lan Airlines S.A. and Subsidiaries are valued using the currency of the main economic environment in which the entity operates (the functional currency). The functional currency of Lan Airlines S.A. is the United States dollar which is also the presentation currency of the consolidated financial statements of Lan Airlines S.A. and Subsidiaries.

(b) Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates on the transaction dates. Foreign currency gains and losses resulting from the liquidation of these transactions and from the translation at the closing exchange rates of the monetary assets and liabilities denominated in foreign currency are shown in the consolidated statement of income.

(c) Group entities

The results and financial position of all the Group entities (none of which has the currency of a hyper- inflationary economy) that have a functional currency other than the presentation currency are translated to the presentation currency as follows:

(i) Assets and liabilities of each consolidated statement of financial position presented are translated at the closing exchange rate on the consolidated statement of financial position date;

(ii) The revenues and expenses of each income statement account are translated at the exchange rates prevailing on the transaction dates,

(iii) All the resultant exchange differences are shown as a separate component in net equity.

In the consolidation, exchange differences arising from the translation of a net investment in foreign entities (or local with a functional currency different to that of the parent), and of loans and other foreign currency instruments designated as hedges for these investments, are recorded within net equity. When the investment is sold, these exchange differences are shown in the consolidated statement of income as part of the loss or gain on the sale.

Adjustments to the goodwill and fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate.

2.4. Property, plant and equipment

The land of Lan Airlines S.A. and Subsidiaries is recognized at cost less any accumulated impairment loss. The rest of the property, plant and equipment is shown, initially and subsequently, at historic cost less the corresponding depreciation and any impairment loss, except for certain land and minor equipment that are reassessed at first adoption, according to IFRS.

The amounts of advance payments to aircraft manufacturers are capitalized by the Company under Construction in progress until receipt of the aircraft.

Subsequent costs (replacement of components, improvements, extensions, etc.) are included in the value of the initial asset or shown as a separate asset only when it is probable that the future economic benefits associated

F-1-14

with the elements of property, plant and equipment are going to flow to the Company and the cost of the element can be determined reliably. The value of the component replaced is written off in the books at the time of replacement. The rest of the repairs and maintenance are charged to the results of the year in which they are incurred.

Depreciation of property, plant and equipment is calculated using the straight-line method over their estimated technical useful lives; except in the case of certain technical components which are depreciated on the basis of cycles and hours flown.

The residual value and useful life of assets are reviewed, and adjusted if necessary, once per year.

When the carrying amount of an asset is higher than its estimated recoverable amount, its value is reduced immediately to its recoverable amount (Note 2.8).

Losses and gains on the sale of property, plant and equipment are calculated by comparing the proceeds obtained with the book value and are included in the consolidated statement of income.

2.5. Intangible assets

Computer software

Licenses for computer software acquired are capitalized on the basis of the costs incurred in acquiring them and preparing them for using the specific software. These costs are amortized over their estimated useful lives.

Expenses related to the development or maintenance of computer software which do not qualify for capitalization, are shown as an expense when incurred. Certain costs directly related to the production of unique and identifiable computer software controlled by the Company, are shown as intangible assets when they have met all the criteria for capitalization. The direct costs include the expenses of the personnel who develop the computer software and other costs directly associated.

Development costs of computer software shown as assets are amortized over their estimated useful lives.

2.6. Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the Company’s participation in the net identifiable assets of the subsidiary on the acquisition date. Goodwill related to acquisition of subsidiaries is not amortized but tested for impairment annually and when there are indications that the carrying value may not be recoverable. Gains and losses on the sale of an entity include the book amount of the goodwill related to the entity sold.

2.7. Borrowing costs

Interest costs incurred for the construction of any qualified asset are capitalized over the time necessary for completing and preparing the asset for its intended use. Other interest costs are charged to income and expenses.

2.8. Losses for impairment of non-financial assets

Intangible assets that have an indefinite useful life, and developing IT projects, are not subject to amortization and are subject to annual testing for impairment losses. Assets subject to amortization are subjected to

F-1-15

impairment tests whenever any event or change in circumstances indicates that the book value of the assets may not be recoverable. An impairment loss is recorded when the book value is greater than the recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. In evaluating the impairment, the assets are grouped at the lowest level for which cash flows are separately identifiable (CGUs). Non-financial assets other than goodwill that have suffered an impairment loss are subjected to a test once per year to check that there has been no reversal of the loss.

2.9. Financial assets

The Company classifies its financial instruments in the following categories: financial assets at fair value through profit and loss, loans and accounts receivable and financial assets held to maturity. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at the time of initial recognition, which occurs on the date of transaction.

(a) Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss are financial instruments held for trading and those which have been designated as at fair value through profit or loss in their initial classification. A financial asset is classified in this category if acquired mainly for the purpose of being sold in the near future or when these assets are managed and measured using fair value. Derivatives are also classified as acquired for trading unless they are designated as hedges. Assets in this category are classified as cash and cash equivalents, held for trading, and other financial assets, designated on initial recognition.

(b) Loans and accounts receivable

Loans and accounts receivable are non-derivative financial instruments with fixed or determinable payments not traded on an active market. These items are classified in current assets except for those with maturity over 12 months from the date of the consolidated statement of financial position, which are classified as non-current assets. Loans and accounts receivable are included in trade and other accounts receivable in the consolidated statement of financial position (Note 2.12).

(c) Financial assets held to maturity

Financial assets held to maturity are non-derivative financial instruments with fixed or determinable payments and fixed maturities that the Company’s management has the positive intention and capacity to hold until their maturity. Should the Company sell a not-insignificant amount of the financial assets held to their maturity, the whole category is reclassified as available for sale. These financial instruments held to maturity are included in non-current assets, except for those maturity equal to or less than 12 months from the consolidated statement of financial position, which are classified as other current financial assets.

Regular purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest rate method. Held to maturity investments are carried at amortized cost using the effective interest rate.

F-1-16

At the date of each consolidated statement of financial position, the Company assesses if there is objective evidence that a financial asset or group of financial assets may have suffered an impairment loss. For the case of financial assets held to maturity, if there is any evidence of impairment, the amount of the provision is the difference between the book value of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate.

2.10.   Derivative financial instruments and hedging activities

Derivatives are booked initially at fair value on the date the derivative contracts are signed and later they continue to be valued at their fair value. The method for booking the resultant loss or gain depends on whether the derivative has been designated as a hedging instrument and if so, the nature of the item hedged. The Company designates certain derivatives as:

(a) Hedge of the fair value of recognized assets (fair value hedge);

(b) Hedge of an identified risk associated with a recognized liability or an expected highly-probable transaction (cash-flow hedge), or

(c) Derivatives that do not qualify for hedge accounting.

The Company documents, at the inception of each transaction, the relationship between the hedging instrument and the hedged item, as well as its objectives for managing risk and the strategy for carrying out various hedging transactions. The Company also documents its assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being hedged.

The total fair value of the hedging derivatives is booked as an other non-current financial asset or liability if the remaining maturity of the item hedged is over 12 months, and as an other current financial asset or liability if the remaining term of the item hedged is less than 12 months. Derivatives not booked as hedges are classified as other financial assets or liabilities, current in the case that their remaining maturity is less than 12 months and non-current in the case that it is more than 12 months.

(a) Fair value hedges

Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the consolidated statement of income, together with any change in the fair value of the asset or liability hedged that is attributable to the risk being hedged.

(b) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is shown in the statement of other comprehensive income. The loss or gain relating to the ineffective portion is recognized immediately in the consolidated statement of income under Other gains (losses).

In the case of variable interest-rate hedges, the amounts recognized in the statement of other comprehensive income are reclassified to results within financial costs at the same time the associated debts accrue interest.

For fuel price hedges, the amounts shown in the statement of other comprehensive income are reclassified to results under the line item Cost of sales to the extent that the fuel subject to the hedge is used.

F-1-17

When hedging instruments mature or are sold or when they do not meet the requirements to be accounted for as hedges, any gain or loss accumulated in the statement of other comprehensive income until that moment remains in the statement of other comprehensive income and is reclassified to the consolidated statement of income when the hedged transaction is finally recognized. When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the statement of other comprehensive income is taken immediately to the consolidated statement of income as Other gains (losses).

(c) Derivatives not booked as a hedge

Certain derivatives are not booked as a hedge. The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in the consolidated statement of income in Other gains (losses).

2.11.   Inventories

Inventories, detailed in Note 10, are shown at the lower of cost and their net realizable value. The cost is determined on the basis of the weighted average cost method. The net realizable value is the estimated selling price in the normal course of business, less estimated costs necessary to make the sale.

2.12.   Trade and other accounts receivable

Trade accounts receivable are shown initially at their fair value and later at their amortized cost in accordance with the effective interest rate method, less the allowance for impairment losses. An allowance for impairment loss of trade accounts receivable is made when there is objective evidence that the Company will not be able to recover all the amounts due according to the original terms of the accounts receivable.

The existence of significant financial difficulties on the part of the debtor, the probability that the debtor is entering bankruptcy or financial reorganization and the default or delay in making payments are considered indicators that the receivable has been impaired. The amount of the provision is the difference between the book value of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate. The book value of the asset is reduced by the amount of the allowance and the loss is shown in the consolidated statement of income in Cost of sales. When an account receivable is written off, it is charged to the allowance account for accounts receivable.

2.13.   Cash and cash equivalents

Cash and cash equivalents include cash and bank balances, time deposits in financial institutions, and other short-term and easily liquidated investments.

2.14.   Capital

The common shares are classified as net equity.

Incremental costs directly attributable to the issuance of new shares or options are shown in net equity as a deduction from the proceeds obtained.

2.15.   Trade and other accounts payables

Trade payables and other accounts payable are initially recognized at fair value and subsequently at amortized cost and are valued according to the method of the effective interest rate.

F-1-18

2.16.   Interest-bearing loans

Financial liabilities are shown initially at their fair value, net of the costs incurred in the transaction. Later, these financial liabilities are valued at their amortized cost; any difference between the proceeds obtained (net of the necessary arrangement costs) and the repayment value, is shown in the consolidated statement of income during the term of the debt, according to the effective interest rate method.

Financial liabilities are classified in current and non-current liabilities according to the contractual payment dates of the nominal principal.

2.17.   Deferred taxes

Deferred taxes are calculated on the temporary differences arising between the tax bases of assets and liabilities and their book values. However, if the temporary differences arise from the initial recognition of a liability or an asset in a transaction different from a business combination that at the time of the transaction does not affect the accounting result or the tax gain or loss, they are not booked. The deferred tax is determined using the tax rates (and laws) that have been enacted or substantially enacted at the end of the reporting period, and are expected to apply when the related deferred tax asset is realized or the deferred tax liability discharged.

Deferred tax assets are recognised when it is probable that there will be sufficient future tax earnings with which to compensate the temporary differences.

The Company does not record deferred tax on temporary differences arising on investments in subsidiaries and associates, provided that the opportunity to reverse the temporary differences is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.

2.18.   Employee benefits

(a) Personnel vacations

The Company recognizes the expense for personnel vacations on an accrual basis.

(b) Share-based compensation

The compensation plans implemented by the granting of options for the subscription and payment of shares are shown in the consolidated financial statements in accordance with IFRS 2: Share based payments, showing the effect of the fair value of the options granted as a charge to remuneration on a straight-line basis between the date of granting such options and the date on which these become vested.

(c) Post-employment and other long-term benefits

Provisions are made for these obligations by applying the method of the actuarial value of the accrued cost, and taking into account estimates of future permanence, mortality rates and future wage increases determined on the basis of actuarial calculations. The discount rates are determined by reference to market interest-rate curves. Actuarial gains or losses are shown in results for the year when they occur.

(d) Incentives

The Company has an annual incentives plan for its personnel for compliance with objectives and individual contribution to the results. The incentives eventually granted consist of a given number or portion of monthly remuneration and the provision is made on the basis of the amount estimated for distribution.

F-1-19

2.19.   Provisions

Provisions are recognised when:

(i) The Company has a present legal or implicit obligation as a result of past events.

(ii) It is probable that some payment is going to be necessary to settle an obligation, and

(iii) The amount has been reliably estimated.

Provisions are shown at the present value of the disbursements expected to be necessary for settling the obligation using the Company’s best estimates. The pre-tax discount rate used for determining the present value reflects current market evaluations on the date of the consolidated financial statements, time value of money, as well as the specific risks related to the liability in question.

2.20.   Revenue recognition

Revenues include the fair value of the proceeds received or to be received on sales of goods and rendering services in the ordinary course of the Company’s business. Revenues are shown net of refunds, rebates and discounts.

(a) Rendering of services

(i) Passenger and cargo transport

The Company shows revenue from the transportation of passengers and cargo once the service has been provided.

(ii) Frequent flyer program

The Company currently has a frequent flyer program called Lan Pass, whose objective is customer loyalty through the delivery of kilometers fly with the Company or its alliance partners in certain flights, use the services of entities registered with the program or make purchases with an associated credit card. The kilometers earned can be exchanged for flight tickets or other services of associated entities.

The consolidated financial statements include liabilities for this concept (deferred income), according to the estimate of the valuation established for the kilometers accumulated pending use at that date, in accordance with IFRIC 13: Customer loyalty programs.

(iii) Other revenues

The Company records revenues for other services when these have been provided.

(b) Interest income

Interest income is booked using the effective interest rate method.

(c) Dividend income

Dividend income is booked when the right to receive the payment is established.

F-1-20

2.21.   Leases

(a) When the Company is the lessee – financial lease

The Company leases certain property, plant and equipment in which it has substantially all the risk and benefits deriving from the ownership; they are therefore classified as financial leases. Financial leases are capitalized at the start of the lease at the lower of the fair value of the asset leased and the present value of the minimum lease payments.

Every lease payment is separated between the liability component and the financial expenses so as to obtain a constant interest rate over the outstanding amount of the debt. The corresponding leasing obligations, net of financial charges, are included in Other financial liabilities. The element of interest in the financial cost is charged to the consolidated statement of income over the lease period so that it produces a constant periodic rate of interest on the remaining balance of the liability for each year. The asset acquired under a financial lease is depreciated over its useful life and is included in Property, plant and equipment.

(b) When the Company is the lessee – operating lease

Leases, in which the lessor retains an important part of the risks and benefits deriving from ownership, are classified as operating leases. Payments with respect to operating leases (net of any incentive received from the lessor) are charged in the consolidated statement of income on a straight-line basis over the term of the lease.

2.22.   Non-current assets (or disposal groups) classified as held for sale

Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of their book value and the fair value less costs to sell.

2.23.   Maintenance

The costs incurred for scheduled major maintenance of the aircraft’s fuselage and engines are capitalized and depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to its use expressed in terms of cycles and flight hours.

The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.

2.24.  Environmental costs

Disbursements related to environmental protection are charged to results when incurred.

NOTE 3 – FINANCIAL RISK MANAGEMENT

3.1. Financial risk factors

The Company’s activities are exposed to different financial risks: (a) market risk, (b) credit risk, and (c) liquidity risk. The Company’s global risk management program is focused on uncertainty in the financial markets and tries to minimize the potential adverse effects on the net margin. The Company uses derivatives to hedge part of these risks.

F-1-21

(a) Market risk

Due to the nature of its operations, the Company is exposed to market risks such as:

(i) fuel-price risk, (ii) interest-rate risk, and (iii) local exchange-rate risk. In order to fully or partially hedge all of these risks, the Company operates with derivative instruments to fix or limit rises in the underlying assets.

(i) Fuel-price risk:

Fluctuations in fuel prices largely depend on the global supply and demand for oil, decisions taken by Organization of Petroleum Exporting Countries (“OPEC”), global refining capacity, stock levels maintained, and weather and geopolitical factors.

The Company purchases an aircraft fuel called Jet Fuel grade 54. There is a benchmark price in the international market for this underlying asset, which is US Gulf Coast Jet 54. However, the futures market for this asset has a low liquidity index and as a result the Company hedges its exposure using West Texas Intermediate (“WTI”) crude and distillate Heating Oil (“HO”), which have a high correlation with Jet Fuel and are highly liquid assets and therefore have advantages in comparison to the use of the U.S. Gulf Coast Jet 54 index.

During 2011, the Company booked gains of US$ 39.9 million on fuel hedging. During 2010, the Company recognized gains of US$ 1.0 million for the same reason.

At December 31, 2011, the market value of its fuel positions amounted to US$ 30.6 million (positive). At December 31, 2010, this market value was US$ 45.8 million (positive). The following tables show the notional value of the purchase positions together with the derivatives contracted for the different years:

Positions as of December 31, 2011 (*)	Maturities
	Q112			Q212			Q312			Total
Volume (thousands of barrels WTI)		1,800			1,134			693			3,627
Contracted future price (US$ per barril)(**)		95			92			89			93
Total (ThUS$)		171,000			104,328			61,677			337,311
Approximate percentage of hedge (of expected consumption value)		50	%		33	%		19	%		34	%

(*) The volume shown in the table considers all the hedging instruments (swaps and options). The contracted future price considers the volume covered with swaps in addition to options that are expected to be exercised.

(**) Weighted average between collars and asset options

Positions as of December 31, 2010	Maturities
	Q111			Q211			Q311			Q411			Total
Volume (thousands of barrels WTI)		1,848			918			687			324			3,777
Contracted future price (US$ per barril)(*)		82			81			84			90			83
Total (ThUS$)		151,536			74,358			57,708			29,160			313,491
Approximate percentage of hedge (of expected consumption value)		54	%		27	%		19	%		8	%		26	%

(*) Weighted average between collars and asset options

F-1-22

Sensitivity analysis

A drop in fuel price positively affects the Company through a reduction in costs. However, this drop also negatively affects contracted positions as these are acquired to protect the Company against the risk of a rise in price. The policy therefore is to maintain a hedge-free percentage in order to be competitive in the event of a drop in price.

As the current positions do not represent changes in cash flows, but a variation in the exposure to the market value, the current hedge positions have no impact on income (they are booked as cash flow hedge contracts, so a variation in the fuel price has an impact on the Company’s net equity).

The following table shows the sensitivity analysis of the financial instruments according to reasonable changes in the fuel price and their effect on equity. The term of the projection was defined until the end of the last current fuel hedge contract, being the last business day of the third quarter of 2012. The calculations were made considering a parallel movement of US$ 5 per barrel in the curve of the WTI crude futures benchmark price at December 31, 2011 and the end of December 31, 2010.

Bench marck price (US$ per barrel)	Positions as of December 31, 2011 effect on equity (millions of US$)		Positions as of December 31, 2010 effect on equity (millions of US$)
+5		+16.5		+16.7
-5		-13.8		-15.7

The Company seeks to reduce the risk of fuel price rises to ensure it is not left at a disadvantage compared to its competitors in the event of a sharp price fall. The Company therefore uses hedge instruments like swaps, call options and collars to partially hedge the fuel volumes consumed.

According to the requirements of IAS 39, during the presented years, the Company has not recorded amounts for ineffectiveness in the consolidated income statement.

Given the fuel hedge structure during 2011, which considers a hedge-free portion, a vertical fall by US$ 5 in the WTI benchmark price (the monthly daily average), would have meant a decrease of approximately US$ 42.5 million in the cost of total fuel consumption for the same period. For the same year, a vertical rise by US$ 5 in the WTI benchmark price (the monthly daily average) would have meant an impact of approximately US$ 39.5 million of increased fuel costs for the same period.

(ii) Cash flow interest-rate risk:

The fluctuation in interest rates depends heavily on the state of the global economy. An improvement in long-term economic prospects moves long-term rates upward while a drop causes a decline through market effects. However, if we consider government intervention in periods of economic recession, it is usual to reduce interest rates to stimulate aggregate demand by making credit more accessible and increasing production (in the same way interest rates are raised in periods of economic expansion). The present uncertainty about how the market and governments will react, and thus how interest rates will change, creates a risk related to the Company’s debt at floating interest rates and its investments.

Cash flow interest rate risk equates to the risk of future cash flows of the financial instruments due to the fluctuation in interest rates on the market. The Company’s exposure to risks of changes in market interest rates is mainly related to long-term obligations with variable interest rates.

F-1-23

In order to reduce the risk of an eventual rise in interest rates, the Company has signed interest-rate swap and call option contracts in order to eliminate more than 82% of its exposure to interest-rate fluctuations. The Company is therefore exposed to a small portion of the fluctuations in the 90 days, 180 days and 360 days London Inter Bank Offer Rate (LIBOR).

The following table shows the sensitivity of changes in financial obligations that are not hedged against interest-rate variations. These changes are considered reasonably possible based on current market conditions.

Increase (decrease) in libor 3 months	Positions as of December 31, 2011 effect on pre-tax earnings (millions of US$)		Positions as of December 31, 2010 effect on pre-tax earnings (millions of US$)
+100 basis points		-3.06		-1.18
-100 basis points		+3.06		+1.18

Changes in market conditions produce a change in the valuation of current financial instruments hedging interest rates, causing an effect on the Company’s equity (because they are booked as cash-flow hedges). These changes are considered reasonably possible based on current market conditions. The calculations were made increasing (decreasing) vertically 100 basis points of the three-month Libor futures curve.

Increase (decrease) futures curve in libor 3 months	Positions as of December 31, 2011 effect on equity (millions of US$)			Positions as of December 31, 2010 effect on equity (millions of US$)
+100 basis points		40.70			42.39
-100 basis points		(43.20	)		(45.35	)

There are limitations in the method used for the sensitivity analysis and relate to those provided by the market because the levels indicated by the futures curves are not necessarily met and will change in each year.

In accordance with the requirements of IAS 39, during the year presented, the Company has not recorded amounts for ineffectiveness in the consolidated income statement.

(iii) Local exchange-rate risk:

The functional currency used by the parent Company is the US dollar in terms of setting prices for its services, the composition of its statement of financial position and effects on its operating income. The Company sells most of its services in US dollars or prices equivalent to the US dollar, and a large part of its expenses are denominated in US dollars or equivalents to the US dollar, particularly fuel costs, aeronautic charges, aircraft leases, insurance and aircraft components and accessories. Remuneration expenses are denominated in local currencies.

The Company maintains its cargo and passenger business tariffs in US dollars. There is a mix in the domestic markets as sales in Peru are in local currency but the prices are indexed to the US dollar. In Chile and Argentina, tariffs are in local currency without any kind of indexation. In the case of the domestic business in Ecuador, both tariffs and sales are in US dollar. The Company is therefore exposed to fluctuations in the different currencies, mainly: Chilean peso, Argentine peso, Uruguayan peso, Euro, Peruvian sol, Brazilian real, Colombian peso, Australian dollar and New Zealand dollar; of these, the largest exposure is in Chilean pesos.

The Company manages its exposure to foreign currency risk through hedging selected balances using forward exchange contracts and cross currency swaps.

F-1-24

(b) Credit risk

Credit risk occurs when the counterparty to a financial agreement or instrument fails to discharge an obligation due or financial instrument, leading to a loss in market value of a financial instrument (only financial assets, not liabilities).

The Company is exposed to credit risk due to its operative and financial activities, including deposits with banks and financial institutions, investments in other kinds of instruments, exchange-rate transactions and the contracting of derivative instruments or options.

(i) Financial activities

Cash surpluses that remain after the financing of assets necessary for the operation are invested according to credit limits approved by the Company’s Board, mainly in time deposits with different financial institutions, short-term mutual funds, and easily-liquidated corporate and sovereign bonds with short remaining maturities. These investments are booked as cash and cash equivalents and as investments held to maturity.

In order to reduce counterparty risk and to ensure that the risk assumed is known and managed by the Company, investments are diversified among different banking institutions (both local and international). The Company evaluates the credit standing of each counterparty and the levels of investment, based on (i) their credit rating, (ii) the equity size of the counterparty, and (iii) investment limits according to the Company’s level of liquidity. According to these three parameters, the Company chooses the most restrictive parameter of the previous three and based on this, establishes limits for operations with each counterparty.

The Company has no guarantees to mitigate this exposure.

(ii) Operational activities

The Company has four large sales “clusters”: travel agencies, cargo agents, airlines and credit-card administrators. The first three are governed by IATA (International Air Transport Association), international organization comprising most of the airlines that represent over 90% of scheduled commercial traffic and one of its main objectives is to regulate the financial transactions between airlines and travel agents and cargo. When an agency or airline does not pay their debt, they are excluded from operating with IATA’s member airlines. In the case of credit-card administrators, they are fully guaranteed by the issuing institutions.

The exposure consists of the term granted, which fluctuates between 1 and 45 days.

One of the tools the Company uses for reducing credit risk is to participate in global entities related to the industry, such as IATA, Business Sales Processing (BSP), Cargo Account Settlement Systems (“CASS”), IATA Clearing House (“ICH”) and banks (credit cards). These institutions fulfill the role of collectors and distributors between airlines and travel and cargo agencies. In the case of the Clearing House, it acts as an offsetting entity between airlines for the services provided between them. A reduction in term and implementation of guarantees has been achieved through these entities.

Credit quality of financial assets

The external credit evaluation system used by the Company is provided by IATA. Internal systems are also used for particular evaluations or specific markets based on trade reports available on the local market. The internal

F-1-25

classification system is complementary to the external one, i.e. for agencies or airlines not members of IATA, the internal demands are greater. The bad-debt rate in the principal countries where the Company has a presence is insignificant.

(c) Liquidity risk

Liquidity risk represents the risk that the Company has no funds to meet its obligations.

Because of the cyclical nature of the business, the operation, and its investment and financing needs related to the acquisition of new aircraft and renewal of its fleet, plus the financing needs related to market-risk hedges, the Company requires liquid funds to meet its payment obligations.

The Company therefore manages its cash and cash equivalents and its financial assets, matching the term of investments with those of its obligations. The Company’s policy is that the average term of its investments may not exceed the average term of its obligations. This cash and cash equivalents position is invested in highly-liquid short-term instruments through first-class financial entities.

The Company has future obligations related to financial leases, operating leases, maturities of other bank borrowings, derivative contracts and aircraft purchase contracts.

F-1-26

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2011

Class of Liability	Debtor Tax No.		Debtor	Debtor country	Creditor Tax No.	Creditor	Creditor country	Currency	Up to 90 days
										ThUS$
Guaranteed obligations		89.862.200-2	Lan Airlines S.A.	Chile	0-E	ING	U.S.A.	US $		4,025
			Lan Airlines S.A.	Chile	0-E	CREDITEAGRICOLE	France	US $		21,249
			Lan Airlines S.A.	Chile	0-E	PEFCO	U.S.A.	US $		15,633
			Lan Airlines S.A.	Chile	0-E	BNP PARIBAS	U.S.A.	US $		19,616
			Lan Airlines S.A.	Chile	0-E	WELLS FARGO	U.S.A.	US $		5,615
			Lan Airlines S.A.	Chile	0-E	CITIBANK	U.S.A.	US $		13,585
			Lan Airlines S.A.	Chile	97.036.000-K	SANTANDER	Chile	US $		5,436
			Lan Airlines S.A.	Chile	0-E	JP MORGAN	U.S.A.	US $		4,692
			Lan Airlines S.A.	Chile	0-E	BTMU	U.S.A.	US $		2,227
			Lan Airlines S.A.	Chile	0-E	APPLEBANK	U.S.A.	US $		757
Financial leases		89.862.200-2	Lan Airlines S.A.	Chile	0-E	ING	U.S.A.	US $		7,332
			Lan Airlines S.A.	Chile	0-E	CREDITEAGRICOLE	France	US $		2,311
			Lan Airlines S.A.	Chile	0-E	CITIBANK	U.S.A.	US $		1,809
			Lan Airlines S.A.	Chile	0-E	S.CHARTERED	U.S.A.	US $		1,773
			Lan Airlines S.A.	Chile	0-E	PEFCO	U.S.A.	US $		4,204
Bank loans		89.862.200–2	Lan Airlines S.A.	Chile	97.036.000-K	SANTANDER	Chile	US $		—
			Lan Airlines S.A.	Chile	97.004.000-5	BANCODECHILE	Chile	US $		292
			Lan Airlines S.A.	Chile	97.006.000-6	BCI	Chile	US $		50,187
			Lan Airlines S.A.	Chile	97.030.000-7	ESTADO	Chile	US $		—
			Lan Airlines S.A.	Chile	97.032.000-8	BBVA	Chile	US $		—
Other loans		89.862.200–2	Lan Airlines S.A.	Chile	97.036.000-K	SANTANDER	Chile	US $		1,145
			Lan Airlines S.A.	Chile	0-E	BOEING	U.S.A.	US $		—
			Lan Airlines S.A.	Chile	—	OTHERS	—	US $		—
Derivatives		89.862.200-2	Lan Airlines S.A.	Chile	—	OTHERS	—	US $		10,191
Non-hedging derivatives		89.862.200-2	Lan Airlines S.A.	Chile	—	OTHERS	—	US $		1,357
Accounts payable and		—	Lan Airlines S.A.
Other accounts payables			and subsidiaries	Several	—	sundry	—	US $		411,908
								CLP		15,408
								Others		78,245
Accounts payable, non-current		—	Lan Airlines S.A. and subsidiaries	Several	—	sundry	—	US $		—
Accounts payable Related parties		—	Lan Airlines S.A. and subsidiaries	Several	96.847.880-K	LufthansaLan Technical Training S.A.	—	US $		147
				Several	96.921.070-3	Austral sociedad
						Concesionaria S.A.	—	CLP		2
				Several	78.591.370-1	Bethia S.A. and subsidiaries	—	C LP		116
				Several	Foreing	Inversora Aeronaútica
						Argentina	—	US $		102
Total										679,364

Class of Liability	More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Amortization		Effective rate			Nominal value		Nominal rate
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$				%			ThUS$		%
Guaranteed obligations		12,076		32,192		32,213		60,438		140,944		Quarterly		5.69	%		113,193		5.01	%
		61,560		67,744		33,826		7,228		191,607		Quarterly		4.05	%		182,041		4.05	%
		46,900		125,060		106,833		124,408		418,834		Quarterly		5.18	%		354,360		4.61	%
		59,263		15 9,420		161,548		252,865		652,712		Quarterly		4.27	%		557,517		3.81	%
		16,828		44,837		44,7 49		113,352		225,381		Quarterly		3.64	%		188,942		3.53	%
		41,065		110,232		111,306		290,463		566,651		Quarterly		2.94	%		497,707		2.61	%
		16,577		44,721		45,461		143,675		255,870		Quarterly		1.14	%		239,882		1.01	%
		14,32 9		38,755		39,580		143,763		241,119		Quarterly		1.09	%		226,295		0.94	%
		6,817		18,434		18,807		69,085		115,370		Quarterly		1.41	%		105,863		1.26	%
		2,330		6,322		6,469		23,952		39,830		Quarterly		1.37	%		36,541		1.22	%
Financial leases		21,559		43,281		39,703		9,324		121,199		Quarterly		3.94	%		110,576		3.73	%
		7,020		20,099		20,901		35,093		85,424		Quarterly		1.46	%		79,428		1.46	%
		6,140		19,663		—		—		27,612		Quarterly		1.85	%		26,426		1.82	%
		5,435		7,538		—		—		14,746		Quarterly		1.56	%		14,481		1.56	%
		12,617		33,636		33,629		14,736		98,822		Quarterly		5.22	%		85,948		4.68	%
Bank loans		12,704		—		—		—		12,704		Semiannual		2.35	%		12,500		2.35	%
		30,291		—		—		—		30,583		Semiannual		1.91	%		30,000		1.91	%
		—		—		—		—		50,187		Quarterly		1.51	%		50,000		1.51	%
		876		45,532		—		—		46,408		Semiannual		1.82	%		44,848		1.81	%
		61,297		—		—		—		61,297		Anual		2.21	%		60,000		2.13	%
Other loans		2,314		203,779		—		—		207,238		—		2.55	%		202,899		2.55	%
		5,884		271,307		—		—		277,191		—		1.87	%		269,965		1.87	%
		—		31,081		31,006		—		62,087		Quarterly		2.43	%		58,960		2.43	%
Derivatives		28,940		70,303		41,382		8,62 0		159,436		—		—			154,410		—
Non-hedging derivatives		3,896		8,998		1,586		—		15,837		—		—			15,380		—
Accounts payable and
Other accounts payables		25,920		—		—		—		437,828		—		—			437,828		—
		—		—		—		—		15,408		—		—			15,408		—
		—		—		—		—		78,245		—		—			78,245		—
Accounts payable, non-current		—		36,000		—		—		36,000		—		—			36,000		—
Accounts payable Related parties		—		—		—		—		147		—		—			147		—
		—		—		—		—		2		—		—			2		—
		—		—		—		—		116		—		—			116		—
		—		—		—		—		102		—		—			102		—
Total		502,638		1,438,934		768,999		1,297,002		4,686,937							4,286,010

F-1-27

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2010

Class of Liability	Debtor Tax No.	Debtor	Debtor country	Creditor Tax No.	Creditor	Creditor country	Currency		Up to 90 days
										ThUS$
Guaranteed obligations	89.862.200-2	Lan Airlines S.A.	Chile	0-E	ING	U.S.A.		US $		7,425
		Lan Airlines S.A.	Chile	0-E	CALYON	France		US $		21,045
		Lan Airlines S.A.	Chile	0-E	PEFCO	U.S.A.		US $		19,838
		Lan Airlines S.A.	Chile	0-E	BNPPARIBAS	U.S.A.		US $		22,831
		Lan Airlines S.A.	Chile	0-E	WELLSFARGO	U.S.A.		US $		5,626
		Lan Airlines S.A.	Chile	0-E	CITIBANK	U.S.A.		US $		8,984
		Lan Airlines S.A.	Chile	0-E	SANTANDER	Spain		US $		2,919
Financial leases	89.862.200-2	Lan Airlines S.A.	Chile	0-E	ING	U.S.A.		US $		3,899
		Lan Airlines S.A.	Chile	0-E	CALYON	France		US $		2,249
		Lan Airlines S.A.	Chile	0-E	CITIBANK	U.S.A.		US $		1,692
		Lan Airlines S.A.	Chile	0-E	S.C HARTERED	U.S.A.		US $		3,858
Bank loans	89.862.200-2	Lan Airlines S.A.	Chile	0-E	SANTANDERMADRID	Spain		US $		—
Bank loans	89.862.200-2	Lan Airlines S.A.	Chile	97.023.000-9	CORPBANCA	Chile		CLP		13,479
		Lan Airlines S.A.	Chile	76.645.030-K	ITAU	Chile		CLP		—
		Lan Airlines S.A.	Chile	97.006.000-6	BCI	Chile		CLP		—
		Lan Airlines S.A.	Chile	97.030.000-7	ESTADO	Chile		CLP		—
		Aires S.A.	Colombia	0-E	HELM	Colombia		COP		3,944
Other loans	89.862.200-2	Lan Airlines S.A.	Chile	0-E	SANTANDERMADRID	Spain		US $		586
		Lan Airlines S.A.	Chile	0-E	BOEING	U.S.A.		US $		1,862
Derivatives	89.862.200-2	Lan Airlines S.A.	Chile	—	OTHERS	—		US $		6,018
Non-hedging derivatives	89.862.200-2	Lan Airlines S.A.	Chile	—	OTHERS	—		US $		1,461
Accounts payable and other accounts payables	—	Lan Airlines S.A. and subsidiaries	Several	—	Sundry	—		US $		277,327
								CLP		28,058
								Others		169,307
Accounts payable, non-current	—	Lan Airlines S.A. and subsidiaries	Several	—	Sundry	—		US $		—
Accounts payable related parties	—	Lan Airlines S.A. and subsidiaries	Several	96.847.880-k	Luf thansaLa n Technical trainings.	—		US $		110
								CLP		74
Total										602,592

Class of Liability	More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Amortization		Effective rate			Nominal value		Nominal rate
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$				%			ThUS$		%
Guaranteed obligations		22,305		53,471		47,128		93,325		223,654		Quarterly		5.19	%		181,029		4.69	%
		63,352		130,785		39,186		20,916		275,284		Quarterly		4.47	%		256,417		4.47	%
		59,513		158,688		149,595		209,374		597,008		Quarterly		5.16	%		497,692		4.60	%
		68,726		184,673		186,931		385,438		848,599		Quarterly		4.49	%		707,306		4.00	%
		16,842		44,872		44,796		135,714		247,850		Quarterly		3.64	%		204,392		3.53	%
		27,039		72,767		73,806		206,771		389,367		Quarterly		3.93	%		326,235		3.48	%
		8,859		24,242		25,206		95,708		15 6,934		Quarterly		0.95	%		14 8,741		0.83	%
Financial leases		11,685		30,440		25,695		11,675		83,394		Quarterly		4.08	%		77,096		3.71	%
		6,786		18,376		22,613		43,431		93,455		Quarterly		1.27	%		87,337		1.27	%
		5,24 9		26,758		—		—		33,699		Quarterly		1.32	%		32,921		1.27	%
		11,87 3		14,628		—		—		30,359		Quarterly		1.28	%		29,864		1.25	%
Bank loans		26,125		12,726		—		—		38,851		Quarterly		3.64	%		37,500		3.55	%
Bank loans		13,158		12,713		—		—		39,350		Semiannual		6.53	%		36,858		6.44	%
		21,653		10,332		—		—		31,985		Semiannual		6.67	%		29,967		6.60	%
		38,14 4		18,188		—		—		56,332		Semiannual		6.71	%		52,723		6.63	%
		47,521		22,666		—		—		70,187		Semiannual		6.65	%		65,704		6.59	%
		—		—		—		—		3,944		30 days		3.37	%		3,936		3.37	%
Other loans		1,587		72,962		—		—		75,135		—		3.29	%		72,962		3.29	%
		1,207		106,665		—		—		109,734		—		2.04	%		106,209		2.04	%
Derivatives		22,331		61,273		24,643		4,751		119,016		—		—			115,189		—
Non-hedging derivatives		4,239		9,891		5,608		—		21,199		—		—			20,703		—
Accounts payable and other accounts payables		26,002		—		—		—		303,329		—		—			303,329		—
		—		—		—		—		28,058		—		—			28,058		—
		—		—		—		—		169,307		—		—			169,307		—
Accounts payable, non-current		—		54,000		—		—		54,000		—		—			54,000		—
Accounts payable related parties		—		—		—		—		110		—		—			110		—
		—		—		—		—		74		—		—			74		—
Total		504,196		1,141,116		645,207		1,207,103		4,100,214							3,645,659

F-1-28

The Company has fuel and interest rate hedging strategies involving derivatives contracts with different financial institutions. The Company has margin facilities with each financial institution in order to regulate the mutual exposure produced by changes in the market valuation of the derivatives.

At the end of 2010, the Company had provided US$ 78.5 million in derivative margin guarantees, for cash and stand-by letters of credit. At the end of December 31, 2011, the Company had provided US$ 117.2 million in guarantees for cash and stand-by letters of credit. The increase was due to the maturity and acquisition of fuel and interest rate contracts, rising fuel prices and falling interest rates.

3.2. Capital risk management

The Company’s objectives, with respect to the management of capital, are (i) to safeguard it in order to continue as an on-going business, (ii) to seek a return for its shareholders, and (iii) to maintain an optimum capital structure and reduce its costs.

In order to maintain or adjust the capital structure, the Company may adjust the amount of the dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Company monitors the adjusted leverage ratio, in line with industry practice. This index is calculated as net adjusted debt divided by the sum of adjusted equity and net adjusted debt. Net adjusted debt is total financial debt plus 8 times the operating lease payments of the last 12 months, less total cash (measured as the sum of cash and cash equivalents plus marketable securities). Capital is the amount of net equity without the impact of the market value of derivatives, plus net adjusted debt.

Currently the Company’s strategy, which has not changed since 2007, has consisted of maintaining a leverage ratio of between 70% and 80% and an international credit rating of higher than BBB- (the minimum required for being considered investment grade). The leverage ratios as of December 31, 2011, and December 31, 2010, were as follows:

	As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$
Total financial loans		3,788,272			3,259,666
Last twelve months Operating lease payment x8		1,393,576			788,704
Less:
Cash and marketable securities		(472,499	)		(737,093	)
Total net adjusted debt		4,709,349			3,311,277
Net Equity		1,445,324			1,296,814
Cash flow hedging reserve		140,556			107,050
Adjusted equity		1,585,880			1,403,864
Total adjusted debt and equity		6,295,229			4,715,141
Adjusted leverage		74.8	%		70.2	%

F-1-29

3.3. Estimates of fair value

At December 31, 2011, the Company maintained financial instruments that should be recorded at fair value. These include:

Investments in short-term Mutual Funds (cash equivalent),

Interest rate derivative contracts,

Fuel derivative contracts,

Currency derivative contracts, and

Private investment funds.

The Company has classified the fair value measurement using a hierarchy that reflects the level of information used in the assessment. This hierarchy consists of 3 levels (I) fair value based on quoted prices in active markets for identical assets or liabilities, (II) fair value calculated through valuation methods based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) and (III) fair value based on inputs for the asset or liability that are not based on observable market data.

The fair value of financial instruments traded in active markets, such as investments acquired for trading, is based on quoted market prices at the close of the year using the current price of the buyer. The fair value of financial assets not traded in active markets (derivative contracts) is determined using valuation techniques that maximize use of available market information. Valuation techniques generally used by the Company are quoted market prices of similar instruments and / or estimating the present value of future cash flows using forward price curves of the market at year end.

The following table shows the classification of financial instruments at fair value at December 31, 2011 depending on the level of information used in the assessment:

	Fair value At December 31, 2011		Fair value measurements using values considered as
			Level I		Level II		Level III
	ThUS$		ThUS$		ThUS$		ThUS$
Assets
Short-term mutual funds		156,334		156,334		—		—
Fair value of interest rate derivatives		73		—		73		—
Fair value of fuel derivatives		30,615		—		30,615		—
Fair value of foreign currency derivatives		631		—		631
Private investment funds		60,733		60,733		—		—
Liabilities
Fair value of interest rate derivatives		159,436		—		159,436		—
Fair value of foreign currency derivatives		884		—		884		—
Interest rate derivatives not accounted for as hedging instruments		14,766		—		14,766		—

F-1-30

Additionally, at December 31, 2011, the Company has financial instruments which are not recorded at fair value. In order to meet the disclosure requirements of fair values, the Company has valued these instruments as shown in the table below:

	As of December 31, 2011				As of December 31, 2010
	Book value		Fair value		Book value		Fair value
	ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents
Cash on hand		4,605		4,605		3,857		3,857
Bank balance		17,013		17,013		24,432		24,432
Time Deposits		196,455		196,455		406,143		406,143
Other financial assets
Domestic and foreign bonds		37,359		40,250		47,184		50,294
Other financial assets		120,225		120,225		80,836		80,836
Trade and other accounts receivable non-current		544,897		544,897		489,233		489,233
Accounts receivable from related entities		838		838		50		50
Other financial liabilities		3,516,307		3,665,661		2,945,294		2,969,939
Trade and other accounts payables,		531,481		531,481		500,694		500,694
Accounts payable to related entities		367		367		184		184
Accounts payable, non-current		307,965		307,965		368,372		368,372

The book values of accounts receivable and payable are assumed to approximate their fair values, due to their short-term nature. In the case of cash on hand, bank balances, deposits and accounts payable, non-current, fair value approximates their carrying values.

The fair value of other financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate for similar financial instruments. In the case of other financial assets, the valuation was performed according to market prices at year end.

NOTE 4 – ACCOUNTING ESTIMATES AND JUDGMENTS

The Company has used estimates to value and book some of the assets, liabilities, revenues, expenses and commitments; these relate principally to:

(a) The evaluation of possible impairment losses for certain assets.

(b) The useful lives and residual values of fixed and intangible assets.

(c) The criteria employed in the valuation of certain assets.

(d) Air tickets sold that are not actually used.

(e) The calculation of deferred income at the year end, corresponding to the valuation of kilometers credited to holders of the Lan Pass loyalty card which have not yet been used.

(f) The need for provisions and where required, the determination of their values.

(g) The recoverability of deferred tax assets.

These estimates are made on the basis of the best information available on the matters analyzed.

In any case, it is possible that events will require modification of the estimates in the future, in which case the effects would be accounted for prospectively.

F-1-31

NOTE 5 – SEGMENTAL INFORMATION

The Company reports information by segments as established in IFRS 8 “Operating segments”. This standard sets rules for the reporting of information by segments in the financial statements, plus reporting about products and services, geographical areas and principal customers.

An operating segment is defined as a component of an entity on which financial information is held separately and which is evaluated regularly by the senior management in making decisions with respect to the assignment of resources and evaluation of results.

The Company has determined that it has only one operating segment: air transportation.

	Air transport segment
	For the year ended December 31,
	2011			2010			2009
	ThUS$			ThUS$			ThUS$
Income from ordinary activities and other operating income		5,718,244			4,523,328			3,655,513
Interest income		14,453			14,946			18,183
Interest expense		(139,077	)		(155,279	)		(153,109	)
Total net interest expense		(124,624	)		(140,333	)		(134,926	)
Depreciation and amortization		(396,475	)		(336,491	)		(304,062	)
Segment profit		320,197			419,702			231,126
Earnings on investments		458			132			315
Expenses for income tax		(61,789	)		(81,107	)		(44,487	)
Assets of segment		7,648,659			6,785,897			5,771,972
Investments in associates		991			593			1,236
Purchase of non-monetary assets		1,394,640			1,048,394			555,279

The Company’s revenues by geographic area are as follows:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Peru		558,227		554,072		458,384
Argentina		616,270		496,546		404,795
USA		1,140,006		858,630		680,179
Europe		523,749		447,702		343,819
Colombia		369,102		85,309		76,574
Chile		1,423,956		1,239,350		1,004,291
Others (*)		1,086,934		841,719		687,471
Total (**)		5,718,244		4,523,328		3,655,513

The Company allocates revenues by geographic area based on the point of sale of the passenger ticket or cargo. Assets are composed primarily of aircraft and aeronautical equipment, which are used throughout the different countries, so it is not possible to assign a geographic area.

(*) Includes the rest of Latin America and Asia Pacific.

(**) Includes operating revenues and other operating income.

F-1-32

NOTE 6 – CASH AND CASH EQUIVALENTS

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Cash on hand		4,605		3,857
Bank balances		17,013		24,432
Time deposits		196,455		406,143
Mutual funds		156,334		196,620
Total		374,407		631,052

Cash and cash equivalents are denominated in the following currencies at December 31, 2011, and December 31, 2010:

Currency	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
US Dollar		158,313		194,212
Chilean peso (*)		148,274		368,360
Euro		5,688		7,844
Argentine peso		20,020		11,230
Brazilian real		6,616		4,759
Colombian peso		7,668		10,231
Other currencies		27,828		34,416
Total		374,407		631,052

(*) The Company entered into currency derivative contracts (forward exchange controls) for ThUS$ 110,339 at December 31, 2011 (ThUS$ 169,357 at December 31, 2010), for conversion into dollars of investments in Chilean pesos, currency derivative contracts (cross currency swaps) for ThUS$ 0 at December 31, 2011 (ThUS$ 30,258 at December 31, 2010), for conversion into dollars of investment in Unidades de Fomento (“UF”).

In Venezuela, effective 2003, the authorities decreed that all remittances abroad should be approved by the Currency Management Commission (CADIVI). Despite having free availability of bolivars in Venezuela, the Company has certain restrictions for freely remitting these funds outside Venezuela. At December 31, 2011 the amount subject to such restrictions in dollar terms is ThUS$ 23,914 (ThUS$ 26,738 at December 31, 2010).

The Company has no significant non-monetary transactions that should be reported.

F-1-33

NOTE 7 – FINANCIAL INSTRUMENTS

7.1. Financial instruments by category

As of December 31, 2011

Assets	Held to maturity		Loans and accounts receivable		Hedging derivatives		Held to trading		Designated as at fair value through profit and loss on initial recognition		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		—		218,073		—		156,334		—		374,407
Other financial assets (*)		37,867		119,717		31,319		—		60,733		249,636
Trade and other current accounts receivable		—		537,406		—		—		—		537,406
Current accounts receivable from related parties		—		838		—		—		—		838
Non-current accounts receivable		—		7,491		—		—		—		7,491
Total		37,867		883,525		31,319		156,334		60,733		1,169,778

Liabilities	Other Financial liabilities		Hedging derivatives		Held to trading		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Other financial liabilities		3,516,307		160,320		14,766		3,691,393
Trade and other accounts payables		531,481		—		—		531,481
Current accounts payable to related parties		367		—		—		367
Non-current accounts payable		307,965		—		—		307,965
Total		4,356,120		160,320		14,766		4,531,206

(*) The value presented in held to maturity corresponds, mainly, to domestic and foreign bonds; designated as at fair value through profit and loss on initial recognition corresponds to private investment funds; and loans and accounts receivable corresponds to guarantees given.

As of December 31, 2010

Assets	Held to maturity		Loans and accounts receivable		Hedging derivatives		Held to trading		Designated as at fair value through profit and loss on initial recognition		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		—		434,432		—		196,620		—		631,052
Other financial assets (*)		47,691		80,329		80,161		—		58,857		267,038
Trade and other current accounts receivable		—		481,350		—		—		—		481,350
Current accounts receivable from related parties		—		50		—		—		—		50
Non-current accounts receivable		—		7,883		—		—		—		7,883
Total		47,691		1,004,044		80,161		196,620		58,857		1,387,373

F-1-34

Liabilities	Other Financial liabilities		Hedging derivatives		Held to trading		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Other financial liabilities		2,945,294		139,930		19,748		3,104,972
Trade and other accounts payables		500,694		—		—		500,694
Current accounts payable to related parties		184		—		—		184
Non-current accounts payable		368,372		—		—		368,372
Total		3,814,544		139,930		19,748		3,974,222

(*) The value presented in held to maturity corresponds mainly to domestic and foreign bonds; and designated as at fair value through profit and loss on initial recognition corresponds to private investment funds; and loans and accounts receivable corresponds to guarantees given.

F-1-35

7.2. Financial instruments by currency

a) Assets	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Cash and cash equivalents		374,407		631,052
US Dollar		158,313		194,212
Chilean Peso		148,274		368,360
Euro		5,688		7,844
Argentine Peso		20,020		11,230
Brazilian Real		6,616		4,759
Colombian Peso		7,668		10,231
Others		27,828		34,416
Other financial Assets		249,636		267,038
US Dollar		241,008		255,808
Brazilian Real		3,066		6,731
Colombian Peso		4,175		2,917
Others		1,387		1,582
Trade and other current accounts receivable		537,406		481,350
US Dollar		354,972		361,570
Chilean Peso		63,818		28,606
Euro		8,266		8,429
Argentine Peso		24,879		6,702
Brazilian Real		35,467		31,329
Australian Dollar		5,567		5,588
Colombian Peso		34,583		27,156
Others		9,854		11,970
Non-current accounts receivable		7,491		7,883
US Dollar		9		9
Chilean Peso		7,422		7,864
Others		60		10
Current accounts receivable from related parties		838		50
US Dollar		29		29
Chilean Peso		809		21
Total financial assets		1,169,778		1,387,373
US Dollar		754,331		811,628
Chilean Peso		220,323		404,851
Euro		13,954		16,273
Argentine Peso		44,899		17,932
Brazilian Real		45,149		42,819
Australian Dollar		5,567		5,588
Colombian Peso		46,426		40,304
Others		39,129		47,978

b) Liabilities

Liabilities information is detailed in the table within Note 3 section (c) Liquidity risk.

F-1-36

NOTE 8 – TRADE, OTHER ACCOUNTS RECEIVABLE AND NON-CURRENT ACCOUNTS RECEIVABLE

	As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$
Trade accounts receivable		474,852			435,576
Other accounts receivable		90,570			75,734
Total trade and other accounts receivable		565,422			511,310
Less: Allowance for impairment loss		(20,525	)		(22,077	)
Total net trade and accounts receivable		544,897			489,233
Less: non-current portion – accounts receivable		(7,491	)		(7,883	)
Trade and other accounts receivable, current		537,406			481,350

The fair value of trade and other accounts receivable does not differ significantly from the book value.

There are overdue accounts receivable which are not impaired. Maturity of these accounts is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Up to 3 months		17,138		12,506
Between 3 and 6 months		6,256		11,114
Total		23,394		23,620

The amounts of individually impaired trade and other accounts receivable are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Judicial and pre-judicial collection		9,626		10,586
Debtors under pre-judicial collection process		4,306		5,259
Total		13,932		15,845

Currency balances that make up the trade receivables, non-current accounts receivable and accounts receivables at December 31, 2011 and December 31, 2010, are as follows:

	As of December 31, 2011		As of December 31, 2010
Currency	ThUS$		ThUS$
US Dollar		354,981		361,579
Chilean Peso		71,240		36,470
Euro		8,266		8,429
Argentine Peso		24,879		6,702
Brazilian Real		35,467		31,329
Australian Dollar		5,567		5,588
Colombian peso		34,583		27,156
Other		9,914		11,980
Total		544,897		489,233

F-1-37

The Company records allowances when there is evidence of impairment of trade receivables. The criteria used to determine that there is objective evidence of impairment losses are the maturity of the portfolio, specific acts of damage (default) and specific market signals.

Maturity	Impairment
Judicial and pre-judicial collection Assets		100	%
Over 1 year		100	%
Between 6 and 12 months		50	%

The movement in the allowance for impairment loss of trade accounts and other accounts receivables between January 01, 2010 and December 31, 2011 is as follows:

	ThUS$
As of January 1, 2010		(23,817	)
Write-offs		5,039
(Increase) decrease in allowance		(3,299	)
Balance as of December 31, 2010		(22,077	)
As of January 1, 2011		(22,077	)
Write-offs		4,060
(Increase) decrease in allowance		(2,508	)
Balance as of December 31, 2011		(20,525	)

Once pre-judicial and judicial collection efforts are exhausted, the assets are written off against the allowance. The Company only uses the allowance method rather than direct write-off, to ensure control.

Historic and current re-negotiations are not relevant and the policy is to analyze case by case in order to classify them according to the existence of risk, determining whether it is appropriate to re-classify accounts to pre-judicial recovery. If such re-classification is justified, an allowance is made for the account, whether overdue or falling due.

The maximum credit-risk exposure at the date of presentation of the information is the fair value of each one of the categories of accounts receivable indicated above.

	As of December 31, 2011							As of December 31, 2010
	Gross exposure		Gross Impaired exposure			Exposure net of risk concentrations		Gross exposure		Gross Impaired exposure			Exposure net of risk concentrations
	ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
Trade accounts receivable		474,852		(20,525	)		454,327		435,576		(22,077	)		413,499
Other accounts receivable		90,570		—			90,570		75,734		—			75,734

There are no relevant guarantees covering credit risk and these are valued when they are settled; no materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through IATA.

F-1-38

NOTE 9 – ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES

The accounts receivable from and payable to related entities as of December 31, 2011 and December 31, 2010, respectively, are as follows:

(a) Accounts Receivable

Tax No.

Related party

Relationship

Country of origin

As of December 31, 2011

As of December 31, 2010

Currency

Transaction deadlines

Nature of transaction

ThUS$

ThUS$

96.810.370-9

Inversiones Costa Verde Ltda y CPA

Controlling shareholder

Chile

19

—

CLP

30 to 45 Days

Monetary

96.778.310-2

Concesionaria Chucumata S.A.

Associate

Chile

—

4

CLP

30 to 45 Days

Monetary

96.921.070-3

Austral Sociedad Concesionaria S.A.

Associate

Chile

—

2

CLP

30 to 45 Days

Monetary

78.591.370-1

Bethia S.A. y Filiales

Others related parties

Chile

758

—

CLP

30 to 45 Days

Monetary

87.752.000-5

Granja Marina Tornagaleones S.A.

Others related parties

Chile

32

15

CLP

30 to 45 Days

Monetary

96.812.280-0

San Alberto S.A. y Filiales

Others related parties

Chile

29

29

US$

30 to 45 Days

Monetary

Total current assets

838

50

(b) Accounts payable

Tax No.	Related party	Relationship	Country of origin	As of December 31, 2011		As of December 31, 2010		Currency	Transaction deadlines	Nature of transaction
				ThUS$		ThUS$
96.847.880-K	Lufthansa Lan Technical Training S.A.	Associate	Chile		—		74	CLP	30 to 45 Days		Monetary
96.847.880-K	Lufthansa Lan Technical Training S.A.	Associate	Chile		147		110	US$	30 to 45 Days		Monetary
96.921.070-3	Austral Sociedad Concesionaria S.A.	Associate	Chile		2		—	CLP	30 to 45 Days		Monetary
78.591.370-1	Bethia S.A. y Filiales	Other related parties	Chile		116		—	CLP	30 to 45 Days		Monetary
Foreign	Inversora Aeronaútica Argentina	Other related parties	Argentina		102		—	US$	30 to 45 Days		Monetary
	Total current liabilities				367		184

Transactions between related parties have been carried out on free-trade conditions between interested and duly-informed parties.

F-1-39

NOTE 10 – INVENTORIES

The inventories at December 31, 2011 and December 31, 2010 respectively, are detailed below:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Technical stock		57,836		40,625
Non-technical stock		14,951		12,568
		72,787		53,193

The items included in this heading are spare parts and materials that will be used mainly in consumption in in-flight and maintenance services (provided to the Company and third parties), which are valued at average cost, net of provision for obsolescence that as of December 31, 2011 amounts to ThUS$ 1,685 (ThUS$ 3,075 as of December 31, 2010). The resulting amounts do not exceed the respective net realizable values.

As of December 31, 2011, the Company recorded ThUS$ 41,213 (ThUS$ 32,915 as of December 31, 2010) within the income statement, mainly due to in-flight consumption and maintenance, which forms part of cost of sales.

NOTE 11 – OTHER FINANCIAL ASSETS

The composition of other financial assets is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
(a) Other financial assets		196,484		165,712
(b) Hedging asset		31,319		79,739
Total Current		227,803		245,451
Non-current
(a) Other financial assets		21,833		21,165
(b) Hedging assets		—		422
Total non-current		21,833		21,587

F-1-40

a) Other financial assets

Other financial assets as of December 31, 2011 and December 31, 2010, respectively, are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Private investment Funds		60,733		58,857
Domestic and Foreign bonds		37,359		47,184
Guarantees for margins of derivatives		79,171		39,868
Deposits in guarantee (aircraft)		11,657		12,030
Other guarantees given		7,564		7,773
Total current		196,484		165,712
Non-current
Deposits in guarantee (aircraft)		15,498		15,000
Other guarantees given		5,827		5,658
Other investments		508		507
Total non-current		21,833		21,165
Total other financial assets		218,317		186,877

b) Hedging assets

Hedging assets as of December 31, 2011 and December 31, 2010, are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Interest accrued since last payment date of currency Swap		—		3,691
Cash-flow hedge of interest-rate risk		73		—
Cash-flow hedge of currency risk		631		30,234
Cash-flow hedge of fuel-price risk		30,615		45,814
Total current		31,319		79,739
Non-current
Cash-flow hedge of interest-rate risk		—		422
Total non-current		—		422
Total hedging assets		31,319		80,161

Foreign currency derivatives include the fair value of Forward and Cross Currency Swaps and forward exchange contracts.

The types of derivative hedging contracts maintained by the Company at the end of each year are presented in Note 20.

F-1-41

NOTE 12 – OTHER NON-FINANCIAL ASSETS

The composition of other non-financial assets is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
a) Advance Payments		25,501		17,648
b) Other assets		1,159		1,172
Total current		26,660		18,820
Non-Current
a) Advance Payments		11,189		8,752
b) Other assets		46,974		23,756
Total non-current		58,163		32,508

a) Advance payments

Advance payments as of December 31, 2011 as of December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Aircraft insurance and other		7,954		6,459
Aircraft leases		13,196		7,343
Handling and ground handling services		2,941		—
Others		1,410		3,846
Total current		25,501		17,648
Non-Current
Aircraft leases		11,189		4,984
Handling and ground handling services		—		2,971
Others		—		797
Total non-current		11,189		8,752
Total advance payments		36,690		26,400

F-1-42

b) Other assets

Other assets as of December 31, 2011, and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Others		1,159		1,172
Total current		1,159		1,172
Non-current
Recoverable taxes		42,958		23,343
Others		4,016		413
Total non-current		46,974		23,756
Total other assets		48,133		24,928

NOTE 13 – NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS HELD FOR SALE

Non-current assets and disposal groups held for sale as of December 31, 2011, and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Engines		2,204		2,204
Inventories on consignment		527		748
Aircraft		1,537		1,537
Scrapped aircraft		365		970
Rotables		28		38
Total		4,661		5,497

During 2011, sales were made of inventories held on consignment of the Boeing 737-200 fleet.

During the financial year 2010, sales were made of rotables, inventories held on consignment and three engines, all from the Boeing 737-200 fleet.

Item balances are shown net of provision, which as of December 31, 2011 amounted to ThUS$ 5,386 (ThUS$ 5,212 at December 31, 2010).

The Company has no discontinued operations as of December 31, 2011.

F-1-43

NOTE 14 – INVESTMENTS IN SUBSIDIARIES

The Company has investments in companies recognized as investments in subsidiaries. All the companies defined as subsidiaries have been consolidated within the financial statements of Lan Airlines S.A. and Subsidiaries. The consolidation also includes special-purpose entities and private investment funds.

The following is a summary of financial information with respect to the sum of the financial statements of subsidiary companies, special-purpose entities and private investment funds that have been consolidated:

As of December 31, 2011

	Assets		Liabilities
	ThUS$		ThUS$
Current		493,662		618,360
Non-current		1,498,840		917,171
Total		1,992,502		1,535,531

As of December 31, 2010

	Assets			Liabilities
	ThUS$			ThUS$
Current		442,743			565,606
Non-current		1,388,194			773,927
Total		1,830,937			1,339,533
	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Total operating revenues		2,619,157			1,931,998
Total expenses		(2,577,685	)		(1,849,438	)
Total net income		41,472			82,560

Significant subsidiaries detailed as of December 31, 2011

Name of significant subsidiary	Country of incorporation	Functional currency	% Ownership		Nature and scope of significant restrictions on transferring funds to controller
Lan Perú S.A.	Perú	US$		69.97858		Without significant restrictions
Lan Cargo S.A.	Chile	US$		99.89803		Without significant restrictions
Lan Argentina S.A.	Argentina	ARS		94.99055		Without significant restrictions
Transporte Aéreo S.A.	Chile	US$		99.89804		Without significant restrictions
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A.	Ecuador	US$		71.94990		Without significant restrictions
Aerovías de Integración Regional, AIRES S.A.	Colombia	COP		98.21089		Without significant restrictions

F-1-44

Summary financial information of significant subsidiaries

	Statement of financial position as of December 31, 2011												Results for the year ended December 31, 2011
Name of significant subsidiary	Total Assets		Current Assets		Non-current Assets		Total Liabilities		Current Liabilities		Non-current Liabilities		Revenue		Net   Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Lan Perú S.A.		139,888		124,485		15,403		128,979		128,025		954		916,861		920
Lan Cargo S.A.		765,829		188,937		576,892		343,799		122,450		221,349		258,298		57,140
Lan Argentina S.A.		136,579		108,561		28,018		114,037		112,555		1,482		438,137		(1,972	)
Transporte Aéreo S.A.		348,943		237,627		111,316		116,663		26,332		90,331		370,697		26,146
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A.		71,598		42,369		29,229		61,102		58,726		2,376		278,039		2,303
Aerovías de Integración Regional, AIRES S.A.		134,983		76,936		58,047		80,271		70,112		10,159		282,493		(25,860	)

Significant subsidiaries detailed as of December 31, 2010

Name of significant subsidiary	Country of incorporation	Functional currency		% Ownership		Nature and scope of significant restrictions on transferring funds to controller
Lan Perú S.A.	Perú		US$		69.97858		Without significant restrictions
Lan Cargo S.A.	Chile		US$		99.89803		Without significant restrictions
Lan Argentina S.A.	Argentina		ARS		94.99055		Without significant restrictions
Transporte Aéreo S.A.	Chile		US$		99.89804		Without significant restrictions
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.	Ecuador		US$		71.94990		Without significant restrictions

Summary financial information of significant subsidiaries

	Statement of financial position as of December 31, 2010												Results for the year ended  December 31, 2010
Name of significant subsidiary	Total Assets		Current Assets		Non-current Assets		Total Liabilities		Current Liabilities		Non-current Liabilities		Revenue		Net   Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Lan Perú S.A.		124,761		113,579		11,182		114,771		113,750		1,021		759,704		1,524
Lan Cargo S.A.		737,550		183,877		553,673		340,082		103,018		237,064		209,512		59,285
Lan Argentina S.A.		113,168		84,751		28,417		88,286		87,420		866		381,168		2,984
Transporte Aéreo S.A.		329,190		215,575		113,615		123,056		28,777		94,279		296,543		31,227
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.		48,416		24,561		23,855		51,723		38,299		13,424		235,877		1,011

F-1-45

NOTE 15 – EQUITY ACCOUNTED INVESTMENTS

The following summarized financial information is the sum of the financial statements of the investees, corresponding to the statements of financial position as of December 31, 2011 and December 31, 2010, and the statements of income for the year ended December 31, 2011, and December 31, 2010:

As of December 31, 2011

	Assets		Liabilities
	ThUS$		ThUS$
Current		2,649		721
Non-current		269		115
Total		2,918		836

As of December 31, 2010

	Assets		Liabilities
	ThUS$		ThUS$
Current		1,865		301
Non-current		382		562
Total		2,247		863

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Total operating revenues		2,896			2,408
Total expenses		(1,902	)		(2,162	)
Sum of net income		994			246

As an investment in associates, the Company has shown its holdings in the following companies: Austral Sociedad Concesionaria S.A., Lufthansa Lan Technical Training S.A. and Concesionaria Chucumata S.A. The Company made no investments in associates during the year ended December 31, 2011.

					Percentage of ownership				Cost of investment
Company	Country of incorporation		Functional currency		As of December 31, 2011		As of December 31, 2010		As of December 31, 2011		As of December 31, 2010
					%		%		ThUS$		ThUS$
Austral Sociedad Concesionaria S.A.		Chile		CLP		20.00		20.00		661		661
Lufthansa Lan Technical Training S.A.		Chile		CLP		50.00		50.00		702		702
Concesionaria Chucumata S.A. (*)		Chile		CLP		—		16.70		—		119

(*) In the extraordinary session of the shareholders on September 22, 2011, the shareholders approved the dissolution of the company Concesionaria Chucumata S.A.

These companies do not have significant restrictions on the ability to transfer funds.

F-1-46

The movement of investments in associates between January 1, 2010 and December 31, 2011 is as follows:

	ThUS$
Opening balance as of January 1, 2010		1,236
Equity accounted earnings		132
Other reductions, investments in associated entities		(665	)
Dividends received		(110	)
Total changes in investments in associated entities		(643	)
Balance as of December 31, 2010		593
Opening balance as of January 1, 2011		593
Equity accounted earnings		502
Dividends received		(79	)
Other reductions, investments in associated entities		(25	)
Total changes in investments in associated entities		398
Balance as of December 31, 2011		991

The Company records the gain or loss on its investments in associates on a monthly basis in the consolidated statement of income, using the equity method. The Company has no investments in associates which are not accounted for using the equity method.

NOTE 16 – INTANGIBLE ASSETS OTHER THAN GOODWILL

The details of intangible assets are as follows:

Classes of intangible assets (net)	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Computer software		64,519		45,183
Other assets		404		566
Total		64,923		45,749

Classes of intangible assets (gross)	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Computer software		112,881		83,875
Other assets		808		808
Total		113,689		84,683

F-1-47

The movement in software and other assets between January 1, 2010 and December 31, 2011 is as follows:

	Computer software Net			Other assets Net			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2010		34,087			727			34,814
Additions		20,915			—			20,915
Acquisitions by business combination		154			—			154
Withdrawals		(779	)		—			(779	)
Amortization		(9,194	)		(161	)		(9,355	)
Balance as of December 31, 2010		45,183			566			45,749
Opening balance as of January 1, 2011		45,183			566			45,749
Additions		29,190			—			29,190
Withdrawals		(184	)		—			(184	)
Amortization		(9,670	)		(162	)		(9,832	)
Balance as of December 31, 2011		64,519			404			64,923

Intangible assets with defined useful lives consist primarily of licensing and computer software, for which the Company has established useful lives of between 4 and 7 years.

The Company shows its intangible assets at cost, except for acquisitions by business combination, which are at fair value; and amortization is made on a straight-line basis over their estimated useful lives.

The amortization of each year is shown in the consolidated statement of income in administrative expenses. The accumulated amortization of computer programs as of December 31, 2011 amounts to ThUS$ 48,362 (ThUS$ 38,692 as of December 31, 2010). The accumulated amortization of other identifiable intangible assets as of December 31, 2011 amounts to ThUS$ 404 (ThUS$ 242 as of December 31, 2010).

NOTE 17 – GOODWILL

The goodwill represents the excess of cost of acquisition over the fair value of the participation of the Company in the identifiable net assets of the subsidiary at the acquisition date. Goodwill at December 31, 2011 amounted to ThUS$ 163,777 (ThUS$ 157,994 at December 31, 2010)

At December 31, 2011, the Company performed an impairment test based on the value in use and no impairment was identified. The testing is done at least once per year.

The value in use of those cash generating units to which goodwill has been assigned has been determined assuming that yields, occupation factors and fleet capacity are maintained at current obtainable levels. The Company projects cash flows for the initial periods based on internal budgets and extrapolates the final value of these periods based on a growth factor consistent with the long-term economic projections in the markets in which the units operate. The determined cash flows are discounted at a rate which takes into account the time value of money and risks related to those cash generating units which have not been taken into account in estimation of the units’ future cash flows.

F-1-48

The movement of goodwill from January 1, 2010 to December 31, 2011, is as follows:

	ThUS$
Opening balance as of January 1, 2010		63,793
Additions (1)		94,224
Increase (decrease) due to exchange rate differences		(23	)
Closing balance as of December 31, 2010		157,994
Opening balance as of January 1, 2011		157,994
Additions (2)		6,736
Amendment initial recognition (3)		(820	)
Increase (decrease) due to exchange rate differences		(133	)
Closing balance as of December 31, 2011		163,777

(1) Corresponds to the goodwill generated by the purchase of Aerovías de Integración Regional, AIRES S.A. (see Note 39).

(2) Corresponds to the goodwill generated by the purchase of Aeroasis S.A. (see Note 39).

(3) Corresponds to change of initial recognition goodwill generated by the purchase of the company Aerovías de Integración Regional, AIRES S.A.

NOTE 18 – PROPERTY, PLANT AND EQUIPMENT

The composition by category of property, plant and equipment is as follows:

	Gross Book Value				Acumulated depreciation						Net Book Value
	As of December 31, 2011		As of December 31, 2010		As of December 31, 2011			As of December 31, 2010			As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
Construction in progress		1,087,563		715,603		—			—			1,087,563		715,603
Land		35,673		35,538		—			—			35,673		35,538
Buildings		101,123		101,181		(23,185	)		(21,060	)		77,938		80,121
Plant and equipment		5,380,663		4,816,723		(1,238,678	)		(1,153,587	)		4,141,985		3,663,136
Information technology equipment		89,678		83,711		(67,087	)		(65,112	)		22,591		18,599
Fixed installations and accessories		64,936		52,954		(29,838	)		(25,951	)		35,098		27,003
Motor vehicles		3,714		3,269		(2,077	)		(1,979	)		1,637		1,290
Leasehold improvements		94,485		87,168		(62,986	)		(43,048	)		31,499		44,120
Other property, plants and equip ment		832,772		646,236		(338,774	)		(283,216	)		493,998		363,020
Total		7,690,607		6,542,383		(1,762,625	)		(1,593,953	)		5,927,982		4,948,430

F-1-49

The movement in the different categories of property, plant and equipment from January 1, 2010 to December 31, 2011 is shown below:

(a) As of December 31, 2010

	Construction in progress			Land		Buildings Net			Plant and equipment Net			Information technology equipment Net			Fixed installations & accessories Net			Motor vehicles Net			Leasehold improvements Net			Other property, plant and equipment Net			Property, Plant and equipment Net
	ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2010		264,259			35,538		81,966			3,231,682			15,043			23,659			951			50,286			493,172			4,196,556
Additions		10,229			—		115			571,422			9,516			2,341			420			2,410			6,673			603,126
Acquisitions through business combination		—			—		1,006			490			137			335			107			—			480			2,555
Disposals		—			—		—			(190	)		—			—			(7	)		—			(2	)		(199	)
Transfers (to) from non-current assets (or disposal groups) classified as Held for Sale		—			—		—			2,552			—			—			—			—			—			2,552
Retirements		—			—		—			(6,633	)		(536	)		(2	)		(12	)		—			(2,550	)		(9,733	)
Depreciation		—			—		(2,315	)		(235,800	)		(5,217	)		(3,997	)		(172	)		(16,797	)		(32,315	)		(296,613	)
Increases (decreases) due to exchanges differences		(62	)		—		—			(857	)		16			(13	)		(3	)		—			(27	)		(946	)
Other increases (decreases)		441,177			—		(651	)		100,470			(360	)		4,680			6			8,221			(102,411	)		451,132
Changes, total		451,344			—		(1,845	)		431,454			3,556			3,344			339			(6,166	)		(130,152	)		751,874
Closing balance as of December 31, 2010		715,603			35,538		80,121			3,663,136			18,599			27,003			1,290			44,120			363,020			4,948,430

F-1-50

(b) As of December 31, 2011

	Construction in progress			Land		Buildings Net			Plant and equipment Net			Information technology equipment Net			Fixed installations & accessories Net			Motor vehicles Net			Leasehold improvements Net			Other property, plant and equipment Net			Property, Plant and equipment Net
	ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2011		715,603			35,538		80,121			3,663,136			18,599			27,003			1,290			44,120			363,020			4,948,430
Additions		29,898			—		1,111			1,028,568			11,885			6,663			543			6,555			19,072			1,104,295
Acquisitions through business combination		—			—		—			—			—			—			—			—			16			16
Disposals		—			—		(2,681	)		(109,936	)		(8	)		—			(6	)		—			(537	)		(113,168	)
Transfers (to) from non-current assets (or disposal groups) classified as Held for Sale		(127	)		—		—			(112	)		(1,195	)		(588	)		(1	)		—			(115	)		(2,138	)
Retirements		(150	)		—		(4	)		(4,817	)		(85	)		(23	)		(17	)		—			(332	)		(5,428	)
Depreciation		—			—		(3,302	)		(265,062	)		(6,354	)		(3,602	)		(215	)		(19,938	)		(30,608	)		(329,081	)
Increases (decreases) due to exchanges differences		(852	)		—		(95	)		(771	)		(63	)		(54	)		18			—			(95	)		(1,912	)
Other increases (decreases)		343,191			135		2,788			(169,021	)		(188	)		5,699			25			762			143,577			326,968
Changes, total		371,960			135		(2,183	)		478,849			3,992			8,095			347			(12,621	)		130,978			979,552
Closing balance as of December 31, 2011		1,087,563			35,673		77,938			4,141,985			22,591			35,098			1,637			31,499			493,998			5,927,982

F-1-51

(c) Composition of the fleet

Aircraft included in the Company’s property, plant and equipment:

Aircraft	Model	As of December 31, 2011		As of December 31, 2010
Boeing 767	300ER		21		18
Boeing 767	300F		8		8
Boeing 767	200ER (*)		1		1
Airbus A318	100		10		15
Airbus A319	100		24		20
Airbus A320	200		33		24
Airbus A340	300		4		4
Total			101		90

(*) Leased to Aerovías de México S.A.

Operating leases:

Aircraft	Model	As of December 31, 2011		As of December 31, 2010
Boeing 767	300ER		10		10
Boeing 767	300F		4		3
Boeing 777	Freighter		2		2
Airbus A320	200		9		5
Airbus A340	300		1		1
Boeing 737	700		9		9
Bombardier	Dhc8-200		10		11
Bombardier	Dhc8-400		4		4
Total			49		45
Total fleet			150		135

(d) Method used for the depreciation of property, plant and equipment:

	Method	Useful life
		minimum	maximum
Buildings	Straight line without residual value	20	50
Plant and equipment	Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet (*)	5	20
Information technology equipment	Straight line without residual value	5	10
Fixed installations and accessories	Straight line without residual value	10	10
Motor vehicle	Straight line without residual value	10	10
Leasehold improvements	Straight line without residual value	5	5
Other property, plant and equipment	Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet (*)	3	20

(*) Except for certain technical components, which are depreciated on the basis of cycles and flight hours.

F-1-52

The depreciation charged to income in the period ended December 31, 2011, which is included in the consolidated statement of income, amounts to ThUS$ 329,081 (ThUS$ 296,613 for the period ended December 31, 2010). Depreciation charges for the year are recognized in Cost of Sales and Administrative Expenses in the consolidated statement of income.

e) Additional information regarding property, plant and equipment:

i) Property, plant and equipment pledged as guarantee:

In the year ended December 31, 2011 direct guarantees were added for sixteen aircraft, nine of them corresponding to the Airbus A320-200 fleet, four to the Airbus A319-100 fleet and three to Boeing B767-300 fleet. Moreover, in the second quarter of 2011 the Company sold three aircraft Airbus A318-100 fleet and in the third quarter two more of the same aircraft A318-100 fleet. Additionally, during the first quarter 2011, the Company sold its participation in the permanent establishments Cernicalo Leasing LLC and Petrel Leasing LLC. Therefore the Company eliminated direct guarantees associated with five aircraft Airbus A318-100 and three aircraft Boeing 767-300 (two freighter and one passenger aircrafts).

Description of property, plant and equipment pledged as guarantee:

			As of December 31, 2011				As of December 31, 2010
Creditor of guarantee	Assets committed	Fleet	Existing Debt		Book Value		Existing Debt		Book Value
			ThUS$		ThUS$		ThUS$		ThUS$
Wilmington	Aircraft and	Boeing 767		1,032,921		1,305,915		1,043,290		1,304,699
Trust Company	engines	Boeing 777		13,750		24,664		18,088		25,915
BNP Paribas	Aircraft and	Airbus A318		187,705		239,530		299,422		359,944
	engines	Airbus A319		390,614		521,829		297,320		370,476
		Airbus A320		695,308		855,214		407,275		478,082
Credite Agricole (*)	Aircraft and	Airbus A319		93,019		158,355		108,803		178,342
	engines	Airbus A320		34,530		149,486		58,236		172,426
		Airbus A340		54,491		215,978		89,378		234,892
Total direct guarantee				2,502,338		3,470,971		2,321,812		3,124,776

(*) Calyon creditor of guarantee renamed Credite Agricole

The amounts of existing debt are presented at nominal value. Book value corresponds to the carrying value of the goods provided as guarantees.

Additionally, there are indirect guarantees related to assets recorded in property, plant and equipment whose total debt at December 31, 2011 amounted to ThUS $ 316,859 (ThUS $ 227,218 at December 31, 2010). The book value of assets with indirect guarantees as of December 31, 2011 amounts to ThUS$ 504,355 (ThUS$ 328,838 as of December 31, 2010).

F-1-53

ii) Commitments and others

Fully depreciated assets and commitments for future purchases are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Gross book value of fully depreciated property, plant and equipment still in use		43,626		57,612
Commitments for the acquisition of aircraft		14,500,000		12,350,000

In December 2009, the Company signed a purchase commitment with Airbus for the purchase of 30 aircraft of the A320 family with deliveries between 2011 and 2016. Later, in December 2010 the Company made another commitment to the manufacturer for the purchase of 50 A320 family aircraft with deliveries between 2012 and 2016. Additionally, in June 2011, the Company signed a contract for 20 additional aircraft of the A320 NEO family with deliveries between 2017 and 2018.

With regards to the above, as of December 31, 2011, and as a result of different aircraft purchase contracts signed with Airbus S.A.S., there remain 90 Airbus aircraft of the A320 family to be delivered between 2012 and 2018. The approximate amount is ThUS$ 7,000,000, according to the manufacturer’s price list. Additionally, the Company has active purchase options for 4 A320 NEO aircraft.

In addition, purchase contracts were signed with The Boeing Company in February, May and December 2011 for 3, 5 and 2 B767-300 aircraft, respectively.

As of December 31, 2011 and a as result of different aircraft contracts signed with The Boeing Company, 13 B767-300 aircraft remain to be delivered between 2012 and 2013, 2 B77-Freighter aircraft for delivery in 2012 and 26 B787 Dreamliner, aircraft with delivery dates from 2012. The approximate amount is ThUS$ 7,500,000, according to the manufacturer’s price list. In addition, the Company has purchase options over 1 B777- Freighter aircraft and 15 B787 Dreamliner aircraft.

The acquisition of the aircraft is part of the strategic plan for long haul fleet. This plan also means the sale of 15 aircraft model Airbus A318 between 2011 and 2013. It is estimated that this sale will have no significant impact on results. During the third quarter of 2011 the Company sold the last 2 aircraft planned to be sold during 2011, thus completing the planned sale of 5 aircraft this year.

iii) Capitalized interest costs with respect to property, plant and equipment.

		For the year ended December 31,
		2011		2010
Average rate of capitalization of capitalized interest costs	%		3.51		4.31
Costs of capitalized interest	ThUS$		33,342		18,400

F-1-54

iv) Financial leases

The detail of the main financial leases is as follows:

Lessor	Aircraft	Model	As of December 31, 2011		As of December 31, 2010
Bluebird Leasing LLC	Boeing 767	300F		2		2
Eagle Leasing LLC	Boeing 767	300ER		1		2
Seagull Leasing LLC	Boeing 767	300F		1		1
Cernicalo Leasing LLC	Boeing 767	300F		2		—
Petrel Leasing LLC	Boeing 767	300ER		1		—
Linnet Leasing Limited	Airbus A320	200		4		4
Total				11		9

Leasing contracts where the Company acts as the lessee of aircrafts establish a 12 year term and quarterly payments of obligations.

Additionally, the lessee will have the obligations to contract and maintain active the insurance coverage for the aircraft, perform maintenance on the aircraft and update the airworthiness certificates at their own cost.

Fixed assets acquired under financial leases are classified as Other property, plant and equipment. As of December 31, 2011, the Company had eleven aircraft as financial leases (nine aircraft as of December 31, 2010).

In the year ended December 31, 2011, due to the sale of its participation in the permanent establishments Cernicalo Leasing LLC and Petrel Leasing LLC, the Company increased its number of aircraft on lease by three Boeing 767-300 (two freighter and one passenger aircrafts). Therefore, these aircraft were reclassified from the Plant and equipment category to the category other property plant and equipment. Additionally, in November 2011 the Company excercised a purchase option for a B767-300 freighter belongs to the Eagle Leasing LLC, which was reclassified from Other property, plant and equipment to Plant and equipment.

The book value of assets under financial leases as of December 31, 2011 amounts to ThUS$ 464,082 (ThUS$ 328,838 as of December 31, 2010).

The minimum payments under financial leases are as follows:

As of December 31, 2011

	Gross Value		Interest			Present Value
	ThUS$		ThUS$			ThUS$
No later than one year		78,369		(7,622	)		70,747
Between one and five years		207,365		(18,657	)		188,708
Over five years		59,152		(2,078	)		57,074
Total		344,886		(28,357	)		316,529

F-1-55

As of December 31, 2010

	Gross Value		Interest			Present Value
	ThUS$		ThUS$			ThUS$
No later than one year		57,976		(3,679	)		54,297
Between one and five years		127,370		(7,421	)		119,949
Over five years		55,106		(1,781	)		53,325
Total		240,452		(12,881	)		227,571

NOTE 19 – INCOME TAXES

Deferred tax assets and liabilities are offset if there is a legal right to offset assets and liabilities for income taxes relating to the same tax authority.

The balances of deferred taxes are as follows:

	Assets						Liabilities
Concept	As of December 31, 2011			As of December 31, 2010			As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(547	)		(415	)		338,741			290,254
Amortization		14,255			12,286			36,667			29,606
Provisions		7,036			8,128			48,681			23,017
Post-employment benefit obligations		865			622			(924	)		(982	)
Revaluation of financial instruments		—			—			(28,788	)		(21,926	)
Tax losses		35,300			13,229			—			—
Others		3,239			4,234			(24,752	)		(7,957	)
Total		60,148			38,084			369,625			312,012

Movements of deferred tax assets and liabilities from January 1, 2010 to December 31, 2011 are as follows:

(a) From January 1 to December 31, 2010

	Beginning balance asset (liability)			Recognized in consolidated income			Recognized in comprehensive income			Incorporation by business combinations		Others		Ending balance asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$
Depreciation		(222,188	)		(68,481	)		—			—		—		(290,669	)
Amortization		(22,453	)		(5,948	)		—			11,081		—		(17,320	)
Provisions		(2,102	)		(17,968	)		—			5,181		—		(14,889	)
Post-employment benefit obligations		1,183			(196	)		—			617		—		1,604
Revaluation of financial instruments		18,891			—			3,035			—		—		21,926
Tax losses		5,013			(1,303	)		—			9,519		—		13,229
Others		(8,311	)		16,645			(120	)		2,545		1,432		12,191
Total		(229,967	)		(77,251	)		2,915			28,943		1,432		(273,928	)

F-1-56

(b) From January 1 to December 31, 2011

	Beginning balance asset (liability)			Recognized in consolidated income			Recognized in comprehensive income		Incorporation by business combinations		Reclassification			Others			Sale of investment			Ending balance asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(290,669	)		(48,614	)		—		—		—			—			(5	)		(339,288	)
Amortization		(17,320	)		(8,903	)		—		3,811		—			—			—			(22,412	)
Provisions		(14,889	)		(26,368	)		—		—		—			—			(388	)		(41,645	)
Post-employment benefit obligations		1,604			185			—		—		—			—			—			1,789
Revaluation of financial instruments		21,926			—			6,862		—		—			—			—			28,788
Tax losses		13,229			28,716			—		—		(6,645	)		—			—			35,300
Others		12,191			16,542			1,846		—		—			(2,521	)		(67	)		27,991
Total		(273,928	)		(38,442	)		8,708		3,811		(6,645	)		(2,521	)		(460	)		(309,477	)

Deferred tax assets not recognized:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Temporary differences		2,152		2,152
Tax losses		35		1,662
Total Deferred tax assets not recognized		2,187		3,814

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. The Company did not recognize deferred income tax assets of ThUS$ 35 (ThUS$ 1,662 at December 31, 2010) in respect to losses amounting to ThUS$ 103 (ThUS$ 5,992 at December 31, 2010) that can be carried against future taxable income.

Expense (income) for deferred and current income taxes for the years ended at December 31, 2011 and December 31, 2010, respectively, are as follows:

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Expense for current income tax
Current tax expense		19,470			8,890
Adjustment to previous year’s current tax		3,877			(3,153	)
Other current tax expense (income)		—			(1,881	)
Total current tax expense, net		23,347			3,856
Expense for deferred income taxes
Deferred expense (income) for taxes related to the creation and reversal of temporary differences		40,051			75,284
Reduction (increase) in value of deferred tax assets		(1,609	)		1,967
Total deferred tax expense, net		38,442			77,251
Income tax expense		61,789			81,107

F-1-57

Composition of income tax expense (income):

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Current tax expense, net, foreign		4,486			1,121
Current tax expense, net, Chile		18,861			2,735
Total current tax expense, net		23,347			3,856
Deferred tax expense, net, foreign		(20,876	)		3,724
Deferred tax expense, net, Chile		59,318			73,527
Deferred tax expense, net, total		38,442			77,251
Income tax expense		61,789			81,107

Reconciliation of tax expense using the legal rate to the tax expense using the effective rate:

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Tax expense using the legal rate		76,410			85,138
Tax effect of legal rate change		(10,571	)		—
Tax effect of rates in other jurisdictions		1,916			1,491
Tax effect of non-taxable operating revenues		(11,094	)		(4,089	)
Tax effect of disallowable expenses		5,087			849
Tax effect of current period tax losses not recognized		—			1,967
Other increases (decreases)		41			(4,249	)
Total adjustments to tax expense using the legal rate		(14,621	)		(4,031	)
Tax expense using the effective rate		61,789			81,107

Reconciliation of legal tax rate to effective tax rate:

	For the year ended December 31,
	2011			2010
	%			%
Legal tax rate		20.00			17.00
Effect of tax rates for legal rate change		(2.77	)		—
Effect of tax rates in other jurisdictions		0.50			0.30
Effect of tax rate on non-taxable operating revenues		(2.89	)		(0.82	)
Effect of tax rate on disallowable expenses		1.33			0.17
Effect of tax rate on use of not-previously recognized tax losses		—			0.39
Other increase (decrease)		0.01			(0.84	)
Total adjustment to the legal tax rate		(3.82	)		(0.80	)
Total effective tax rate		16.18			16.20

F-1-58

Deferred taxes related to items charged to net equity:

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Aggregate deferred taxation of components of other comprehensive income		8,708			2,915
Aggregate deferred taxation related to items charged to net equity		(355	)		(599	)
Total deferred taxes related to items charged to net equity		8,353			2,316

Deferred tax effects of the components of other comprehensive income:

	As of December 31, 2011
	Amount before Taxes		Income tax expense (income)			Amount after Taxes
	ThUS$		ThUS$			ThUS$
Cash-flow hedges		40,368		(6,862	)		33,506
Translation adjustment		10,864		(1,846	)		9,018
				(8,708	)

	As of December 31, 2010
	Amount before Taxes			Income tax expense (income)			Amount after Taxes
	ThUS$			ThUS$			ThUS$
Cash-flow hedges		17,855			(3,035	)		14,820
Translation adjustment		(708	)		120			(588	)
					(2,915	)

NOTE 20 – OTHER FINANCIAL LIABILITIES

The composition of other financial liabilities is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
(a) Bank loans		537,334		495,261
(b) Other financial liabilities		4,907		5,321
(c) Hedge liabilities		40,016		42,042
Total Current		582,257		542,624
Non-current
(a) Bank loans		2,978,973		2,450,033
(b) Other financial liabilities		9,859		14,427
(c) Hedge liabilities		120,304		97,888
Total Non-current		3,109,136		2,562,348

F-1-59

a) Interest bearing loans

Obligations with credit institutions and debt instruments:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Bank loans		153,765		151,417
Guaranteed obligations		310,217		283,637
Financial leases		70,747		54,297
Other loans		2,605		5,910
Total current		537,334		495,261
Non-current
Bank loans		247,725		146,884
Guaranteed obligations		2,159,055		2,023,666
Financial leases		245,782		173,274
Other loans		326,411		106,209
Total non-current		2,978,973		2,450,033
Total obligations with financial institutions		3,516,307		2,945,294

All interest-bearing liabilities are recorded using the effective interest rate method. Under IFRS, the effective interest rate for loans with a fixed interest rate does not vary throughout the loan, while in the case of loans with variable interest rates, the effective rate changes on each date of repricing of the loan.

Currency balances that make the interest bearing loans at December 31, 2011 and December 31, 2010, are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
US Dollar		3,516,307		2,753,788
Chilean Peso (*)		—		187,101
Colombian Peso		—		4,405
Total		3,516,307		2,945,294

(*) At December 2010, the Company maintained cross currency swaps, securing the payment of ThU$ 128,056 of debt in dollars. At December 2011, these contracts were closed because the loans in Chilean pesos were paid and one of them converted to U.S. dollar.

F-1-60

b) Other financial liabilities

The detail of other financial liabilities as of December 31, 2011 and December 31, 2010, respectively, is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Interest rate derivative not recognized as a hedge		4,907		5,321
Total current		4,907		5,321
Non-current
Interest rate derivative not recognized as a hedge		9,859		14,427
Total non-current		9,859		14,427
Total other financial liabilities		14,766		19,748

c) Hedging liabilities

Hedging liabilities as of December 31, 2011 and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Interest from the last date of interest rate swap		5,027		3,826
Fair value interest rate derivatives		34,105		24,522
Fair value of foreign currency derivatives		884		13,694
Total current		40,016		42,042
Non-current
Fair value interest rate derivatives		120,304		90,666
Fair value of foreign currency derivatives		—		7,222
Total non-current		120,304		97,888
Total hedging liabilities		160,320		139,930

The foreign currency derivatives correspond to Cross Currency Swaps and forward exchange contracts.

F-1-61

Hedging operation

The fair values by type of derivative, of the contracts held as hedging instruments are presented below:

	As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$
Forward starting swaps (FSS) (1)		(19,703	)		(54,670	)
Interest rate options (2)		73			422
Interest rate swaps (3)		(139,733	)		(64,344	)
Cross currency swaps (CCIRS) (4)		—			26,703
Fuel collars (5)		19,016			17,782
Fuel swap (6)		11,599			28,032
Currency forward (7)		(253	)		(13,694	)

(1) Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate for long-term loans incurred in the acquisition of aircraft to be produced from the future contract date. These contracts are recorded as cash flow hedges.

(2) Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate for long-term loans incurred in the acquisition of aircraft. These contracts are recorded as cash flow hedges.

(3) Covers the significant variations in cash flows associated with market risk implicit in the increases in the 3, 6 and 12 months LIBOR interest rates for long-term loans incurred in the acquisition of aircraft and bank loans. These contracts are recorded as cash flow hedges.

(4) Covers the significant variations in cash flows associated with market risk implicit in the changes in the TAB 180 days interest rate and the US dollar-Chilean peso exchange rate. These contracts are recorded as cash flow hedges.

(5) Covers significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases.

(6) Covers the significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases.

(7) Covers investments denominated in Chilean pesos to changes in the US Dollar – Chilean Peso exchange rate, with the aim of ensuring investment in dollars.

During the years presented, the Company only maintains cash flow hedges. In the case of fuel hedges, the cash flows subject to said hedges will impact results between 1 to 9 months from the consolidated statement of financial position date, whereas in the case of interest rate hedging, the hedges will impact results over the life of the related loans, which are valid for 12 years. With respect to interest and currency hedges, the impact on results will occur continuously throughout the life of the contract (3 years), while cash flows will occur quarterly. Finally, the hedges on investments will impact results continuously throughout the life of the investment (up to 3 months), while the cash flows occur at the maturity of the investment.

During the years presented, all hedged highly probable forecast transactions have occurred.

During the years presented, there has been no hedge ineffectiveness recognized in the consolidated statement of income.

Since none of the coverage resulted in the recognition of a non-financial asset, no portion of the result of the derivatives recognized in equity was transferred to the initial value of such assets.

F-1-62

The amounts recognized in comprehensive income during the year and transferred from net equity to income are as follows:

	For the year ended December 31,
	2011			2010
	ThUS$			ThUS$
Debit (credit) recognized in comprehensive income during the year		(40,368	)		(17,855	)
Debit (credit) transferred from net equity to income during the year		62			(35,010	)

NOTE 21 – TRADE AND OTHER ACCOUNTS PAYABLES

The composition of trade and other accounts payables is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
(a) Trade and other accounts payable		531,481		500,694
(b) Accrued liabilities at the reporting date		113,605		144,877
Total trade and other accounts payables		645,086		645,571

a) Trade and other accounts payable as of December 31, 2011 and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Trade creditors		410,533		389,568
Leasing obligations		18,849		26,474
Other accounts payable (*)		102,099		84,652
Total		531,481		500,694

(*) Includes agreement entitled “Plea Agreement” with the Department of Justice of the United States of America. See detail in Note 22.

F-1-63

Trade and other accounts payables by concept:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Aircraft fuel		134,088		104,404
Boarding Fee		80,253		72,864
Landing and other aviation fees		41,900		43,941
Suppliers’ technical purchases		36,387		29,594
Handling and ground handling		34,743		39,915
Other personnel expenses		32,833		22,445
Professional services and advisory		29,870		21,275
Marketing		22,183		21,041
Aircraft and engines leasing		18,849		26,474
U.S.A Department of Justice (*)		18,387		18,387
In-flight services		12,929		11,761
Maintenance		11,252		8,188
Crew		9,780		28,658
Aviation insurance		6,274		5,931
Communication		5,881		3,146
Others		35,872		42,670
Total trade and other accounts payables		531,481		500,694

(*) Includes agreement entitled “Plea Agreement” with the Department of Justice of the United States of America. See detail in Note 22.

b) The liabilities accrued at December 31, 2011 and December 31, 2010, are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Aircraft and engine maintenance		11,178		26,133
Accounts payable to personnel		38,391		52,441
Accrued personnel expenses		46,034		40,974
Others accrued liabilities		18,002		25,329
Total accrued liabilities		113,605		144,877

F-1-64

NOTE 22 – OTHER PROVISIONS

The detail of other provisions as of December 31, 2011 and December 31, 2010 is as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Current
Provision legal claims (1)		7,363		753
Total other provisions, current		7,363		753
Non-current
Provision legal claims (1)		11,710		21,204
Provision for European Commission investigation (2)		10,675		10,916
Total other provisions, non-current		22,385		32,120
Total other provisions		29,748		32,873

(1) The amount represents a provisions for certain legal claims made against the Company by former employees, regulatory agencies and others. The charge for the provision is shown in the consolidated statement of income in Administrative expenses. It is expected that the current balance as of December 31, 2011 will be applied during the next 12 months.

(2) Provision made for proceedings brought by the European Commission for possible breaches of free competition in the freight market.

The movement of provisions between January 1, 2010 and December 31, 2011 is as follows:

	Legal claims			European Commission Investigation			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2010		2,804			25,000			27,804
Increase in provisions		2,872			—			2,872
Acquisition through business combination		17,174			—			17,174
Provision used		(681	)		—			(681	)
Reversal of unused provision		—			(14,084	)		(14,084	)
Exchange difference		(212	)		—			(212	)
Balance as of December 31, 2010		21,957			10,916			32,873

	Legal claims			European Commission Investigation			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2011		21,957			10,916			32,873
Increase in provisions		12,085			—			12,085
Provision used		(3,592	)		—			(3,592	)
Reversal of unused provision		(11,518	)		—			(11,518	)
Exchange difference		141			(241	)		(100	)
Balance as of December 31, 2011		19,073			10,675			29,748

F-1-65

European Commission Provision:

(a) This provision was established because of the investigation brought by the Directorate General for Competition of the European Commission against more than 25 cargo airlines, including Lan Cargo S.A., as part of a global investigation begun in 2006 regarding possible unfair competition on the air cargo market. This was a joint investigation by the European and U.S.A. authorities. The start of the investigation was disclosed through a significant matter report dated December 27, 2007. The U.S.A. portion of the global investigation concluded when Lan Cargo S.A. and its subsidiary, Aerolíneas Brasileiras S.A. (“ABSA”) signed a Plea Agreement with the U.S.A. Department of Justice, as disclosed in a significant matter report notice on January 21, 2009.

(b) A significant matter report dated November 9, 2010, reported that the General Direction of Competition had issued its decision on this case (the “decision”), under which it imposed fines totaling € 799,445,000 (seven hundred and ninety nine million four hundred and forty-five thousand Euros) for infringement of European Union regulations on free competition against eleven (11) airlines, among which are Lan Airlines S.A. and Lan Cargo S.A., Air Canada, Air France, KLM, British Airways, Cargolux, Cathay Pacific, Japan Airlines, Qantas Airways, SAS and Singapore Airlines.

(c) Jointly, Lan Airlines S.A. and Lan Cargo S.A., have been fined in the amount of € 8,220,000 (eight million two hundred twenty thousand Euros) for said infractions, which was provisioned in the financial statements of LAN. This is a minor fine in comparison to the original decision, as there was a significant reduction in fine because LAN cooperated during the investigation.

(d) On January 24, 2011, Lan Airlines S.A. and Lan Cargo S.A. appealed the decision before the Court of Justice of the European Union. At December 31, 2011, the provision reached the amount of ThUS$ 10,675 (ThUS$ 10,916 at December 30, 2010)

NOTE 23 – OTHER CURRENT NON-FINANCIAL LIABILITIES

Other current non-financial liabilities as of December 31, 2011 and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Deferred revenues		969,873		810,524
Dividends payable		85,318		125,435
Other sundry liabilities		2,446		3,192
Total other non-financial liabilities, current		1,057,637		939,151

F-1-66

NOTE 24 – EMPLOYEE BENEFITS

Provisions for employee benefits as of December 31, 2011 and December 31, 2010, respectively, are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Pension payments		3,559		3,164
Termination payments		280		1,161
Other obligations		9,293		5,332
Total provisions for employee benefits, non-current		13,132		9,657

(a) The movement in payments for termination indemnities and other obligations between January 1, 2010 and December 31, 2011 is as follows:

	ThUS$
Opening balance as of January 1, 2010		5,555
Increase (decrease) current service provision		4,825
Benefits paid		(723	)
Balance as of December 31, 2010		9,657
Opening balance as of January 1, 2011		9,657
Increase (decrease) current service provision		5,482
Benefits paid		(2,007	)
Balance as of December 31, 2011		13,132

(b) The provision for short-term benefits as of December 31, 2011 and December 31, 2010 respectively, is detailed below:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Profit-sharing and bonuses		38,391		52,441

The participation in profits and bonuses corresponds to an annual incentives plan for achievement of objectives.

(c) Employment expenses are detailed below:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Salaries and wages		764,396		587,148		476,404
Short-term employee benefits		85,681		73,335		58,530
Termination benefits		18,207		11,751		17,408
Other personnel expenses		144,219		121,030		84,329
Total		1,012,503		793,264		636,671

F-1-67

NOTE 25 – NON-CURRENT ACCOUNTS PAYABLE

Non-current accounts payable as of December 31, 2011 and December 31, 2010 are as follows:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Fleet financing (JOL)		271,965		314,372
Other accounts payable (*)		36,000		54,000
Aircraft and engine maintenance		38,540		47,607
Provision for vacations and bonuses		7,982		7,949
Other sundry liabilities		443		1,753
Total non-current liabilities		354,930		425,681

(*) Agreement entitled “Plea Agreement” with the Department of Justice of United States of America; its short-term part is in trade and other payables. See details in Note 22.

F-1-68

NOTE 26 – EQUITY

(a) Capital

The capital of the Company is managed and composed in the following form:

The Company’s objective is to maintain an appropriate level of capitalization that enables it to ensure access to the financial markets for carrying out its medium and long-term objectives, optimizing the return for its shareholders and maintaining a solid financial position.

The capital of the Company at December 31, 2011 amounts to ThUS$ 473,907, divided into 340,326,431 common stock of a same series (ThUS$ 453,444 divided into 338,790,909 shares as of December 31, 2010), no par value. There are no special series of shares and no privileges. The form of its stock certificates and their issuance, exchange, disablement, loss, replacement and other similar circumstances, as well as the transfer of the shares, is governed by the provisions of Corporations Law and its regulations.

(b) Subscribed and paid shares

At December 31, 2011, the total number of shares authorized is 488,355,882 shares no par value, according to the capital increase approved at the Extraordinary Shareholders’ Meeting of December 21, 2011 by 147,355,882 ordinary shares no par value. Of this increase, 142,555,882 shares, will be allocated to the proposed merger with companies Sister Holdco S.A. and Holdco II S.A.; and 4,800,000 shares will be allocated to compensation plans for employees of the Company and its subsidiaries. At the end of this year, of the total shares subscribed, before the capital increase mentioned, 340,326,431 shares have been fully paid (includes 7,000 shares paid on 30 December 2011 and registered in the Register of Shareholders in January 2012), leaving 673,569 shares reserved for issuance under option contracts. Between January 1 and December 31, 2011, options for 1,535,522 shares have been exercised.

At December 31, 2010, of the total subscribed shares 338,790,909 were fully paid, with 2,209,091 stock option contracts reserved for issuance.

(c) Other equity interests

The movement of other equity interest between January 1, 2010 and December 31, 2011 is as follows:

	Stock option plans			Other reserves		Total
	ThUS$			ThUS$		ThUS$
Opening balance as of January 1, 2010		2,477			13		2,490
Stock option plans		3,523			—		3,523
Deferred tax		(599	)		—		(599	)
Legal reserves		—			49		49
Balance as of December 31, 2010		5,401			62		5,463

F-1-69

	Stock option plans			Other reserves			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2011		5,401			62			5,463
Stock option plans		2,084			—			2,084
Deferred tax		(355	)		—			(355	)
Transactions with minority interests		—			(1,801	)		(1,801	)
Capitalization share issuance and placement costs (1)		—			2,672			2,672
Legal reserves		—			429			429
Balance as of December 31, 2011		7,130			1,362			8,492

(1) Capitalization share issuance and placement costs caused by the capital increase carried out in 2007, as set out extraordinary share holders meeting held on December 21, 2011.

(c.1) Reserves for stock option plans

These reserves are related to the share-based payments explained in Note 36.

(c.2) Other sundry reserves

The balance of other sundry reserves comprises the following:

	As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$
Reserve for the adjustment of the value of fixed assets (1)		2,620			2,620
Transactions with minority interests (2)		(1,801	)		—
Share issuance and placement costs (3)		—			(2,672	)
Others		543			114
Total		1,362			62

(1) Corresponds to the technical revaluation of fixed assets authorized by the Superintendence of Securities and Insurance in 1979, in Circular No. 1,529. The revaluation was optional and could be taken only once, the reserve is not distributable and can only be capitalized.

(2) Corresponds to the loss generated by the participation of Lan Pax Group S.A., in the capital increase for Aerovías de Integración Regional, AIRES S.A.

(3) As established in Circular 1,736 of the Superintendence of Securities and Insurance, the next extraordinary shareholders meeting to be held by the parent Company should approve the share issuance and placement costs account to be deducted from the capital paid.

F-1-70

(d) Other reserves

The movement of other reserves between January 1, 2010 and December 31, 2011 is as follows:

	Currency translation reserve			Cash flow hedging reserve			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2010		(4,924	)		(92,230	)		(97,154	)
Derivatives valuation gains (losses)		—			(17,855	)		(17,855	)
Deferred tax		(137	)		3,035			2,898
Currency translation differences		804			—			804
Balance as of December 31, 2010		(4,257	)		(107,050	)		(111,307	)
Opening balance as of January 1, 2011		(4,257	)		(107,050	)		(111,307	)
Derivatives valuation gains (losses)		—			(40,368	)		(40,368	)
Deferred tax		1,855			6,862			8,717
Currency translation differences		(10,915	)		—			(10,915	)
Balance as of December 31, 2011		(13,317	)		(140,556	)		(153,873	)

(d.1) Currency translation reserve

These originate from exchange differences arising from the translation of any investment in foreign entities (or Chilean investment with a functional currency different to that of the parent), and from loans and other instruments in foreign currency designated as hedges for such investments. When the investment (all or part) is sold or disposed and loss of control occurs, these reserves are shown in the consolidated statement of income as part of the loss or gain on the sale or disposal. If the sale does not involve loss of control, these reserves are transferred to non-controlling interests.

(d.2) Cash flow hedging reserve

These originate from the fair value valuation at the end of each year of the outstanding derivative contracts that have been defined as cash flow hedges. When these contracts expire, these reserves should be adjusted and the corresponding results recognized.

(e) Retained earnings

The movement of retained earnings between January 1, 2010 and December 31, 2011 is as follows:

	ThUS$
Opening balance as of January 1, 2010		740,047
Result for the year		419,702
Other decreases		(129	)
Dividends		(210,406	)
Balance as of December 31, 2010		949,214
Opening balance as of January 1, 2011		949,214
Result for the year		320,197
Other decreases		(632	)
Dividends		(151,981	)
Balance as of December 31, 2011		1,116,798

F-1-71

(f) Dividends per share

As of December 31, 2011

	Final dividend 2010		Interim dividend 2011		Interim dividend 2011
Description
Date of dividend		4/29/2011		8/30/2011		12/20/2011
Amount of the dividend (ThUS$)		10,386		56,595		85,000
Number of shares among which the dividend is distributed		339,310,509		339,358,209		340,164,105
Dividend per share (US$)		0.03061		0.16677		0.24988
As of December 31, 2010
	Final dividend 2009		Interim dividend 2010		Interim dividend 2010
Description
Date of dividend		4/29/2010		7/27/2010		12/23/2010
Amount of the dividend (ThUS$)		10,940		74,466		125,000
Number of shares among which the dividend is distributed		338,790,909		338,790,909		338,790,909
Dividend per share (US$)		0.03229		0.21980		0.36896

The Company’s dividend policy is that dividends distributed will be equal to the minimum required by law, i.e. 30% of the net income according to current regulations. This policy does not preclude the Company from distributing dividends in excess of this obligatory minimum, based on the events and circumstances that may occur during the course of the year.

At December 31, 2011 interim dividends were declared for 44.2% of earnings for this year.

NOTE 27 – REVENUE

The detail of revenues is as follows:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Passengers		4,008,910		3,109,797		2,623,608
Cargo		1,576,530		1,280,705		895,554
Total		5,585,440		4,390,502		3,519,162

F-1-72

NOTE 28 – COSTS AND EXPENSES BY NATURE

a) Costs and operating expenses

The main operating costs and administrative expenses are detailed below:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Other rentals and landing fees		671,614		595,214		490,921
Aircraft fuel		1,750,052		1,161,927		959,608
Commissions		209,255		173,397		143,900
Other operating expenses		646,051		506,730		387,106
Aircraft rentals		174,197		98,588		83,712
Aircraft maintenance		182,358		120,642		121,037
Passenger services		136,049		114,221		92,796
Total		3,769,576		2,770,719		2,279,080

b) Depreciation and amortization

Depreciation and amortization are detailed below:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Depreciation (*)		386,644		327,136		295,894
Amortization		9,831		9,355		8,168
Total		396,475		336,491		304,062

(*) Includes the depreciation of property, plant and equipment and the maintenance cost of aircraft held under operating leases.

c) Personnel expenses

The costs for personnel expenses are disclosed in provisions for employee benefits (See Note 24).

d) Financial costs

The detail of financial costs is as follows:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Bank loan interest		99,093		117,405		113,827
Financial leases		10,617		5,880		4,406
Other financial instruments		29,367		31,994		34,876
Total		139,077		155,279		153,109

F-1-73

Costs and expenses by nature presented in this note are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other expenses and financing costs presented in the consolidated statement of income by function.

NOTE 29 – GAINS (LOSSES) ON THE SALE OF NON-CURRENT ASSETS NOT CLASSIFIED AS HELD FOR SALE

The gains (losses) on sales of non-current assets not classified as Held for Sale as of December 31, 2011 and 2010 are as follows:

				For the year ended December 31,
	2011			2010		2009
	ThUS$			ThUS$		ThUS$
Property, plant and equipment		(172	)		1,413		4,278
Investments in companies, associates and joint businesses		—			—		(2	)
Total		(172	)		1,413		4,276

The gain (loss) on sales for the year is presented in other operating income by function and cost of sales.

NOTE 30 – OTHER INCOME, BY FUNCTION

Other income by function is as follows:

			For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Duty free		16,874		11,983		9,593
Aircraft leasing		12,701		13,130		20,696
Logistics and courier		10,958		36,778		33,132
Customs and warehousing		24,677		24,673		18,682
Tours		43,952		28,216		31,088
Other miscellaneous income		23,642		18,046		23,160
Total		132,804		132,826		136,351

F-1-74

NOTE 31 – FOREIGN CURRENCY AND EXHANGE RATE DIFFERENCES

a) Foreign currency

The foreign currency detail of current and non-current assets is as follows:

Current assets	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Cash and cash equivalents		216,094		436,840
Chilean peso		148,274		368,360
Euro		5,688		7,844
Argentine peso		20,020		11,230
Brazilian real		6,616		4,759
Colombian peso		7,668		10,231
Other currency		27,828		34,416
Other current financial assets		4,352		6,726
Brazilian real		1,127		4,740
Colombian peso		2,009		947
Other currency		1,216		1,039
Other current non-financial assets		3,881		2,692
Chilean peso		1,561		1,247
Argentine peso		1,781		419
Brazilian real		52		96
Colombian peso		117		299
Other currency		370		631
Trade and other current accounts receivable		182,434		119,780
Chilean peso		63,818		28,606
Euro		8,266		8,429
Argentine peso		24,879		6,702
Brazilian real		35,467		31,329
Australian dollar		5,567		5,588
Colombian peso		34,583		27,156
Other currency		9,854		11,970
Current accounts receivable from related entities		809		21
Chilean peso		809		21
Current tax assets		67,668		62,455
Chilean peso		15,817		16,805
Argentine peso		20,236		14,477
Brazilian real		8,475		6,735
Mexican peso		18,457		17,477
Colombian peso		2,658		2,615
Other currency		2,025		4,346
Total current assets		475,238		628,514
Chilean peso		230,279		415,039
Euro		13,954		16,273
Argentine peso		66,916		32,828
Brazilian real		51,737		47,659
Mexican peso		18,457		17,477
Australian dollar		5,567		5,588
Colombian peso		47,035		41,248
Other currency		41,293		52,402

F-1-75

Non-current assets	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
Other non-current financial assets		4,276		4,504
Brazilian real		1,939		1,991
Colombian peso		2,166		1,970
Other currency		171		543
Other non-current non-financial assets		18,081		1,681
Argentine peso		17,951		1,681
Colombian peso		130		—
Non-current accounts receivable		7,482		7,874
Chilean peso		7,422		7,864
Other currency		60		10
Investment recorded using the method of participation		990		593
Chilean peso		990		593
Goodwill		100,529		94,747
Argentine peso		487		523
Colombian peso		100,042		94,224
Deferred tax assets		50,272		28,943
Colombian peso		45,173		28,943
Other currency		5,099		—
Total non-current assets		181,630		138,342
Chilean peso		8,412		8,457
Argentine peso		18,438		2,204
Brazilian real		1,939		1,991
Colombian peso		147,511		125,137
Other currency		5,330		553

F-1-76

The foreign currency detail of current and non-current liabilities is as follows:

	Up to 90 days				91 days to 1 year
Current liabilities	As of December 31, 2011		As of December 31, 2010		As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$		ThUS$		ThUS$
Other current financial liabilities		—		46,043		—		112,672
Chilean peso		—		41,638		—		112,672
Colombian peso		—		4,405		—		—
Trade and other accounts payables		298,551		240,419		21,082		14,012
Chilean peso		77,141		52,779		10,284		9,559
Euro		10,921		9,438		697		14
Argentine peso		35,542		43,214		—		3,725
Brazilian real		32,898		22,633		9		—
Colombian peso		53,988		44,725		10,019		—
Other currency		88,061		67,630		73		714
Current accounts payable from related		118		74		—		—
Chilean peso		118		74		—		—
Current tax liabilities		10,168		9,700		4,384		2,621
Chilean peso		3,678		3,007		748		1,064
Argentine peso		2,164		240		2,303		1,202
Brazilian real		1,724		1,994		334		—
Colombian peso		942		3,125		999		17
Other currency		1,660		1,334		—		338
Other current non-financial liabilities		32,393		27,729		2,527		1,071
Brazilian real		—		—		235		1,041
Colombian peso		32,036		27,477		1,789		—
Other currency		357		252		503		30
Total current liabilities		341,230		323,965		27,993		130,376
Chilean peso		80,937		97,498		11,032		123,295
Euro		10,921		9,438		697		14
Argentine peso		37,706		43,454		2,303		4,927
Brazilian real		34,622		24,627		578		1,041
Colombian peso		86,966		79,732		12,807		17
Other currency		90,078		69,216		576		1,082

F-1-77

	More than 1 to 3 years				More than 3 to 5 years				More than 5 years
Non-current liabilities	As of December 31, 2011		As of December 31, 2010		As of December 31, 2011		As of December 31, 2010		As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Other non-current financial liabilities		—		61,477		—		—		—		—
Chilean peso		—		61,477		—		—		—		—
Non-current accounts payable		7,665		7,696		76		71		10		5
Chilean peso		6,684		6,721		76		71		10		5
Other currency		981		975		—		—		—		—
Other long-term provisions		21,175		—		—		1,707		—		—
Brazilian real		466		—		—		1,401		—		—
Colombian peso		5,728		—		—		153		—		—
Other currency		14,981		—		—		153		—		—
Non-current provisions for employee benefits		5,528		3,153		—		—		—		698
Argentine peso		1,097		—		—		—		—		698
Colombian peso		4,431		3,153		—		—		—		—
Total non-current liabilities		34,368		72,326		76		3,026		10		703
Chilean peso		6,684		68,198		76		71		10		5
Argentine peso		1,097		—		—		—		—		698
Brazilian real		466		—		—		1,401		—		—
Colombian peso		10,159		3,153		—		1,401		—		—
Other currency		15,962		975		—		153		—		—

General summary of foreign currency:	As of December 31, 2011			As of December 31, 2010
	ThUS$			ThUS$
Total assets		656,868			766,856
Chilean peso		238,691			423,496
Euro		13,954			16,273
Argentine peso		85,354			35,032
Brazilian real		53,676			49,650
Mexican peso		18,457			17,477
Australian dollar		5,567			5,588
Colombian peso		194,546			166,385
Other currency		46,623			52,955
Total liabilities		403,677			528,995
Chilean peso		98,739			289,067
Euro		11,618			9,452
Argentine peso		41,106			49,079
Brazilian real		35,666			27,069
Colombian peso		109,932			82,902
Other currency		106,616			71,426
Net position		253,191			237,861
Chilean peso		139,952			134,429
Euro		2,336			6,821
Argentine peso		44,248			(14,047	)
Brazilian real		18,010			22,581
Mexican peso		18,457			17,477
Australian dollar		5,567			5,588
Colombian peso		84,614			83,483
Other currency		(59,993	)		(18,471	)

F-1-78

b) Exchange differences

Exchange rate differences recognized in results, other than those relating to financial instruments at fair value through profit and loss, accumulated at December 31, 2011 and 2010 generated a loss of ThUS$ 256 and a gain of ThUS$ 13,792, respectively.

Exchange rate differences shown in equity as translation reserves for the year ended December 31, 2011 and 2010 represented a loss of ThUS$ 10,864 and a gain of ThUS$ 708, respectively.

The following shows the current exchange rates for the US dollar at the end of each period:

	As of December 31, 2011		As of December 31, 2010
Chilean peso		519.20		468.01
Argentine peso		4.30		3.97
Brazilian real		1.87		1.66
Peruvian Sol		2.69		2.81
Australian dollar		0.98		0.99
Strong Bolivar		4.30		4.30
Boliviano		6.86		6.94
Uruguayan peso		19.80		19.80
Mexican peso		13.96		12.38
Colombian peso		1,936.00		1,905.10
New Zealand dollar		1.28		1.30
Euro		0.77		0.75

NOTE 32 – EARNINGS PER SHARE

	For the year ended December 31,
Basic earnings	2011		2010
Earnings attributable to controlling company’s equity holders (ThUS$)		320,197		419,702
Weighted average number of shares, basic		339,424,598		338,790,909
Basic earnings per share (US$)		0.94335		1.23882

	For the year ended December 31,
Diluted earnings	2011		2010
Earnings attributable to controlling company’s equity holders (ThUS$)		320,197		419,702
Weighted average number of shares, basic		339,424,598		338,790,909
Adjustment diluted weighted average shares Stock options		271,380		954,544
Weighted average number of shares, diluted		339,695,978		339,745,453
Diluted earnings per share (US$)		0.94260		1.23534

F-1-79

NOTE 33 – CONTINGENCIES

a) Lawsuits

a1) Actions brought by Lan Airlines S.A. and Subsidiaries.

Company	Court	Case No.		Origin	Stage and level of proceeding	Amounts involved
						ThUS$
Atlantic Aviation Investments LLC (AAI)	Supreme Court of the State of New York County of New York		07-6022920	Atlantic Aviation Investments LLC. (“AAI”), an indirect subsidiary of Lan Airlines S.A. constituted under the laws of the state of Delaware, sued on August 29, 2007 Varig Logística S.A. (“Variglog”) for the non-payment of four loans under loan agreements governed by the law of New York. These agreements provide for the acceleration of the loans in the event of sale of the original debt or, VRG Linhas Aéreas S.A.	Stage of execution in Switzerland of judgment condemning Variglog to repay the principal, interest and costs in favor of AAI. An embargo is held over the bank account of Variglog in Switzerland by AAI. Variglog is in the process of judicial recovery in Brazil and requested on Switzerland to recognize the judgment that declared the state of judicial recovery (*)	17,100 plus interest and costs
Atlantic Aviation Investments LLC	Supreme Court of the State of New York, County of New York		602286-09	Atlantic Aviation Investments LLC. (“AAI”) sued on July 24, 2009 Matlin Patterson Global Advisers LLC, Matlin Patterson Global Opportunities Partners II LP, Matlin Patterson Global Opportunities Partners (Cayman) II LP and Volo Logistics LLC (a) as representative for Variglog, for failure to pay the four loans indicated in the previous note; and (b) for a default on their obligations of guarantors and other obligations under the Memorandum of Understanding signed by the parties on September 29, 2006.	The court dismissed in part and upheld in part the motion to dismiss counterclaims brought by defendants in the case. Both parties appealed this decision. AAI filed a request for summary Judgement (short trial) that the court ruled favorably. The defendants appealed from this decision that was granted suspensive effect (*)	17,100 plus interest costs and damages
(*) See Note 38

F-1-80

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Tax Court of Guayaquil	6319-4064-05	Against the regional director of the Guayaquil Internal Revenue Service for overpayment of VAT.	Favorable sentence at first intance, appeal pending against them.	4,210 plus interest
Lan Airlines S.A.	Tax Tribunal of Quito	23493-A	Against the regional director of the Quito Internal Revenue Service for overpayment of VAT.	Requested sentence.	3,958
Lan Perú S.A.	Administrative Tribunal of Perú	2011	Lan Peru is suing L.A.P. (Lima Airport concession) for wrong amounts charged by the use of hoses at the airport in Lima. These amounts are intended to supplement what has already been obtained in a ruling that ordered Ositran LAP wrong amounts charged back.	First intances.	740
Aerotransportes Mas de Carga S.A. de C.V.	Federal Court of Fiscal and Administrative Justice	24611/08	Judgement of invalidity against the tax authority’s refusal to restore a balance in favor of VAT.	At the stage of offer of proof.	1,000
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Distric Tax Court No. 2 (Guayaquil)	09504-2010- 0114	Against the regional director of the Guayaquil Internal Revenue Service to determine tax credit decreased for the year 2006.	Practiced evidence	4,565
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Distric Tax Court No. 2 (Guayaquil)	09503-2010- 0172	Against the regional director of the Guayaquil Internal Revenue Service for non-payment of advance income tax, 2010.	Calling for evidence	696
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Distric Tax Court No. 2 (Guayaquil)	6886-4499-06	Against the regional director of the Guayaquil Internal Revenue Service for rectification of tax return for 2003.	Sentence pending.	Undetermined

F-1-81

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Aerovías de Integración Regional S.A. AIRES S.A.	Section One, Subsection A, the Administrative Tribunal of Cundinamarca		AEROVIAS DE INTEGRACION REGIONAL S.A AIRES S.A. seeks that Act 043 Session of October 20, 2008 of Grupo Evaluador de Proyectos Aerocomerciales GEPA be declared invalid. This relates to the decision of the Director of the UAEAC and Enrique Olaya Herrera airport in Medellin to order the suspension of operations of the company to and from that airport.	On June 17, 2010 a decree was issued by which evidence was presented, the status of which was notified on June 22 of that year. On March 8, 2011 the preliminary stages were completed. On July 6, 2011 per state order, Aerocivil was ordered to pay the fees of the expert witness. An appeal was registered against this judgement on July 22.	ThUS$ 2,033 The estimated amount of damages that were caused to AIRES SA as a result of the suspension of operations at the Enrique Olaya Herrera airport in Medellin.

a2) Lawsuits against Lan Airlines S.A. and Subsidiaries

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Aerolinhas Brasileiras S.A.	Secretary of Finance of State of Río de Janeiro	2003	The administrative authority of Río de Janeiro, Brazil, notified breach action or fine for alleged non-payment of ICMS (VAT) on import of Boeing-767 aircraft registered No. PR-ABB.	Pending resolution of the review group to annul the fine.	3,000
Lan Cargo S.A.	Civil Court of Asunción, Paraguay	78-362	Request of indemnification for damages brought by the prior general agent in Paraguay.	Pending appeal of the decision to reject one of the exceptions to lack of overt action, made by lawyers for the defendant.	437

F-1-82

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Lan Airlines S.A. y Lan Cargo S.A.	European commission and Canada	—	Investigation of possible breaches of free competition of cargo airlines, especially the fuel surcharge.On December 26, 2007, the Director General for Competition of the European Commission notified Lan Cargo S.A.and Lan Airlines S.A. of the instruction of a process against twenty-five cargo airlines, including Lan Cargo S.A., for alleged breaches of free competition in the European air cargo market, especially the intended fixing of a surcharge for fuel and cargo. Dated November 09, 2010 the Direction General for Competition of the European Commission notified Lan Cargo S.A. and Lan Airlines S.A. the imposition of fines in the amount of ThUS$ 10,675. This fine is being appealed by Lan Cargo SA and Lan Airlines S.A. We can not predict the outcome of the appeal process.	On 14 April 2008, the Company answered the European Commission’s notification. The appeal was presented on January 24, 2011.	10,675
Lan Airlines S.A. and Lan Cargo S.A.	Competition Bureau Canada	—	Investigation for possible infractions of competition from airlines cargo flights, especially fuel surcharges.	Investigation pending.	Undetermined
Lan Cargo S.A. and Lan Airlines S.A.	Canada-Superior Court of Quebec, Supreme Court of British Columbia, Superior Court of Ontario	—	For class actions, as a result of the investigation for possible breaches of competition from airlines cargo flights, especially fuel surcharges. They have filed three lawsuits in Canada (Quebec, British Columbia and Ontario).	Case is in the process of discovery and class certification tests.	850

F-1-83

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Lan Cargo S.A. and Lan Airlines S.A.	In the High Court of Justice Chancery Division (England) and Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands).	—	Lawsuit filed against European Airlines by users of freight services in private prosecutions as a consequence of the investigation into alleged breaches of free competition of cargo airlines, especially fuel surcharges. Lan Airlines S.A. and Lan Cargo S.A. have been third- party defendants in such prosecutions in England and the Netherlands.	Case is in the process of discovery tests.	Undetermined
Lan Logistics, Corp.	Federal Court, Florida, U.S.A.	—	In mid June 2008 a demand was presented for purchase option right for sale of LanBox.	Failed against Lanlogistics, Corp. for $5 million plus interest, which is appealing to the court of appeals.	Undetermined
Aerovías de Integración Regional S.A. AIRES S.A.	Civil Court of the Circuit of Bogota		On December 10th 2008, HK-4491 aircraft was at the Bucaramanga airport and after starting engine n°2 as the starting procedure of engine n°1 began; there was a failure in the startup system and pressurization of the aircraft. The complainant, Mrs. Milena Paez, claims there is a civil contractual liability since, due to hearing loss in her right ear which affected her family, professional, and community life, the airline failed in its obligation to bring the passenger safely to her destination.	Aires S.A. was served the first week of December 2011 on the petition and is in time to answer, the due date being January 23rd 2012	Action against Aires S.A. with an initial aspiration of ThUS$ 1,768 that is ThCOP 1,899,650 (equivalent 3,550 SMMLV plus the corresponding accrued interest since December 2008, title that generates an additional quantity of ThCOP 1,500,000 equivalent to 2,800 SMMLV).

F-1-84

Company	Court	Case No.	Origin	Stage and level of proceeding	Amounts involved
					ThUS$
Aerolinhas Brasileiras S.A.	Conselho Administrativo de Defesa Econômica, Brasil	—	Investigation of alleged breaches of free competition of cargo airlines, especially fuel surcharges.	Investigation pending. CADE and Federal Attorney not yet issued final decisions.	Undetermined
Lan Airlines S.A. “Brazil”	Instituto de Defesa do Consumidor de Sao Paulo	—	The Department of Consumer Protection and Defense (“PROCON”) has applied a fine to Lan Airlines S.A. in the amount of MR$ 1,688 equivalent to approximately ThUS$ 905. This penalty relates to the cancellation of flights to Chile as a product of the 2010 earthquake, holding that Lan Airlines S.A. did not act in accordance with the rules applicable to the facilities and offered no compensation to passengers who could not travel as a result of this extraordinary circumstance.	Fine imposed by the consumer entity Sao Paulo.	905
Lan Perú S.A.	Administrative Tribunal of Peru	2011	LAP (Lima Airport concession) is questioning before an administrative tribunal’s decision to the administrative authority Ositran, which in due course LAP stated that it had to give certain amounts uncollected by Lan Peru for the use of hoses in the Lima Airport.	First instance.	2.109
Lan Cargo S.A	Tribunal of Arbitration, Frankfurt/ Germany		Aerohandling Airport Assistance GmbH (Handling company in Frankfurt/ Airport) is claiming additional payment for Lan Cargo S.A. services offered over the years 2007 to 2010.	Single instance.	820

F-1-85

Considering the stage of process for each of the cases mentioned above and/or the improbable event of obtaining an adverse sentence, as of December 31, 2011 the Company has estimated that is not necessary to make a provision for any case, with the exception of the significant matter relating to the European Commission which was reported to the SVS. A provision of US$ 11 million has been recorded for the decision issued by the European Commission on November 9, 2010.

On May 6 2011, the Directors of Lan Cargo S.A. and Aerolinhas Brasileiras S.A. approved a judicial agreement with the defenders of the civil class action case that was in process before the United States District Court for the Eastern District of New York. From the agreement, Lan Cargo S.A. and Aerolinhas Brasileiras S.A. committed to pay the amount of US$ 59.7 million and US$ 6.3 million, respectively, payments that were already made as of December 31, 2011. This agreement terminates the companies´ obligations with regards to all plaintiffs who will not choose to file a suit in an individual capacity against the companies. The terms of the judgment have not yet been set for the plaintiffs who are considering opting for a separate suit.

NOTE 34 – COMMITMENTS

(a) Loan covenants

With respect to various loans signed by the Company for the financing of Boeing 767 aircraft, which carry the guarantee of the United States Export–Import Bank, limits have been set on some of the Company’s financial indicators on a consolidated basis. Moreover, and related to these same contracts, restrictions are also in place on the Company’s management in terms of its ownership and disposal of assets.

Additionally, with respect to various loans signed by its subsidiary Lan Cargo S.A. for the financing of Boeing 767 aircraft, which carry the guarantee of the United States Export – Import Bank, restrictions have been established to the Company’s management and its subsidiary Lan Cargo S.A. in terms of shareholder composition and disposal of assets.

Regarding the various contracts of the Company for the financing of Airbus A320 aircraft, which are guaranteed by the European Export Credit Agencies, limits have been established on some of the Company’s financial indicators. Moreover, and related to these same contracts, restrictions are also in place on the Company’s management in terms of its ownership and disposal of assets.

In connection with the financing of spare engines for its Boeing 767 and 777 fleet, which are guaranteed by the Export – Import Bank of the United States, restrictions have been placed on the ownership structure of their guarantors and their legal successor in case of merger.

In relation to credit agreements entered into by the Company, for the current year local banks have set limits to some financial indicators of the Company on a consolidated basis.

At December 31, 2011, the Company is in compliance with these covenants.

F-1-86

(b) Commitments under operating leases as lessee

Details of the main operating leases are as follows:

Lessor	Aircraft	As of December 31, 2011		As of December 31, 2010
ACS Aircraft Finance Bermuda Ltd. – Aircastle (WFBN)	Boeing 737		1		1
AerCap (WFBN)	Airbus A320		—		1
Aircraft 76B-26261 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-26327 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-26329 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-27597 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-27613 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-27615 Inc. (ILFC)	Boeing 767		1		—
Aircraft 76B-28206 Inc. (ILFC)	Boeing 767		1		—
Aircraft Solutions Lux V S.ÀR.L. (AVMAX)	Bombardier Dhc8-200		1		—
Avolon Aerospace AOE 19 Limited	Airbus A320		1		—
Avolon Aerospace AOE 20 Limited	Airbus A320		1		—
Avolon Aerospace AOE 6 Limited	Airbus A320		1		—
AWAS 4839 Trust	Airbus A320		1		—
BOC Aviation Pte. Ltd.	Airbus A320		1		—
Celestial Aviation Trading 16 Ltd. – GECAS (WFBN)	Boeing 767		1		1
Celestial Aviation Trading 23 Ltd. – GECAS (WFBN)	Boeing 777		1		1
Celestial Aviation Trading 35 Ltd. (GECAS)	Boeing 767		1		1
Celestial Aviation Trading 39 Ltd. – GECAS (WFBN)	Boeing 777		1		1
Celestial Aviation Trading 47 Ltd. – GECAS (WFBN)	Boeing 767		1		1
Celestial Aviation Trading 48 Ltd. – GECAS (WFBN)	Boeing 767		1		—
Celestial Aviation Trading 51 Ltd. – GECAS (WFBN)	Boeing 767		1		1
CIT Aerospace International	Boeing 767		1		1
Delaware Trust Company, National Association (CRAFT)	Bombardier Dhc8-200		9		9
International Lease Finance Corp. (ILFC)	Boeing 737		2		2
International Lease Finance Corp. (ILFC)	Boeing 767		1		8
JB 30244, Inc. – AWAS	Boeing 737		1		1
JB 30249, Inc. – AWAS	Boeing 737		1		1
KN Operating Limited (NAC)	Bombardier Dhc8-400		4		4
MCAP Europe Limited – Mitsubishi (WTC)	Boeing 737		1		1
MSN 167 Leasing Limited	Airbus A340		1		1
MSN 32415, LLC – AWAS	Boeing 737		1		1
NorthStar AvLease Ltd.	Bombardier Dhc8-200		—		1
Orix Aviation Systems Limited	Airbus A320		2		2
Pembroke B737-7006 Leasing Limited	Boeing 737		2		2
Sunflower Aircraft Leasing Limited – AerCap	Airbus A320		2		2
TIC Trust (AVMAX)	Bombardier Dhc8-200		—		1
Total			49		45

F-1-87

During 2011, 7 of 8 Boeing 767 aircraft leased to “International Lease Finance Corp. (ILFC), were transferred by the lessor to seven different special purpose entities. Further, in December 2011, NorthStar AvLease Ltd. transferred a Bombardier Dhc8-200 aircraft to Aircraft Solutions Lux V S.ÀR.L. (AVMAX)

The rentals are shown in results for the period for which they are incurred.

The minimum future lease payments not yet payable are the following:

	As of December 31, 2011		As of December 31, 2010
	ThUS$		ThUS$
No later than one year		169,842		151,781
Between one and five years		443,256		440,632
Over five years		92,264		107,593
Total		705,362		700,006

The minimum lease payments charged to income are the following:

	For the year ended December 31,
	2011		2010		2009
	ThUS$		ThUS$		ThUS$
Minimum operating lease payments (*)		168,369		93,219		81,425
Total		168,369		93,219		81,425

In September 2010, the Company added one Airbus A320-200 aircraft for a period of eight months, the latter finally returned in May 2011. Additionally, in November and December 2010, the Company added two Boeing 767-300F aircraft, with terms of contract for seven and six years respectively.

In January 2011, the Company added to the fleet three aircraft, a Boeing 767-300F with a contract term of five years, one Airbus A320-200 for a period of seven years and one Airbus A319-100 for a period of four months which was returned in May 2011. In July 2011, the Company added two Airbus A320-200 aircrafts for a period of eight years, while in August and September 2011, the Company received an Airbus A320-200 aircraft for a period of eight years. On the other hand, in September 2011 an Bombardier Dhc8-200 aircraft was returned due to termination of the lease term.

(*) At December 31, 2011, includes an amount of ThUS$ 44,011 as a result of the incorporation of AIRES S.A. as a subsidiary as of December 2010.

The operating lease agreements signed by the Company and its subsidiaries state that maintenance of the aircraft should be done according to the manufacturer’s technical instructions and within the margins agreed in the leasing agreements, a cost that must be assumed by the lessee. The lessee should also contract insurance for each aircraft to cover associated risks and the amounts of these assets. Regarding rental payments, these are unrestricted and may not be netted against other accounts receivable or payable between the lessor and lessee.

F-1-88

At December 31, 2011 the Company has existing letters of credit relations to operating leasing as follows:

Acreedor Garantía	Nombre deudor	Tipo	Valor MUS$		Fecha de liberación
Air Canada	Lan Airlines S.A.	One letter of credit		1,800		Jun 30, 2012
Celestial Aviation Trading 16 Ltd	Lan Cargo S.A.	Two letters of credit		3,500		Apr 25, 2012
Celestial Aviation Trading 35 Ltd	Lan Airlines S.A.	One letter of credit		2,500		Jun 13, 2012
CIT Aerospace International	Lan Airlines S.A.	Two letters of credit		3,240		May 10, 2012
GE Capital Aviation Services Ltd	Lan Cargo S.A.	Eight letters of credit		23,682		Apr 25, 2012
International Lease Finance Corp.	Lan Airlines S.A.	Eight letters of credit		3,880		Aug 25, 2012
Orix Aviation System Limited	Lan Airlines S.A.	Two letters of credit		6,520		May 5, 2012
TAF Mercury	Lan Airlines S.A.	One letter of credit		4,000		Dec 11, 2012
TAF Venus	Lan Airlines S.A.	One letter of credit		4,000		Dec 11, 2012
				53,122

(c) Other commitments

At December 31, 2011 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:

Creditor Guarantee	Debtor	Type	Value ThUS$		Release date
Deutsche Bank A.G.	Lan Airlines S.A.	Two letters of credit		20,000		Jan 31, 2012
The Royal Bank of Scotland plc	Lan Airlines S.A.	Two letters of credit		18,000		Jan 8, 2012
Dirección General de Aviación Civil de Chile	Lan Airlines S.A.	Forty-five certificates of deposits		7,282		Jan 31, 2012
Washington International Insurance	Lan Airlines S.A.	Six letters of credit		2,990		Apr 6, 2012
Dirección Seccional de Aduanas de Bogotá	Línea Aérea Carguera de Colombia S.A.	Two warranty insurance policies		2,702		Apr 7, 2012
Metropolitan Dade County	Lan Airlines S.A.	Five letters of credit		1,675		May 31, 2012
				52,649

F-1-89

NOTE 35 – TRANSACTIONS WITH RELATED PARTIES

a) Transactions with related parties for the year ended December 31, 2011

Tax No.	Related party	Relationship	Country of origin	Other information on related party	Transaction	Currency		Amount of transactions
								ThUS$
96.810.370-9	Inversiones Costa	Controlling	Chile	Investments	Property rental granted		CLP		71
	Verde Ltda. y CPA	shareholder			Passenger services provided		CLP		19
96.847.880-K	Lufthansa Lan Technical	Associate	Chile	Training center	Property rental granted		CLP		122
	Training S.A.				Payments on behalf received		CLP		(19	)
					Training received		CLP		(633	)
					Payments on behalf received		US$		(82	)
					Training received		US$		(512	)
78.591.370-1	Bethia S.A. y Filiales (1)	Other related parties	Chile	Investments	Property rental granted		CLP		546
					Professional advice granted		CLP		300
					Services provided air cargo transport		CLP		1.381
					Other service received		CLP		(109	)
					Payments on behalf received		CLP		(345	)
					Sale of subsidiaries		CLP		53.386
87.752.000-5	Granja Marina Tornagaleones S.A.	Other related parties	Chile	Fish farming	Passenger services provided		CLP		199
Foreign	Inversora Aeronáutica Argentina	Other related parties	Argentina	Investments	Property rental granted Payments on behalf provided		US$ US$		(412 811	)
96.625.340-1	Inversiones Mineras del Cantabrico S.A.	Other related parties	Chile	Investments	Payments on behalf received		US$		(811	)

(1) On April 06, 2011 Lan Cargo S.A. e Inversiones Lan S.A., subsidiaries of Lan Airlines S.A. as sellers, and Servicios de Transporte Limitada and Inversiones Betmin SpA, subsidiaries of Bethia S.A. company, as purchasers, entered into a contract of sale with respect to 100% of the social capital of companies Blue Express Intl Ltda. and Blue Express S.A. The sale value of Blue Express Intl. Ltda and subsidiary was for ThUS$ 53,386.

F-1-90

b) Transactions with related parties for the year ended December 31, 2010

Tax No.	Related party	Relationship	Country of origin	Other information on related party	Transaction	Currency		Amount of transactions
								ThUS$
96.810.370-9	Inversiones Costa Verde Ltda. y CPA	Controlling shareholder	Chile	Investments	Property rental granted Passenger services provided		CLP CLP		77 13
96.847.880-K	Lufthansa Lan Technical	Associate	Chile	Training center	Property rental granted		CLP		17
	Training S.A.				Assignment of debt granted		CLP		18
					Payments on behalf received		CLP		(16	)
					Training received		CLP		(356	)
					Payments on behalf received		US$		(95	)
					Training received		US$		(363	)
96.921.070-3	Austral Sociedad Concesionaria S.A.	Associate	Chile	Concessionaire	Landing and other aviation rates received		CLP		(35	)
					Basic consumptions received		CLP		(8	)
					Aeronautical concession received		CLP		(153	)
					Dividend distribution		CLP		73
87.752.000-5	Granja Marina	Other related	Chile	Fish farming	Passenger services provided		CLP		63
	Tornagaleones S.A.	parties
96.669.520-K	Red de Televisión	Other related	Chile	Television	Passenger services provided		CLP		65
	Chilevisión S.A.	parties			Publicity services received		CLP		(100	)
96.894.180-1	Bancard Inversiones	Other related parties	Chile	Professional advice	Professional advice received		CLP		(7	)
Foreign	Inversora Aeronáutica	Other related	Argentina	Investments	Property rental granted		US$		(271	)
	Argentina	parties			Other services provided		US$		13

F-1-91

c) Compensation of key management

The Company has defined for these purposes that key management personnel are the executives who define the Company’s policies and major guidelines and who directly affect the results of the business, considering the levels of vice-presidents, chief executives and directors.

	For the year ended December 31,
	2011		2010
	ThUS$		ThUS$
Remuneration		9,696		7,505
Management fees		185		150
Corrections of value and non-monetary benefits		665		352
Short-term benefits		5,011		4,680
Share-based payments		2,084		3,523
Total		17,641		16,210

NOTE 36 – SHARE-BASED PAYMENTS

The compensation plans implemented through the granting of options to subscribe and pay for shares, which have been granted since the last quarter of 2007, are shown in the consolidated statements of financial position in accordance with IFRS 2 “Share-based payments”, booking the effect of the fair value of the options granted as a charge to remuneration on a straight-line basis between the date of granting the options and the date on which these become vested.

During the last quarter of 2009, the original terms of the plan were amended regarding subscription and payment of options. These modifications were carried out during the first quarter of 2010 and established a new term and exercise price.

The original grant and subsequent amendments have been formalized through the signing of option contracts for the subscription of shares according to the proportions shown in the accrual schedule, which are related to the permanence of the executive on those dates for exercising the options:

Percentage	Period
30%	From October 29, 2010 until March 31, 2012
70%	From October 30, 2011 until March 31, 2012

These options have been valued and booked at their fair value on the grant date, determined using the “Black-Scholes-Merton” method.

All options expire on March 31, 2012.

	Number of share options
Stock options under a share-based payment agreement balance as of January 1, 2011		2,209,091
Stock options granted		—
Stock options annulled		—
Stock options exercised		(1,535,522	)
Stock options under a share-based payment agreement balance as of December 31, 2011		673,569

F-1-92

Entry data for option valuation model used for stock options granted during the year.

Weighted average share price	Exercise price		Expected volatility			Life of option		Dividends expected			Risk-free interest
US$ 17.3	US$	14.5		33.20	%		1.9 years		50	%		0.0348

NOTE 37 – THE ENVIRONMENT

In accordance with the General Environment Bases Law issued in Chile and its complementary regulations, there are no provisions that affect the operation of air transport services.

NOTE 38 – SUBSEQUENT EVENTS

The consolidated financial statements of Lan Airlines S.A. and Subsidiaries as of December 31, 2011 have been approved in extraordinary session of the Board February 14, 2012, which was attended by the following directors:

1. Jorge Awad Mehech,

2. Darío Calderón González,

3. Juan José Cueto Plaza,

4. Juan José Cueto Sierra,

5. Ramón Eblen Kadis, and

6. Carlos Alberto Heller Solari.

Judgement against Variglog

On February 2, 2012, Variglog made a filing before the Brazilian court expressing that it was unable to abide by the terms of the judicial reorganization. Variglog shall therefore present a new plan which shall be approved or rejected by the creditors at a Meeting. Up to the date hereof, there is no a fixed date in which Variglog shall present the new plan.

Judgement against Matlin Patterson

On February 7, 2012, the Appellate Court of New York in a unanimous decision confirmed the judgment of the lower court in favor of AAI. With such decision, the staying effect ordered by the Appellate Court on July 28, 2011 ceases and AAI will reassume the procedure before the lower court for determination of damages. In principle, Matlin Patterson may not appeal to the decision of the Appelate Court unless it obtains a special permission from the New York Court of Appeals, the highest court in the State.

Except as mentioned above, subsequent to December 31, 2011 until the date of issuance of these financial statements, the Company has no knowledge of any other subsequent events that may significantly affect the balances or their interpretation.

F-1-93

NOTE 39 – BUSINESS COMBINATIONS

(a) Aerovías de Integración Regional, AIRES S.A.

On November 26, 2010 Lan Pax Group S.A., a subsidiary of Lan Airlines S.A., acquired 98.942% of the Colombian company Aerovías de Integración Regional, AIRES S.A.

This acquisition was made through the purchase of 100% of the shares of the Panamanian corporations AKEMI Holdings S.A. and SAIPAN Holding S.A., which owned the aforementioned percentage of AIRES S.A. The purchase price was ThUS$ 12,000.

Aerovías de Integración Regional, AIRES S.A., founded in 1980, at the date of acquisition it was the second largest operator within the Colombian domestic market with a market share of 22%. AIRES S.A. offers regular service to 27 domestic destinations within Colombia as well as 3 international destinations. Synergies are expected between the combination of AIRES S.A. in the Colombian market and efficiency of the business model of LAN Airlines S.A. Additionally, better performance is expected by the business of Lan Airlines S.A. (passengers and cargo) through an increase in coverage in Latin America.

The Company has measured the non-controlling interest in AIRES S.A. using the proportionate share of the non-controlling interest in net identifiable assets acquired.

The business combination is recognized in the statement of financial position of Lan Airlines S.A. and Subsidiaries as goodwill of ThUS$ 94,224.

Summary statement of financial position at acquisition date:

	ThUS$				ThUS$
Current assets		27,315		Current liabilities		125,193
Non-current assets		31,652		Non-current liabilities		20,327
				Equity		(86,553	)
Total assets		58,967		Total liabilities		58,967
Controlling interest		(82,224	)

Goodwill determination:

	ThUS$
Controlling interest		82,224
Purchase price		12,000
Goodwill		94,224

(b) AEROASIS S.A.

Dated February 15, 2011, Lan Pax Group S.A. subsidiary of Lan Airlines S.A. acquired 100% of Colombian society AEROASIS S.A. The purchase price was ThUS$ 3,541.

AEROASIS S.A. is a corporation incorporated under the laws of the Republic of Colombia through Public Deed No. 1206 dated May 2, 2006.

The business combination is recognized in the statement of financial position of Lan Airlines S.A. and Subsidiaries as goodwill of ThUS$ 6,736.

F-1-94

Summary statement of financial position at acquisition date:

	ThUS$				ThUS$
Current assets		1,802		Current liabilities		8,007
Non-current assets		3,010		Non-current liabilities		—
				Equity		(3,195	)
Total assets		4,812		Total liabilities & equity		4,812
Controlling interest		(3,195	)

Goodwill determination:

	ThUS$
Controlling interest		3,195
Purchase price		3,541
Goodwill		6,736

In accordance with IFRS 3, the determined value of goodwill is provisional.

F-1-95

EX-1.1

Exhibit 1.1

BY-LAWS¹

LAN AIRLINES S.A.

SECTION ONE: Name, Registered Office and Purpose

Article 1: A corporation is incorporated that will be governed voluntarily by the rules applicable to open corporations and will be called Lan Airlines S.A., although it may also indistinctively use the fictitious names of “Lan,” “Lan Chile,” “Lan Airlines” and/or “Lan Group.”²

Article 2: The company will have its registered offices in the city of Santiago, borough of the same name, although it may establish agencies, branches, offices or establishments in other places in the country or abroad.

Article 3: The duration of the Company will be indefinite.

Article 4: The Company shall engage in:

(a) the trade of any form of air and/or ground transportation, whether passenger, cargo, or mail, and of everything relating directly or indirectly to that activity, in the country or abroad, for its own account or others;

(b) the rendering of services relating to the maintenance and repair of aircraft, whether own or third parties;

(c) the development and exploitation of other activities derived from the business purpose and/or linked, related, cooperative or complementary thereto;

(d) the trade and development of activities relating to travel, tourism and lodging; and

(e) holding interests in companies of any type or kind that facilitate the business of the Company.

¹  A new text of these bylaws will govern once the merger of the Company with Sister Holdco S.A. and Holdco II S.A. is perfected. These latter two companies will be absorbed by, and incorporated to, the Company (hereinafter also called the “Merger”). The Merger is subject to fulfillment of certain terms and conditions, all in the terms approved by the Special Shareholders Meeting of the Company held December 21, 2011. The minutes thereof were executed to public deed on January 11, 2012 in the Santiago Notarial Office of Mr. Eduardo Diez Morello. An abstract thereof was registered on page 4,238, number 2,921, of the Santiago Commercial Registry on January 16, 2012.

²  The text of this article will be amended after the Merger is perfected, as indicated in Note 1 above.

1

SECTION TWO: Capital, Shares and Shareholders

Article 5: The capital of the Company is US$1,948,953,009.66, divided into 488,355,882 shares in one single series, with no par value. There are no special series of shares nor privileges. The form of share certificates, their issuance, exchange, ruin, misplacement, replacement and other circumstances thereof as well as the transfer of shares shall be governed by the provisions in the Companies Law and its Regulations.

Article 6: Shareholders may stipulate agreements limiting the free transfer of shares, but those agreements shall be deposited with the Company and be available to other shareholders and interested third parties, and they shall be annotated in the shareholders registry in order to be valid.

SECTION THREE: Management

Article 7: The Company will be managed by the Board of Directors that will be elected by the Shareholders Meeting.

Article 8: The Board will be comprised of 9 members and will hold office for two years. Members may be reelected. There will be no need to be a shareholder in order to be a director. The Board will appoint a Chairman and a Vice Chairman from among its members. The Vice Chairman shall substitute for the Chairman in the event of the latter’s absence or impediment. The Board of Directors may appoint an Interim Chairman whenever the Chairman and Vice Chairman are absent or suffer from an impediment. The absences or impediments behind such substitution shall not have to be proven to third parties.

Article 9: The entire Board of Directors shall be elected at the next Regular Shareholders Meeting to be held by the Company whenever there is a vacancy in a Directorship. The Board may appoint a replacement in the interim.

2

Article 10. Directors will be compensated for their office. Whether they will be compensated and the amount thereof will be determined annually by the Regular Shareholders Meeting.

Article 11: Board meetings shall be installed by the presence of a majority of Directors. Resolutions will be adopted by an absolute majority of the Directors present, save resolutions that require a higher majority according to the law or these by-laws.

Any tie shall be decided by the vote of the Chairman of the Meeting. The Chief Executive Officer of the Company shall act as Secretary or the person expressly appointed by the Board of Directors to that position.

Article 12: The Board shall hold regular meetings on the days and at the times it determines. In any case, it shall meet at least once a month. Special meetings may be held when they are convened specially by the Chairman together with two directors and/or at the request of an absolute majority of directors, in which case the meeting must necessarily be held.

Article 13: The Board represents the Company judicially and extrajudicially and shall be vested, in order to fulfill the business purpose, which shall not be necessary to prove to third parties, with all powers of administration and disposition that the Law, Regulations and these by-laws do not reserve for the shareholders meeting. There will be no need to grant any special power of attorney, including for those acts or contracts regarding which the laws require such an event, as provided in article 40 of the Law. The foregoing is without prejudice to the judicial representation pertaining to the Chief Executive Officer of the Company.

The Board of Directors may delegate part of its authority to the General Manager, Managers, attorneys of the Company, to one director or a committee of directors, and to other people for certain special purposes.

Article 14. The deliberations and resolutions of the Board of Directors shall be written down in a minutes book that will be signed on each occasion by the directors who attended the meeting and by the Secretary.

3

A director who wishes to circumvent his liability for any act or resolution of the Board shall have his opposition recorded in the minutes and that opposition shall be disclosed by the Chairman at the next Regular General Shareholders Meeting.

Should a director die or be unable for any reason to sign the corresponding minutes, a record of that fact shall be left at the foot of the minutes.

The minutes shall be deemed approved as from the time they have been signed by the aforesaid persons, and from that moment the resolutions indicated therein may be implemented.

Article 15: The Company will have an Executive Vice President and a Manager, who will be the legal representative of the Company. Both positions will be appointed by the Board of Directors and may be held by one same person. The Executive Vice President shall have the powers conferred thereupon by the Board of Directors. The Manager shall have the powers delegated thereto by the Board of Directors, notwithstanding those corresponding thereto by the Law and in particular:

(i) he shall represent the Company judicially with the powers listed in both subparagraphs of article seventh of the Code of Civil Procedure, which are deemed expressly set out.

(ii) he shall execute and enter into all acts and contracts, whether civil, commercial, administrative or otherwise, conducive to the purposes of the Company within the limits on amount set by the Board; and

(iii) generally, he shall implement resolutions of the Board and execute all acts for which he has been expressly delegated authority, in the form, amount and conditions that are determined. The Board shall appoint one or more persons who may individually validly represent the company in all notifications made thereto in absence of the Manager, which the interested party shall not have to evidence.

SECTION FOUR: Shareholders Meetings

Article 16: Shareholders shall meet in a regular meeting once a year between February 1 and April 30.

4

Article 17: Matters for a regular meeting are:

1. the annual appointment of the independent external auditors to examine the accounting, inventory, balance sheet and other financial statements of the Company;

2. the examination of the situation of the Company and of the reports by the external auditors and approval, amendment or rejection of the annual report, balance sheet and financial statements and exhibits;

3. the approval of the distribution of fiscal year profits and the payment of dividends;

4. the election or revocation of the board, liquidators and auditors of management;

5. the determination of the annual compensation of directors;

6. acknowledgement of the resolutions adopted by the Board in which there was opposition of one or more directors.

7. acknowledgement of the resolutions approving acts or contracts in which one or more directors had or have an interest personally or as the representative of another person; and

8. generally, any matter of corporate interest not reserved for a Special Shareholders Meeting.

Article 18: Matters for a Special Shareholders Meeting are:

1. a reform to the Company’s by-laws;

2. the issuance of bonds or debentures convertible to shares;

3. the grant of real or personal guarantees to secure third-party obligations when those third parties are not subsidiaries; and

4. the other matters surrendered to the debate thereof by the by-laws and the law.

5

Article 19: Notices of meetings shall be given by a prominent advertisement that will be published at least 3 times on different days in a newspaper in the corporate domicile determined by the meeting or, failing agreement, or when compliance therewith is impossible, in the Official Gazette, in the time, form and conditions determined by the Companies Regulations.

In addition to the preceding notice, a notice should be sent by mail to each shareholder a minimum of 15 days in advance of the date of the meeting, which shall contain a reference to the matters to be discussed thereat.

The notice shall mention the resolutions of the Board that the Meeting must study according to Article 44 of the Law. Meetings attended by all issued shares may be validly held even though the formalities required for notice have not been completed.

Article 20: Regular and Special Shareholders Meeting shall be validly installed by representatives of a majority of the issued shares. If that number is not present, a new notice will be given and the Regular or Special Shareholders Meeting will be validly installed by the shareholders attending.

Special Shareholders Meetings shall be held before a notary. Second notices may only be published once the meeting has failed under a first notice or second notice, as the case may be, and a new shareholders meeting shall be convened, regardless, within 45 days after the date set for the meeting that was not held under a first notice.

Notices shall be published in the same period indicated above.

Article 21: Resolutions of both Regular and Special Shareholders Meeting shall be adopted by the affirmative vote of at least an absolute majority of the shares represented at the meeting. In any case, the resolutions indicated in the second subparagraph of article 67 of the Companies Law shall require the affirmative vote of two-thirds of the issued and voting shares. Only shareholders registered in the Shareholders Registry five days in advance of the date of the respective meeting may attend meetings and exercise their right to speak and vote. Directors shall be elected in one single voting, and the persons who earn the nine highest majorities shall be deemed elected. Shareholders may distribute their votes among candidates in the manner they deem convenient. In order to proceed with voting,

6

save unanimously resolution otherwise, the Chairman and Secretary, together with the persons previously designated by the meeting to sign the minutes thereof, shall record in a document the votes that are cast outloud by the shareholders present, in the order of the attendance list. Any shareholder shall have the right, however, to vote on a ballot signed thereby, stating whether he signs personally or on behalf of another.

Notwithstanding the foregoing, in order to facilitate the conduct or quickness of the voting, the Chairman or the Superintendency, as the case maybe, may order that voting be taken alternatively and indistinctively outloud or by ballot. When counting votes from the annotations made by the aforesaid persons, the Chairman may read the votes outloud in order for all those present to calculate the votes themselves or to confirm the true outcome through such annotation and ballots.

The Secretary shall add up the votes and the Chairman shall proclaim the top majorities until completing the number to be elected.

The Secretary will put all papers in an envelope that he will close and seal by the company seal, which will be filed with the Company for at least two years.

Article 22: Shareholders may be represented at meetings by other shareholders or by third parties in the form and conditions set down in the Regulations. The proxy granted for the meeting not held shall be deemed valid for the new meeting held instead provided the first meeting was not held due to a lack of quorum.

Article 23: Attendees at meetings shall sign an attendance sheet that will indicate after their signature the number of shares held by the signatory, the number of shares represented by the signatory and the name of the principal.

Article 24: Deliberations and resolutions of Shareholders Meetings shall be set down in a Special Minutes Book that will be kept by the Secretary. Minutes will be signed by the Chairman or by his substitute, by the Secretary and by three Shareholders on behalf of attendees, elected by the meeting.

An abstract of the events of the meeting shall be written in minutes and the following data necessarily recorded: the name of the shareholders present, the number of shares owned or represented by each, a succinct account of any observations, an account of the motions submitted to discussion and the outcome of voting, and the list of shareholders who have voted against those motions, if anyone has requested nominal voting.

7

Only under the unanimous consent of attendees may the record of some event occurring at the meeting be eliminated from the minutes, provided it relates to corporate interests.

The minutes containing the election of directors shall indicate the names of all shareholders present and specify the number of shares voted by each, personally or on behalf of another, and the general outcome of the voting.

A copy of these minutes will be sent to the Superintendency of Securities and Insurance. The Company shall notify the Superintendency of the appointment of directors who are replaced within three business days.

SECTION FIVE: Annual Report, Balance Sheet and Profits

Article 25: A General Balance Sheet of the Company’s assets and liabilities shall be prepared as of December 31st of each year, which will contain the indications required by the laws and regulations.

Article 26: At the Regular General Shareholders Meeting, the Board of Directors shall advise shareholders of the status of the Company’s business and present an annual report containing explanatory and analytical information on the transactions performed in the most recent fiscal year, accompanied by the general balance sheet, profit and loss statement and report presented by the external auditors.

All sums earned during the fiscal year by the Chairman and Director shall be placed in separate lines within the profit and loss accounts in such balance sheet.

Article 27: Dividends shall be paid exclusively against net profits from the fiscal year or retained earnings in balance sheets approved by the Shareholders Meeting. Should the Company have accumulated losses, profits earned in the fiscal year shall be first allocated to absorbing those losses. A cash dividend shall be paid annually to shareholders in proportion to their shares, amounting to at least 30% of the net profits from each fiscal year, save resolution otherwise adopted unanimously by the respective meeting.

8

Article 28. The annual report, balance sheet and inventory, minutes, books and other items supporting them and the report that the external auditors must present shall be available to shareholders for examination at the management’s offices for 15 days prior to the date set for the Regular General Shareholders Meeting. For this purpose, the Company shall keep printed or typed copies of those documents in that office. The Company shall send each of the shareholders registered in the respective Registry a copy of the balance sheet and of the annual report of the Company on a date that is no later than the date of the first notice convening a Regular Shareholders Meeting, including the opinion of the auditors and the respective notes, all without prejudice to the provisions in the second and third subparagraphs of article 75 of the law.

Article 29: The Company shall publish the information determined by the Superintendency of Securities and Insurance on its duly audited general balance sheets and profit and loss statements in a widely circulated newspaper in the corporate domicile no less than 10 nor more than 20 days in advance of the date of the Regular Shareholders Meeting that will decide on them. In that same period, the Company shall submit the number of counterparts of such documents to the Superintendency of Securities and Insurance as determined thereby. If the balance sheet and profit and loss statements are modified by the meeting, the changes will be published in the same newspaper within 15 days following the date of the meeting, notwithstanding that they must also be sent to the Shareholders registered in the Registry. The balance sheet shall contain the name of the Chairman, directors, managers and indicate the share transactions performed by such individuals during the fiscal year.

Article 30: When the condition of corporate funds allow and the Board deems it convenient, interim dividends may be paid to Shareholders during the fiscal year on account of profits from that year, under the personal liability of directors approving the resolution, provided there are no cumulative losses.

SECTION SIX: Audit of Management

Article 31: The Regular Shareholders Meeting shall appoint independent external auditors annually to examine the accounting, inventories, balance sheets and other financial statements of the Company, under the obligation to report in writing on fulfillment of their mandate to the next Regular Shareholders Meeting.

9

SECTION SEVEN: Arbitration

Article 32: Any matter arising among shareholders as such or among them and the company or its managers shall be resolved without form of trial or further remedy by an arbitrator ex aequo et bono appointed by mutual consent of the parties involved, and failing consent, by the ordinary courts, in which case the arbitrator shall be a conciliator in regard to procedure and an arbiter in regard to the ruling. The appointment shall fall upon an attorney who is or has been a deputy justice of the Supreme Court of Justice for at least one year. Notwithstanding the foregoing, the plaintiff in any dispute may remove the hearing thereof from the venue of arbitrators and submit to the decision of the Ordinary Courts.

TRANSITORY ARTICLES

Transitory Article First: The capital of the Company is US$1,948,953,009.66, divided into 488,355,882 shares in one single series, with no par value, which has been and will be subscribed and paid as follows:

(One)

The sum of US$472,482,439.59, divided into 340,232,861 shares, fully subscribed and paid in prior to this date.

(Two)

The sum of US$11,097,599.98, divided into 767,139 shares to be subscribed and paid on account of the capital increase approved at the Special Shareholders Meeting of the Company held April 5, 2007. These shares are allocated to compensation plans for the employees of the Company and its subsidiaries, as provided in Article 24 of the Companies Law. The Board was fully authorized to create and implement the stock option plans in one or several stages. These shares must be subscribed and paid for at a price of US$14.50 per share, adjustable by the change in the CPI—i.e., the Consumer Price Index published monthly by the U.S. Department of Labor from November 5, 2009 to the date of subscription and payment of the shares—, payable in pesos at the observed dollar exchange rate on the same date of subscription and payment. This price was set by the Board at Special Meeting 85 held November 5, 2009, within the purview of the resolution adopted by the Company’s Special Shareholders Meeting on October 29, 2009 at which it was delegated the authority to set the final placement price according to the rule in the second subparagraph of Article 28 of the Companies Regulations. The shareholders do not enjoy a right of first refusal in regard to these shares, as

10

	provided in the third subparagraph of said Article 24. These shares shall be paid at once, in the act of subscription, in cash, by check, bank check, wire transfer or any other instrument or effect representing money payable upon demand. The maximum term for subscription and payment of these shares expires April 5, 2012; and
(Three)	The sum of US$1,465,372,970.09, divided into 147,355,882 shares to be subscribed and paid on account of the capital increase approved at the Special Shareholders Meeting of the Company held December 21, 2011.

In regard to this capital increase for an aggregate of US$1,465,372,970.09, represented by said 147,355,882 shares:

(A) a part, totalling US$1,417,639,617.60, represented by 142,555,882 shares, to be exchanged—because of the merger of the Company with Sister Holdco S.A. and Holdco II S.A. in which these latter two companies will be absorbed by, and incorporated to, the Company (hereinafter also called the “Merger”)—at the rate of 0.9 shares in the Company per share that is fully subscribed and paid in each of the absorbed companies that is owned by shareholders other than shareholders in the Company. Once exchanged as indicated above, these shares will be deemed fully subscribed and paid by the contribution of all assets, liabilities and equity of the absorbed companies incorporated to the Company by the Merger. The shares held by the Company in the absorbed companies at the time the Merger is perfected will become invalid.

By effect of the Merger, the Company, as the absorbing company, will acquire all of the assets and liabilities of the absorbed companies and succeed them in regard to all of their rights and obligations according to Article 99 of the Companies Law. By reason of the Merger, all of the equity and shareholders of the absorbed companies will be incorporated to the Company, as the absorbing company, as well as all of the assets, rights, authorizations, patents, permits, obligations and liabilities thereof. Sister Holdco S.A. and Holdco II S.A., as the absorbed companies, will be legally dissolved in consequence. Hence, by effect of the Merger and for all pertinent purposes, the Company will be the successor and legal continuer of

11

Sister Holdco S.A. and Holdco II S.A. The Merger is being implemented on the basis of the expert merger report dated December 1, 2011, together with its appendices, prepared by Mr. Enrique Cid Corral, an independent expert, and of the duly audited financial statements of the three companies through September 30, 2011. The Company will keep records of the tax values of the assets and liabilities of the absorbed companies in the same terms as the latter now do, in accordance with Article 64 of the Tax Code, for the purpose of proving compliance with all rules contained in the Income Tax Law, such as depreciation, price-level restatement, the calculation of goodwill at the time of transfer and the other rules that may be applicable. Moreover, as provided in Article 69 of the Tax Code, the Company, as the legal continuer and successor of Sister Holdco S.A. and Holdco II S.A., will be liable for payment of all taxes that (i) are or may be owed by Sister Holdco S.A. and Holdco II S.A.; and (ii) are shown in the winding up balance sheets to be presented by the Company to the Internal Revenue Service.

The maximum term for subscription and payment, i.e., for the exchange of such 142,555,882 shares to occur, will expire June 28, 2012. It is stipulated that this period leaves time for the Merger to be materialized since it is subject to the Terms and Conditions of the Agreements contained in Proposal for Agreement 8, approved by the Special Shareholders Meeting of the Company on December 21, 2011.

If there is a balance of such 142,555,882 shares not used after the exchange in the Merger, it will be used to create and implement compensation plans for the employees of the Company and its subsidiaries, as provided in Article 24 of the Companies Law. For all pertinent purposes, as of the date when use thereof is no longer feasible because of the exchange in the Merger, the issuance, subscription, payment and other pertinent aspects of such unused balance of shares will be governed by the same bylaw as the 4,800,000 shares to which letter (B) below refers. In that case, the maximum term for issuance, subscription and payment shall therefore expire December 21, 2016.

12

Since it will not be possible for shareholders in the absorbed companies to receive fractions of shares in the absorbing company in the application of the aforesaid share exchange ratio, the Company’s Board of Directors was authorized to pay a sum in United States of America dollars for such fractions, equal to the product of (i) the fraction of a share that would correspond to the respective shareholder and (ii) the closing price of the Company’s share on the Santiago Stock Exchange on the exchange business day prior to the day when the Merger is materialized, using the “observed” dollar exchange rate published by the Central Bank of Chile on that date, notwithstanding the authority to collect and place the shares resulting from said fractions on a stock exchange.

The Company’s Board of Directors was amply empowered, within the framework of the resolutions adopted by the Meeting, to proceed to issue the shares representing the capital increase to which this letter (A) refers all at once and for all of the shares, or in parts, at the Board’s discretion; to conduct or order all proceedings necessary to register the shares in the increase in the Securities Registry of the Securities and Insurance Commission of Chile, including all types of requests, measures, procedures, presentations, declarations and other measures relating to the registration and placement of the shares; and once the share issue has been registered that was approved for this capital increase, to decide on the exchange and placement thereof all at once or in parts and listing thereof on one or more stock exchanges; to represent the Company or order that it be represented before any type of authority, entity or person, including, but not limited to, government, regulatory or oversight entities, stock exchanges or others related to the securities market; to grant the powers of attorney necessary or convenient to implement all or part of the foregoing; and, in general, to resolve all situations, modalities, supplements, amendments and details that may arise or be required in relation to this bylaw reform and related matters approved by the Meeting; and

(B) the remainder of the increase for US$47,733,352.49, represented by 4,800,000 shares, shall be allocated to compensation plans for the employees of the Company and its subsidiaries, as provided in Article 24 of the Companies Law. The Board was fully authorized to create and implement

13

the stock option plans in one or several stages. The shareholders do not enjoy a right of first refusal in regard to these shares, as provided in the third subparagraph of said Article 24. The price of these shares must be paid at once, in the act of subscription, in cash, by check, bank check, wire transfer or any other instrument or effect representing money payable upon demand. The Board was authorized by the Meeting to set the placement price for the cash shares according to the rule in the second subparagraph of Article 28 of the Companies Regulations The maximum term for issuance, subscription and payment of these shares expires December 21, 2016; and

The Company’s Board of Directors was amply empowered, within the framework of the resolutions adopted by the Meeting, to proceed to issue the shares representing the capital increase to which this letter (B) refers all at once and for all of the shares, or in parts, at the Board’s discretion; to conduct or order all proceedings necessary to register the shares in the increase in the Securities Registry of the Securities and Insurance Commission of Chile, including all types of requests, measures, procedures, presentations, declarations and other measures relating to the registration and placement of the shares; and once the share issue has been registered that was approved for this capital increase, to decide on the exchange and placement thereof all at once or in parts and listing thereof on one or more stock exchanges; to represent the Company or order that it be represented before any type of authority, entity or person, including, but not limited to, government, regulatory or oversight entities, stock exchanges or others related to the securities market; to determine all matters relating to the options forming part of the compensation plans, including, but not limited to, the periods during which the options will be valid, the periods, opportunities, form and other conditions for acceptance or exercise thereof, the employees that will be benefitted thereby, the number of shares in the options offered and all other matters relating to the foregoing; to grant the powers of attorney necessary or convenient to implement all or part of the foregoing; and, in general, to resolve all situations, modalities, supplements, amendments and details that may arise or be required in relation to this bylaw reform and related matters approved by the Meeting.

14

It is specially stipulated that the Merger, the capital increase to which this number (Three) refers and other resolutions related to the foregoing are subject to the Terms and Conditions of the Agreements contained in the Proposal of Agreement 8, approved by the Special Shareholders Meeting of the Company held December 21, 2011.

CERTIFICATE

Lan Airlines S.A. is an open stock corporation registered under #306 in the Securities Registry. It was incorporated by public deed executed December 30, 1983 in the Santiago Notarial Office of Mr. Eduardo Avello Arellano. An abstract thereof was registered on page 20,341, number 11,248, in the 1983 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on December 31, 1983. The restated text of the company’s bylaws was approved by a Special Shareholders Meeting held September 15, 1988, the minutes of which were executed to public deed on October 7, 1988 in the Santiago Notarial Office of Mr. Mario Baros Gonzalez. The respective abstract was registered on page 25,966, number 13,208, of the 1988 Commercial Registry of the Santiago Real Estate Registrar and published in the Official Gazette on October 21, 1988. The company’s bylaws were subsequently amended, as follows:

• by public deed executed August 2, 1989, in the Santiago Notarial Office of Mr. Mario Baros Gonzalez. An abstract thereof was registered on page 24,330, number 12,374, of the 1989 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on September 9, 1989.

• by public deed executed January 31, 1990 in the Santiago Notarial Office of Mr. Victor Manuel Correa Valenzuela. An abstract thereof was registered on page 4,038, number 2,167, of the 1990 Commercial Registry of the Santiago Real Estate Registrar and published in the Official Gazette on February 10, 1990.

• by public deed executed November 12, 1990 in the Santiago Notarial Office of Mr. Ivan Torrealba Acevedo. An abstract thereof was registered on page 31,410, number 15,623, of the 1990 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on November 17, 1990.

15

• by public deed executed May 6, 1991 in the Santiago Notarial Office of Mr. Victor Manuel Correa Valenzuela. An abstract thereof was registered on page 13,150, number 6,518, of the 1991 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on May 14, 1991.

• by public deed executed March 17, 1994 in the Santiago Notarial Office of Mr. Victor Manuel Correa Valenzuela. An abstract thereof was registered on page 5,595, number 4,601, of the 1994 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on …., 1994.

• by public deed executed August 28, 1997 in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract thereof was registered on page 21,506, number 17,221, of the 1997 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on September 2, 1997.

• by public deed executed May 15, 1998 in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract thereof was registered on page 11,806, number 9,626, of the 1998 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on May 29, 1998.

• by public deed executed September 7, 2000, in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract thereof was registered on page 23,758, number 18,844, of the 2000 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on September 12, 2000.

• by public deed executed July 28, 2004 in the Santiago Notarial Office of Mr. Ivan Torrealba Acevedo. An abstract thereof was registered on page 25,128, number 18,764, of the 2004 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on August 21, 2004.

• by public deed executed January 26, 2007 in the Santiago Notarial Office of Mr. Raul Undurraga Laso. An abstract thereof was registered on page 7,232, number 5,340, of the 2007 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on February 19, 2007.

• by public deed executed April 9, 2007 in the Santiago Notarial Office of Mr. Raul Undurraga Laso. An abstract thereof was registered on page 14,510, number 10,713, of the 2007 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on April 14, 2007; and

• by public deed executed January 11, 2012 in the Santiago Notarial Office of Mr. Eduardo Diez Morello. An abstract thereof was registered on page 4,238, number 2,921, of the 2012 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on January 14, 2012.

16

It is certified that the attached text corresponds to the valid bylaws of Lan Airlines S.A.

Santiago, Chile, January 27, 2012

Alejandro de la Fuente Goic

Chief Financial Officer

LAN AIRLINES S.A.

17

EX-2.3

Exhibit 2.3

PATRICIO RABY BENAVENTE

  NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

  5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

REPERTORIO N^O 11.703-2011

MODIFICACIÓN DE LA CONVENCIÓN CELEBRADA DE

ACUERDO CON EL

EX CAPÍTULO XXVI DEL TÍTULO I, DEL COMPENDIO DE

NORMAS DE CAMBIOS INTERNACIONALES DEL BANCO

CENTRAL DE CHILE

ENTRE

BANCO CENTRAL DE CHILE

Y

LAN AIRLINES S.A.

Y

THE BANK OF NEW YORK MELLON

Y

JPMORGAN CHASE BANK, N.A.

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

En Santiago de Chile, a veintiocho de Octubre del año dos mil once, ante mí, PATRICIO RABY BENAVENTE, Abogado, Notario Público, Titular de la Quinta Notaría de Santiago, con domicilio en Gertrudis Echenique número treinta, Oficina cuarenta y cuatro, Las Condes, COMPARECEN: Don GABRIEL APARICI CARDOZO, chileno, casado, ingeniero agrónomo, cédula de identidad número siete millones setenta y siete mil seiscientos setenta y cinco guión ocho, en su calidad de Gerente de Infraestructura y Regulación Financiera, y en representación, según se acreditará, del BANCO CENTRAL DE CHILE, persona jurídica de derecho público, ambos

1

domiciliados en calle Agustinas número mil ciento ochenta de la Comuna y Ciudad de Santiago, en lo sucesivo el BANCO; don SERGIO ORREGO FLORY, chileno, casado, abogado, cédula de identidad número siete millones cincuenta y un mil setecientos veintisiete guión dos, para estos efectos domiciliado en Avenida Andrés Bello número dos mil setecientos once, piso dieciséis, comuna de Las Condes, en representación, según se acreditará, de THE BANK OF NEW YORK MELLON (antes denominado THE BANK OF NEW YORK), en adelante la EMPRESA BANCARIA, persona jurídica del giro bancario, domiciliada en Barclay Street ciento uno, ciudad y Estado de Nueva York, Estados Unidos de América, constituida bajo las leyes del Estado de Nueva York; don VICTOR ALEJANDRO MIGUEL DE LA FUENTE GOIC, chileno, casado, ingeniero comercial, cédula de identidad número seis millones novecientos cuarenta y siete mil setecientos quince guión uno y don ANDRES ENRIQUE DEL VALLE EITEL, chileno, casado, ingeniero comercial, cédula de identidad número seis millones trescientos cuarenta y seis mil novecientos cinco guión K, ambos domiciliados en esta ciudad, Avenida Presidente Riesco número cinco mil setecientos once piso veinte, comuna de Las Condes, en representación, según también se acreditará, de LAN AIRLINES S.A., sociedad anónima abierta del giro de su denominación (antes denominada LÍNEA AÉREA NACIONAL CHILE S.A.

2

PATRICIO RABY BENAVENTE

  NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

  5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

y Lan Chile S.A.), en lo sucesivo la ENTIDAD RECEPTORA; y don VICENTE MONGE ALCALDE, chileno, casado, economista, cédula de identidad número seis millones novecientos noventa y nueve mil novecientos treinta y ocho guión siete, domiciliado en esta ciudad, calle Mariano Sánchez Fontecilla número trescientos diez, noveno piso, comuna de Las Condes, en representación, según se acreditará, de JPMORGAN CHASE BANK, N.A., una asociación bancaria constituida y existente de acuerdo a las leyes de los Estados Unidos de América, domiciliada en doscientos cuarenta Park Avenue, Nueva York, Nueva York, uno cero cero uno siete, Estados Unidos de América, en adelante JPMORGAN para los efectos de la Convención que por este acto se modifica; todos los comparecientes mayores de edad, quienes acreditan su identidad con las cédulas referidas, y exponen: PRIMERO: Por escritura pública de fecha tres de Noviembre de mil novecientos noventa y siete, otorgada en la Notaria de Santiago de don Eduardo Pinto Peralta, el BANCO, la ENTIDAD RECEPTORA y CITIBANK, N.A., ésta última en calidad entonces de Empresa Bancaria, suscribieron, en conformidad con lo dispuesto en el artículo cuarenta y siete de la Ley Orgánica Constitucional del Banco Central de Chile, contenida en el ARTICULO PRIMERO de la Ley número dieciocho mil ochocientos cuarenta, una convención Capítulo Veintiséis del Título I

3

del Compendio de Normas de Cambios Internacionales, en lo sucesivo LA CONVENCIÓN, con el objeto de establecer el régimen cambiario aplicable a la inversión señalada en la misma efectuada al amparo del Capítulo Veintiséis ya citado. Asimismo, LA CONVENCIÓN fue modificada por escritura pública de fecha diecisiete de abril de dos mil tres, otorgada ante don ANDRÉS RUBIO FLORES, Notario Público, Titular de la Octava Notaría de Santiago, con la concurrencia de las mismas partes citadas y también de THE BANK OF NEW YORK (hoy denominado THE BANK OF NEW YORK MELLON), con el objeto de convenir y dejar constancia que a partir de la fecha de dicha modificación, ésta última institución pasaba a detentar la calidad de EMPRESA BANCARIA para efectos de LA CONVENCIÓN, en virtud de la venta, cesión y transferencia de los derechos y obligaciones que a CITIBANK, N.A. le correspondían en tal calidad, a favor de THE BANK OF NEW YORK /hoy denominado THE BANK OF NEW YORK MELLON/, efectuada por escritura pública otorgada en esa misma Notaría con fecha catorce de abril de dos mil tres.- SEGUNDO: Por el presente instrumento los comparecientes, en la representación que cada uno inviste, concurren a modificar nuevamente LA CONVENCIÓN individualizada en la Cláusula Primera, en los términos estipulados en la Cláusula Tercera siguiente, para lo cual se ha tenido en

4

PATRICIO RABY BENAVENTE

  NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

  5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

consideración los siguientes antecedentes: a/ Carta de fecha cuatro de Octubre de dos mil once, suscrita por los señores Alejandro de la Fuente Goic y Andrés del Valle Eitel, en representación de la ENTIDAD RECEPTORA, por el señor Sergio Orrego Flory, en representación de la EMPRESA BANCARIA, y por don Vicente Monge Alcalde en representación de JPMORGAN, mediante la cual solicitan que el BANCO concurra con su acuerdo a modificar LA CONVENCIÓN, de modo de dejar testimonio de los cambios que se mencionan en la Cláusula Tercera siguiente; y b/ Carta número uno cuatro cuatro tres seis del Gerente de Infraestructura y Regulación Financiera del Banco Central de Chile, de fecha diecisiete de Octubre de dos mil once, por la cual se autoriza modificar LA CONVENCIÓN señalada en la Cláusula precedente, modificación que deberá constar en una escritura pública.- TERCERO: En mérito de lo anterior, en este acto el BANCO, la ENTIDAD RECEPTORA, la EMPRESA BANCARIA y JPMORGAN, vienen en otorgar su consentimiento a la modificación de LA CONVENCIÓN individualizada en la Cláusula Primera de esta escritura, que es del tenor siguiente: /i/ Por escritura pública de fecha veintiocho de Octubre de dos mil once, otorgada en esta Notaría, la Empresa Bancaria vendió, cedió y transfirió a JPMorgan todos los derechos y obligaciones que a la primera le correspondían como EMPRESA BANCARIA en la CONVENCION; el BANCO,

5

la EMPRESA BANCARIA y la ENTIDAD RECEPTORA vienen en otorgar su consentimiento a dicha cesión y, consecuentemente, en modificar la CONVENCIÓN individualizada en la Cláusula Primera precedente, en el sentido que, a contar de esta fecha la EMPRESA BANCARIA será JPMORGAN la cual, conforme con lo convenido en la referida escritura pública de fecha veintiocho de Octubre de dos mil once, ha asumido todos los derechos y obligaciones que la CONVENCION otorga o impone a quien detente la calidad de EMPRESA BANCARIA; /ii/ Reemplazar, a contar de esta fecha, la letra g) de la cláusula primera de LA CONVENCIÓN por la siguiente: “g) Que las acciones representadas por los TÍTULOS, serán inscritas en el Registro de Accionistas de la SOCIEDAD RECEPTORA, a nombre de la EMPRESA BANCARIA por sí o como mandataria a nombre propio por cuenta de los tenedores de los TÍTULOS, y serán depositadas en el BANCO SANTANDER-CHILE, empresa bancaria establecida en el país, domiciliada en calle Bandera Número ciento cuarenta, Piso dos, Santiago, que actuará como custodio, en adelante el “BANCO CUSTODIO”; /iii/ Reemplazar, a contar de esta fecha, la letra h) de la cláusula primera de la CONVENCIÓN por la siguiente: “h) el convenio suscrito en idioma inglés y sujeto a las leyes del Estado de Nueva York, con fecha trece de Mayo de dos mil nueve, denominado Subcustodian Agreement, suscrito entre la Empresa Bancaria y el Banco

6

PATRICIO RABY BENAVENTE

  NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

  5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

Custodio, que se tiene sólo presente en cuanto a las actuaciones que competen al BANCO CUSTODIO en virtud de lo dispuesto en el Capítulo Veintiséis ya referido.”; y /iv/ En virtud de lo acordado precedentemente, en adelante todas las referencias que en LA CONVENCIÓN se hacen al BANCO CUSTODIO, deben entenderse hechas al BANCO SANTANDER-CHILE. Por último, las partes declaran que en todo lo no modificado expresamente por la presente escritura, se mantienen vigente las cláusulas y disposiciones de LA CONVENCIÓN indicada en la Cláusula Primera, con sus modificaciones, dejando constancia que a ella le serán aplicables las normas del Capítulo Veintiséis vigentes al dieciocho de abril de dos mil uno. CUARTO: Todos los gastos, derechos e impuestos que origine la suscripción de esta modificación de LA CONVENCIÓN, serán de cargo de la ENTIDAD RECEPTORA, la que se obliga a entregar a la Gerencia de Infraestructura y Regulación Financiera del BANCO una copia autorizada de esta escritura dentro del plazo de diez días contado desde su suscripción. QUINTO: Para todos los efectos legales y judiciales de la presente modificación de LA CONVENCIÓN, las partes fijan sus domicilios en la ciudad de Santiago y se someten a la Jurisdicción de los Tribunales con asiento en dicha ciudad, prorrogando expresamente la respectiva competencia. PERSONERÍAS.- La personería de don Gabriel Aparici Cardozo

7

para representar al Banco Central de Chile, consta del Acuerdo de su Consejo número mil cuatrocientos doce guión cero dos guión cero ocho cero cinco dos nueve del veintinueve de mayo del año dos mil ocho. El poder de don Sergio Orrego para representar a The Bank of New York Mellon consta en instrumento privado otorgado en la ciudad y estado de Nueva York, Estados Unidos de Norteamérica, el día veintiocho de Septiembre de dos mil nueve, el que debidamente legalizado fue protocolizado en la Notaría de Santiago de don Andrés Rubio Flores el día cinco de Noviembre de dos mil nueve (Repertorio número mil doscientos uno/dos mil nueve). La personería de don Víctor Alejandro Miguel de la Fuente Goic y de don Andrés Enrique del Valle Eitel para representar a Lan Airlines S.A. consta de escritura pública de fecha doce de Octubre de dos mil cuatro otorgada en la Notaría de Santiago de don Patricio Zaldívar Mackenna. La personería de don Vicente Monge Alcalde para representar a JPMorgan Chase Bank, N.A., consta de escritura pública de fecha veintiocho de junio de dos mil uno, otorgada en la notaría de Santiago de don Patricio Zaldívar Mackenna, repertorio número once mil cuatrocientos cincuenta y cinco guión dos mil uno. En comprobante y previa lectura firman los comparecientes. Doy fe.-

8

PATRICIO RABY BENAVENTE

  NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

  5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

GABRIEL APARICI CARDOZO

PP. BANCO CENTRAL DE CHILE

SERGIO ORREGO FLORY

PP. THE BANK OF NEW YORK MELLON

VICTOR ALEJANDRO MIGUEL DE LA FUENTE GOIC

PP. LAN AIRLINES S.A.

ANDRES ENRIQUE DEL VALLE EITEL

PP. LAN AIRLINES S.A.

9

VICENTE MONGE ALCALDE

PP. JPMORGAN CHASE BANK, N.A.

NOTARIO

ESTA HOJA CORRESPONDE A LA TERMINACIÓN DE LA ESCRITURA DE MODIFICACIÓN DE LA CONVENCIÓN CELEBRADA DE ACUERDO CON EL EX CAPÍTULO XXVI DEL TÍTULO I, DEL COMPENDIO DE NORMAS DE CAMBIOS INTERNACIONALES DEL BANCO CENTRAL DE CHILE ENTRE BANCO CENTRAL DE CHILE Y LAN AIRLINES S.A. Y THE BANK OF NEW YORK MELLON Y JPMORGAN CHASE BANK, N.A.-

NOTARIO

10

EX-4.1.5

Exhibit 4.1.5

AMENDMENT No.10

TO THE

SECOND A320 FAMILY PURCHASE AGREEMENT

BETWEEN

LAN AIRLINES S.A.

AND

AIRBUS S.A.S.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532

This amendment No.10 to the Second A320 Family Purchase Agreement (as defined below) is entered into as of      June 2011, by and between

AIRBUS S.A.S., having its principal office at:

1 Rond-Point Maurice Bellonte

31707 BLAGNAC-CEDEX

FRANCE

(hereinafter referred to as the “Seller”) of the one part

AND

LAN AIRLINES S.A. having its principal office at:

Edificio Huidobro

Avenida Presidente Riesco 5711- 20th Floor

Las Condes

SANTIAGO

CHILE

(hereinafter referred to as the “Buyer”) of the other part.

The Buyer and the Seller being collectively referred to as the “Parties” and individually as a “Party”

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 2/10

WHEREAS

A. The Buyer and the Seller entered into an A320 family purchase agreement dated March 20th, 1998 covering the purchase by the Buyer and the sale by the Seller of twenty (20) A320 family aircraft bearing rank numbers 1 to 20. By an amendment No.1 to such purchase agreement, entered into by the Buyer and the Seller on February 24th, 2000 the number of A320 family aircraft to be purchased by the Buyer pursuant to such purchase agreement was increased to twenty five (25), with the additional five (5) A320 family aircraft bearing rank numbers 21 to 25. Such twenty five (25) A320 family aircraft are hereinafter referred to as the “Original A320 Family Aircraft”, and such purchase agreement, amendment No.1, and all exhibits, appendices and letter agreements thereto are together referred to as the “Original A320 Family Purchase Agreement”.

B. The Buyer and the Seller entered into a deed of amendment and restatement of the Original A320 Family Purchase Agreement, dated August 2nd, 2000, dividing the Original A320 Family Purchase Agreement into two (2) separate purchase agreements, the first agreement concerning the Original A320 Family Aircraft bearing rank numbers 1 to 20, and the second agreement concerning the Original A320 Family Aircraft bearing rank numbers 21 to 25. The second agreement as supplemented with all exhibits and appendices thereto is hereinafter referred to as the “Second A320 Family Purchase Agreement”.

C. The Buyer and the Seller entered into an amendment No.1 to the Second A320 Family Purchase Agreement dated November 14th 2003 (the “Amendment No.1”) modifying certain provisions of the Second A320 Family Purchase Agreement.

D. The Buyer and the Seller entered into an amendment No.2 to the Second A320 Family Purchase Agreement dated October 4th, 2005 (the “Amendment No.2”) covering the purchase by the Buyer and the sale by the Seller of twenty five (25) additional firm A320 family aircraft comprising twenty (20) A318-100, one (1) A319-100 and four (4) A320-200 aircraft type (the “Additional Aircraft”).

E. The Buyer and the Seller entered into an amendment No.3 to the Second A320 Family Purchase Agreement dated March 6th, 2007 (the “Amendment No.3”) covering the conversion of fifteen (15) Option Aircraft (as defined in the Amendment No.2) into firmly ordered Converted Aircraft (as defined in Amendment No.3).

F. The Buyer and the Seller entered into an amendment No. 4 to the Second A320 Family Purchase Agreement dated June 11th, 2008 (the “Amendment No.4”) covering the conversion of five (5) A318-100 Additional Aircraft bearing rank Nos. 26 to 30 as set forth in Amendment No.2 and three (3) A318-100 Converted Aircraft bearing rank Nos. 37, 40 and 43 as set forth in Amendment No.3, into A319 aircraft type.

G. The Buyer and the Seller entered into an amendment No. 5 to the Second A320 Family Purchase Agreement dated December 23rd 2009 (the “Amendment No.5”) covering the order of thirty (30) incremental A319-100 and A320-200 aircraft (the “Incremental Aircraft”) and amending certain provisions of the Second A320 Family Purchase Agreement.

H. [***].

I. The Buyer and the Seller entered into an amendment No. 6 to the Second A320 Family Purchase Agreement dated May 10th, 2010 (the “Amendment No.6”) covering the conversion of the aircraft type of three (3) A319-100 First Batch of Incremental Aircraft (as defined in the Amendment No.5) into firmly ordered A320-200 First Batch Incremental Aircraft and the advancement of the scheduled delivery positions of Two (2) Aircraft from the First Batch of Incremental Aircraft and Eleven (11) Aircraft from the Second Batch of Incremental Aircraft (as defined in the Amendment No.5).

J. The Buyer and the Seller entered into an amendment No. 7 to the Second A320 Family Purchase Agreement dated May 19th, 2010 (the “Amendment No.7”) covering the advancement of the scheduled delivery positions of Three (3) Converted Aircraft.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 3/10

K. The Buyer and the Seller entered into an amendment No. 8 to the Second A320 Family Purchase Agreement dated September 23rd, 2010 (the “Amendment No.8”) covering (i) the advancement of the scheduled delivery positions of Two (2) Aircraft from the First Batch of Incremental Aircraft and Two (2) Aircraft from the Second Batch of Incremental Aircraft and (ii) the conversion of the aircraft type of one (1) A319-100 from the Second Batch of Incremental Aircraft into firmly ordered A320-200 from the Second Batch Incremental Aircraft.

L. The Buyer and the Seller entered into an amendment No. 9 to the Second A320 Family Purchase Agreement dated December 21^st 2010 (the “Amendment No.9”) covering the order of fifty (50) incremental A319-100, A320-200 and A321-200 aircraft, and, amending certain provisions of the Second A320 Family Purchase Agreement.

M. [***].

N. The Buyer and the Seller wish to enter into this amendment No. 10 to the Second A320 Family Purchase Agreement (the “Amendment No.10”) covering (i) the conversion of certain Aircraft type, (ii) the Sharklets selection for certain Aircraft, and (iii) the notification of the scheduled delivery months for the Aircraft scheduled to be delivered in the [***] and the [***].

NOW IT IS HEREBY AGREED AS FOLLOWS:

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 4/10

0. DEFINITIONS

0.1. The terms “herein,” “hereof,” and “hereunder” and words of similar import refer to this Amendment No.10 and capitalized terms used herein and not otherwise defined in this Amendment No.10 will have the meanings assigned to them in the Purchase Agreement (as defined below).

0.2. Purchase Agreement means the Second A320 Family Purchase Agreement together with Amendments Nos.1 to 9 thereto.

1. SCOPE

1.1. This Amendment No.10 covers (i) the type conversion of certain Aircraft as set forth in Clause 2 below, (ii) the selection of Sharklets for certain Aircraft as set forth in Clause 3 below and (iii) the notification of the Scheduled Delivery Month for certain other Aircraft as set forth in Clause 4 below.

1.2. [***].

2. AIRCRAFT TYPE CONVERSION

2.1 The Buyer has requested and the Seller has agreed to convert three (3) A319-100 corresponding to Aircraft rank 68, Aircraft rank 80 and Aircraft rank 72 into A320 Aircraft as set out in the table here below:

Rank Number	Scheduled Delivery Month	Original Aircraft Type	Revised Aircraft Type	Aircraft Batch
68	[***]	A319-100	A320-200	Second Batch of Incremental Aircraft
80	[***]	A319-100	A320-200	2010 Incremental Aircraft
72	[***]	A319-100	A320-200	Second Batch of Incremental Aircraft

With the above conversion, the provisions and obligations set forth in Letter Agreement No.5B to the Amendment No.5 in relation to the Second Batch of Incremental Aircraft and Letter Agreement No.5 to the Amendment No.9 in relation to the 2010 Incremental Aircraft so converted shall herewith be considered fulfilled in their entirety with regard to the Aircraft rank 68, rank 72 and rank 80 and neither Party shall have any further rights and or obligations under the Amendment No.9 toward the other Party with respect thereto.

2.2 As a result of the Aircraft conversion set forth in clause 2.1 above the Parties agree to delete in its entirety clause 1.1 of Amendment No.5, subsequently amended pursuant to clause 4 of Amendment No.6, and clause 4 of Amendment No.8 and replace it as follows:

QUOTE

1.1. “The Seller shall sell and deliver and the Buyer shall buy and take delivery of seven (7) A319-100 aircraft, twenty three (23) A320-200 aircraft (respectively the “A319 Aircraft”, the “A320 Aircraft”) upon the terms and conditions contained in this Amendment No.5 (hereinafter for the purposes of this Amendment No.5 collectively the “Incremental Aircraft.”)

UNQUOTE

The Parties also agree to delete in its entirety clause 1.1 of Amendment No.9, and replace it as follows:

QUOTE

1.1. “The Seller shall sell and deliver and the Buyer shall buy and take delivery of five (5) A319-100 aircraft, thirty five (35) A320-200 aircraft and ten (10) A321-200 aircraft (respectively the “2010 A319 Aircraft”, the “2010 A320 Aircraft” and the “2010 A321 Aircraft”) upon the terms and conditions contained in this Amendment No.9 (hereinafter for the purposes of this Amendment No.9 collectively the “2010 Incremental Aircraft.”)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 5/10

UNQUOTE

2.3. PREDELIVERY PAYMENT

As a result of the Aircraft conversion set forth in Clause 2.1 above, the Parties hereby agree, that upon signature of this Amendment No.10, the Buyer shall with respect to Aircraft rank 68, Aircraft rank 80 and Aircraft rank 72, [***] Predelivery Payments due in accordance with the Predelivery Payment schedule set out in Letter Agreement No.1B Clause 5.2 of the Amendment No. 5 for Aircraft rank 68 and Aircraft rank 72 and in accordance with the Predelivery Payment schedule set out in Letter Agreement No.1 Clause 5.2 of the Amendment No.9 for Aircraft rank 80, as amended by Amendment No.10.

3. SHARKLETS

3.1 The Buyer has requested and the Seller has agreed the selection of the Sharklets SCN for all 2010 Incremental Aircraft scheduled for delivery in [***] onwards in accordance with the terms of Letter Agreement No.8 to Amendment No.9 to the Second A320 Family Purchase Agreement.

3.2 In addition to the Aircraft already identified as Sharklets Installed Aircraft under Letter Agreement No.8 to Amendment No.9 to the Second A320 Purchase Agreement the Seller hereby offers and the Buyer hereby accepts that A320 with rank number 57 from the Second Batch of Incremental Aircraft, Scheduled for Delivery in [***] shall be converted into a Sharklets Installed Aircraft.

3.3 With respect to the Incremental Aircraft and 2010 Incremental scheduled for delivery in [***], Airbus shall use all reasonable endeavours to deliver such aircraft either as Sharklets Installed Aircraft or Sharklets Capable Aircraft

4. NOTIFICATION OF SCHEDULE DELIVERY MONTHS

Pursuant to Clause 2.1 of Amendment No.5 and Clause 2.1 of Amendment No.9 to the Purchase Agreement, the Seller hereby notifies the Buyer of the Scheduled Delivery Month for the following Aircraft:

• for the A320 Aircraft n°80: [***]

• for the A320 Aircraft n°68: [***]

• for the A320 Aircraft n°69: [***]

• for the A320 Aircraft n°70: [***]

• for the A320 Aircraft n°82: [***]

• for the A320 Aircraft n°81: [***]

• for the A320 Aircraft n°56: [***]

• for the A320 Aircraft n°71: [***]

• for the A320 Aircraft n°72: [***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 6/10

5. DELIVERY SCHEDULE

With reference to Aircraft bearing rank numbers 46 to 125, the Parties hereby agree to delete clause 9.1 of the Second A320 Family Purchase Agreement as substituted by clause 2.1.1 of Amendment No.5, clause 2 of Amendment No.7, clauses 2 and 3 of Amendment No.8 and clause 2.1.1 of Amendment No.9 in its entirely and replace it with the following quoted text:

QUOTE

9.1 Delivery schedule

9.1.1 Subject to the provisions of Clauses 2, 7, 8, 10 and 18 the Seller shall have the Aircraft ready for Delivery at the Delivery Location in accordance with the following schedule:

Scheduled Delivery Months or Scheduled Delivery Quarters		Rank number	Aircraft type	Aircraft defined as
2011	July	53	A320-200	First Batch of Incremental Aircraft
	July	55	A320-200	First Batch of Incremental Aircraft
	August	46	A320-200	First Batch of Incremental Aircraft
	September	47	A320-200	First Batch of Incremental Aircraft
	October	48	A320-200	First Batch of Incremental Aircraft
	November	49	A320-200	First Batch of Incremental Aircraft
	November	50	A320-200	First Batch of Incremental Aircraft
	October	51	A319-100	First Batch of Incremental Aircraft
	November	52	A320-200	First Batch of Incremental Aircraft
	December	62	A320-200	First Batch of Incremental Aircraft
[***]	[***]	54	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	76	A319-100	2010 Incremental Aircraft
[***]	[***]	64	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	66	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	77	A320-200	2010 Incremental Aircraft
[***]	[***]	78	A320-200	2010 Incremental Aircraft
[***]	[***]	65	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	67	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	79	A320-200	2010 Incremental Aircraft
[***]	[***]	80	A320-200	2010 Incremental Aircraft
[***]	[***]	68	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	69	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	70	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	82	A320-200	2010 Incremental Aircraft
[***]	[***]	81	A320-200	2010 Incremental Aircraft
[***]	[***]	56	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	71	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	72	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	57	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	73	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	83	A320-200	2010 Incremental Aircraft
[***]	[***]	84	A320-200	2010 Incremental Aircraft
[***]	[***]	85	A320-200	2010 Incremental Aircraft
[***]	[***]	58	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	59	A319-100	Second Batch of Incremental Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 7/10

[***]	[***]	74	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	60	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	75	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	61	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	86	A320-200	2010 Incremental Aircraft
[***]	[***]	87	A321-200	2010 Incremental Aircraft
[***]	[***]	88	A321-200	2010 Incremental Aircraft
[***]	[***]	89	A319-100	2010 Incremental Aircraft
[***]	[***]	90	A321-200	2010 Incremental Aircraft
[***]	[***]	91	A321-200	2010 Incremental Aircraft
[***]	[***]	63	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	92	A320-200	2010 Incremental Aircraft
[***]	[***]	93	A320-200	2010 Incremental Aircraft
[***]	[***]	94	A321-200	2010 Incremental Aircraft
[***]	[***]	95	A320-200	2010 Incremental Aircraft
[***]	[***]	96	A320-200	2010 Incremental Aircraft
[***]	[***]	97	A320-200	2010 Incremental Aircraft
[***]	[***]	98	A321-200	2010 Incremental Aircraft
[***]	[***]	99	A320-200	2010 Incremental Aircraft
[***]	[***]	100	A320-200	2010 Incremental Aircraft
[***]	[***]	101	A321-200	2010 Incremental Aircraft
[***]	[***]	102	A320-200	2010 Incremental Aircraft
[***]	[***]	103	A320-200	2010 Incremental Aircraft
[***]	[***]	104	A320-200	2010 Incremental Aircraft
[***]	[***]	105	A321-200	2010 Incremental Aircraft
[***]	[***]	106	A320-200	2010 Incremental Aircraft
[***]	[***]	107	A320-200	2010 Incremental Aircraft
[***]	[***]	108	A320-200	2010 Incremental Aircraft
[***]	[***]	109	A321-200	2010 Incremental Aircraft
[***]	[***]	110	A320-200	2010 Incremental Aircraft
[***]	[***]	111	A320-200	2010 Incremental Aircraft
[***]	[***]	112	A320-200	2010 Incremental Aircraft
[***]	[***]	113	A321-200	2010 Incremental Aircraft
[***]	[***]	114	A319-100	2010 Incremental Aircraft
[***]	[***]	115	A319-100	2010 Incremental Aircraft
[***]	[***]	116	A319-100	2010 Incremental Aircraft
[***]	[***]	117	A320-200	2010 Incremental Aircraft
[***]	[***]	118	A320-200	2010 Incremental Aircraft
[***]	[***]	119	A320-200	2010 Incremental Aircraft
[***]	[***]	120	A320-200	2010 Incremental Aircraft
[***]	[***]	121	A320-200	2010 Incremental Aircraft
[***]	[***]	122	A320-200	2010 Incremental Aircraft
[***]	[***]	123	A320-200	2010 Incremental Aircraft
[***]	[***]	124	A320-200	2010 Incremental Aircraft
[***]	[***]	125	A320-200	2010 Incremental Aircraft

9.1.2 [***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 8/10

9.1.3 The Seller shall notify the Buyer, no later that [***] of the concerned delivery quarter (the “Scheduled Delivery Quarter”), of the delivery month in respect of each such Aircraft. Each of such delivery months shall be, with respect to the corresponding Aircraft, the “Scheduled Delivery Month”.

UNQUOTE

6. EFFECT OF THE AMENDMENT

6.1. This Amendment No.10 contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes any previous understanding, commitments or representations whatsoever, whether oral or written.

6.2. The Purchase Agreement shall be deemed amended to the extent provided in this Amendment No.10 and, except as specifically amended hereby, shall continue in full force and effect in accordance with its original terms.

6.3. The Parties agree that this Amendment No.10 shall constitute an integral, non-severable part of the Purchase Agreement and be governed by all of its provisions.

6.4. In the event of any inconsistency between the terms and conditions of the Purchase Agreement and those of the present Amendment No.10, the latter shall prevail to the extent of such inconsistency, whereas the part not concerned by such inconsistency shall remain in full force and effect.

6.5. This Amendment No.10 will not be modified or varied except by an instrument in writing executed by both Parties.

6.6. Each of the Parties hereto agree that the provisions of this Amendment No.10 are personal to it and will not without the prior written consent of the other Parties disclose such information to any other Party. [***].

6.7. The Parties agree that clause 21 of the Second A320 Family Purchase Agreement shall govern the assignability and transferability of each Party’s rights and obligations under this Amendment No.10.

6.8. This Amendment No.10 may be signed by the Parties hereto in separate counterparts, each of which when so signed and delivered will be an original, but all such counterparts will together constitute but one and the same instrument.

6.9. This Amendment No.10 shall be governed by and construed in accordance with the laws of England.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 9/10

IN WITNESS WHEREOF this Amendment No.10 to the Second A320 Family Purchase Agreement was duly entered into the day and year first above written.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S
By:	By:
Its:	Its:
Date:	Date:
LAN AIRLINES S.A.
By:
Its:
Date:

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1101532 10/10

Exhibit 4.1.5

AMENDMENT No.11

TO THE

SECOND A320 FAMILY PURCHASE AGREEMENT

BETWEEN

LAN AIRLINES S.A.

AND

AIRBUS S.A.S.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955

This amendment No.11 to the Second A320 Family Purchase Agreement (as defined below) is entered into as of      October 2011, by and between

AIRBUS S.A.S., having its principal office at:

1 Rond-Point Maurice Bellonte

31707 BLAGNAC-CEDEX

FRANCE

(hereinafter referred to as the “Seller”) of the one part

AND

LAN AIRLINES S.A. having its principal office at:

Edificio Huidobro

Avenida Presidente Riesco 5711- 20th Floor

Las Condes

SANTIAGO

CHILE

(hereinafter referred to as the “Buyer”) of the other part.

The Buyer and the Seller being collectively referred to as the “Parties” and individually as a

“Party”

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 2/10

WHEREAS

A. The Buyer and the Seller entered into an A320 family purchase agreement dated March 20th, 1998 covering the purchase by the Buyer and the sale by the Seller of twenty (20) A320 family aircraft bearing rank numbers 1 to 20. By an amendment No.1 to such purchase agreement, entered into by the Buyer and the Seller on February 24th, 2000 the number of A320 family aircraft to be purchased by the Buyer pursuant to such purchase agreement was increased to twenty five (25), with the additional five (5) A320 family aircraft bearing rank numbers 21 to 25. Such twenty five (25) A320 family aircraft are hereinafter referred to as the “Original A320 Family Aircraft”, and such purchase agreement, amendment No.1, and all exhibits, appendices and letter agreements thereto are together referred to as the “Original A320 Family Purchase Agreement”.

B. The Buyer and the Seller entered into a deed of amendment and restatement of the Original A320 Family Purchase Agreement, dated August 2nd, 2000, dividing the Original A320 Family Purchase Agreement into two (2) separate purchase agreements, the first agreement concerning the Original A320 Family Aircraft bearing rank numbers 1 to 20, and the second agreement concerning the Original A320 Family Aircraft bearing rank numbers 21 to 25. The second agreement as supplemented with all exhibits and appendices thereto is hereinafter referred to as the “Second A320 Family Purchase Agreement”.

C. The Buyer and the Seller entered into an amendment No.1 to the Second A320 Family Purchase Agreement dated November 14th 2003 (the “Amendment No.1”) modifying certain provisions of the Second A320 Family Purchase Agreement.

D. The Buyer and the Seller entered into an amendment No.2 to the Second A320 Family Purchase Agreement dated October 4th, 2005 (the “Amendment No.2”) covering the purchase by the Buyer and the sale by the Seller of twenty five (25) additional firm A320 family aircraft comprising twenty (20) A318-100, one (1) A319-100 and four (4) A320-200 aircraft type (the “Additional Aircraft”).

E. The Buyer and the Seller entered into an amendment No.3 to the Second A320 Family Purchase Agreement dated March 6th, 2007 (the “Amendment No.3”) covering the conversion of fifteen (15) Option Aircraft (as defined in the Amendment No.2) into firmly ordered Converted Aircraft (as defined in Amendment No.3).

F. The Buyer and the Seller entered into an amendment No. 4 to the Second A320 Family Purchase Agreement dated June 11th, 2008 (the “Amendment No.4”) covering the conversion of five (5) A318-100 Additional Aircraft bearing rank Nos. 26 to 30 as set forth in Amendment No.2 and three (3) A318-100 Converted Aircraft bearing rank Nos. 37, 40 and 43 as set forth in Amendment No.3, into A319 aircraft type.

G. The Buyer and the Seller entered into an amendment No. 5 to the Second A320 Family Purchase Agreement dated December 23rd 2009 (the “Amendment No.5”) covering the order of thirty (30) incremental A319-100 and A320-200 aircraft (the “Incremental Aircraft”) and amending certain provisions of the Second A320 Family Purchase Agreement.

H. [***].

I. The Buyer and the Seller entered into an amendment No. 6 to the Second A320 Family Purchase Agreement dated May 10th, 2010 (the “Amendment No.6”) covering the conversion of the aircraft type of three (3) A319-100 First Batch of Incremental Aircraft (as defined in the Amendment No.5) into firmly ordered A320-200 First Batch Incremental Aircraft and the

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 3/10

advancement of the scheduled delivery positions of Two (2) Aircraft from the First Batch of Incremental Aircraft and Eleven (11) Aircraft from the Second Batch of Incremental Aircraft (as defined in the Amendment No.5).

J. The Buyer and the Seller entered into an amendment No. 7 to the Second A320 Family Purchase Agreement dated May 19th, 2010 (the “Amendment No.7”) covering the advancement of the scheduled delivery positions of Three (3) Converted Aircraft.

K. The Buyer and the Seller entered into an amendment No. 8 to the Second A320 Family Purchase Agreement dated September 23rd, 2010 (the “Amendment No.8”) covering (i) the advancement of the scheduled delivery positions of Two (2) Aircraft from the First Batch of Incremental Aircraft and Two (2) Aircraft from the Second Batch of Incremental Aircraft and (ii) the conversion of the aircraft type of one (1) A319-100 from the Second Batch of Incremental Aircraft into firmly ordered A320-200 from the Second Batch Incremental Aircraft.

L. The Buyer and the Seller entered into an amendment No. 9 to the Second A320 Family Purchase Agreement dated December 21^st 2010 (the “Amendment No.9”) covering the order of fifty (50) incremental A319-100, A320-200 and A321-200 aircraft, and, amending certain provisions of the Second A320 Family Purchase Agreement.

M. [***].

N. The Buyer and the Seller entered into an amendment No. 10 to the Second A320 Family Purchase Agreement (the “Amendment No.10”) covering (i) the conversion of certain Aircraft type, (ii) the Sharklets selection for certain Aircraft, and (iii) the notification of the scheduled delivery months for the Aircraft scheduled to be delivered in the [***] and the [***].

O. The Buyer and the Seller wish to enter into this amendment No. 11 to the Second A320 Family Purchase Agreement (the “Amendment No.11”) covering (i) the postponement of certain Aircraft scheduled delivery position, and (ii) the conversion of certain Aircraft type.

NOW IT IS HEREBY AGREED AS FOLLOWS:

0. DEFINITIONS

0.1. The terms “herein,” “hereof,” and “hereunder” and words of similar import refer to this Amendment No.11 and capitalized terms used herein and not otherwise defined in this Amendment No.11 will have the meanings assigned to them in the Purchase Agreement (as defined below).

0.2. Purchase Agreement means the Second A320 Family Purchase Agreement together with Amendments Nos.1 to 10 thereto.

1. SCOPE

1.1. The Buyer has requested and the Seller has agreed to hereby [***].

1.2. [***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 4/10

2. AIRCRAFT [***]

The schedule delivery position of three (3) Aircraft scheduled delivery position from the Second Batch of Aircraft shall be amended as set forth in the table here below.

Rank number	Aircraft Type	Original Scheduled Delivery Months or Scheduled Delivery Quarter	Revised Scheduled Delivery Months or Scheduled Delivery Quarter	Aircraft Batch
70	A320-200	[***]	[***]	Second Batch of Incremental Aircraft
57	A320-200	[***]	[***]	Second Batch of Incremental Aircraft
72	A320-200	[***]	[***]	Second Batch of Incremental Aircraft

The Aircraft rank 70 shall be a Sharklets Installed Aircraft.

For the avoidance of doubt, the Aircraft rank 57 shall remain a Sharklets Installed Aircraft (as the term is defined in clause 0 of letter agreement no.8 to Amendment No.9).

3. AIRCRAFT TYPE CONVERSION

3.1 The Buyer has requested and the Seller has agreed to convert three (3) A319-100 corresponding to Aircraft rank 58, rank 59 and Aircraft rank 73 into A320 Aircraft as set out in the table here below:

Rank number	Original Scheduled Delivery Months or Scheduled Delivery Quarter	Original Aircraft Type	Revised Aircraft Type	Aircraft Batch
58	[***]	A319-100	A320-200	Second Batch of Incremental Aircraft
59	[***]	A319-100	A320-200	Second Batch of Incremental Aircraft
73	[***]	A319-100	A320-200	Second Batch of Incremental Aircraft

With the above conversion, the provisions and obligations set forth in Letter Agreement No.5B to the Amendment No.5 in relation to the Second Batch of Incremental Aircraft so converted shall herewith be considered fulfilled in their entirety with regard to the Aircraft rank 58, rank 59 and rank 73; and neither Party shall have any further rights and or obligations under the Amendment No.9 toward the other Party with respect thereto.

For the avoidance of doubt, the Aircraft rank 58 and rank 59, now being A320 Aircraft, shall be Sharklets Installed Aircraft.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 5/10

3.2 As a result of the Aircraft conversion set forth in clause 2.1 above the Parties agree to delete in its entirety clause 1.1 of Amendment No.5 as amended and replace it as follows:

QUOTE

1.1. “The Seller shall sell and deliver and the Buyer shall buy and take delivery of four (4) A319-100 aircraft, twenty six (26) A320-200 aircraft (respectively the “A319 Aircraft”, the “A320 Aircraft”) upon the terms and conditions contained in this Amendment No.5 (hereinafter for the purposes of this Amendment No.5 collectively the “Incremental Aircraft.”)

UNQUOTE

3.3. PREDELIVERY PAYMENT

(i) As a result of the Aircraft conversion set forth in Clause 3.1 above, the Parties hereby agree, that upon signature of this Amendment No.11, the Buyer shall with respect to Aircraft rank 58, Aircraft rank 59 and Aircraft rank 73, [***] Predelivery Payments due in accordance with the Predelivery Payment schedule set out in Letter Agreement No.1B Clause 5.2 of the Amendment No. 5 for Aircraft rank 58, Aircraft rank 59 and Aircraft rank 73, as amended by Amendment No.11;

(ii) As a result of the Aircraft [***] set forth in Clause 2 above, the Parties hereby agree, that upon signature of this Amendment No.11, the Buyer shall with respect to Aircraft rank 57 and Aircraft rank 70, [***] of the Predelivery Payments due in accordance with the Predelivery Payment schedule set out in Letter Agreement No.1B Clause 5.2 of the Amendment No. 5 for Aircraft rank 57 and Aircraft rank 70, as amended by Amendment No.11;

(iii) As a result of the Aircraft [***] set forth in Clause 2 above, the Parties hereby agree, that upon signature of this Amendment No.11, the [***] of Predelivery Payments received in accordance with the Predelivery Payment schedule set out in Letter Agreement No.1B Clause 5.2 of the Amendment No. 5 for Aircraft rank 57, Aircraft rank 70 and Aircraft rank 72 (the “[***]”);

(iv) [***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 6/10

4. DELIVERY SCHEDULE

With reference to Aircraft bearing rank numbers 46 to 125, the Parties hereby agree to delete clause 9.1 of the Second A320 Family Purchase Agreement as substituted by clause 2.1.1 of Amendment No.5, clause 2 of Amendment No.7, clauses 2 and 3 of Amendment No.8 and clause 2.1.1 of Amendment No.9 in its entirely and replace it with the following:

QUOTE

9.1 Delivery schedule

9.1.1 Subject to the provisions of Clauses 2, 7, 8, 10 and 18 the Seller shall have the Aircraft ready for Delivery at the Delivery Location in accordance with the following schedule:

Scheduled Delivery Months or Scheduled Delivery Quarters		Rank number	Aircraft type	Aircraft defined as
2011	July	53	A320-200	First Batch of Incremental Aircraft
	July	55	A320-200	First Batch of Incremental Aircraft
	August	46	A320-200	First Batch of Incremental Aircraft
	September	47	A320-200	First Batch of Incremental Aircraft
	October	48	A320-200	First Batch of Incremental Aircraft
	November	49	A320-200	First Batch of Incremental Aircraft
	November	50	A320-200	First Batch of Incremental Aircraft
	October	51	A319-100	First Batch of Incremental Aircraft
	November	52	A320-200	First Batch of Incremental Aircraft
	December	62	A320-200	First Batch of Incremental Aircraft
[***]	[***]	54	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	76	A319-100	2010 Incremental Aircraft
[***]	[***]	64	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	66	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	77	A320-200	2010 Incremental Aircraft
[***]	[***]	78	A320-200	2010 Incremental Aircraft
[***]	[***]	65	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	67	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	79	A320-200	2010 Incremental Aircraft
[***]	[***]	80	A320-200	2010 Incremental Aircraft
[***]	[***]	68	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	69	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	82	A320-200	2010 Incremental Aircraft
[***]	[***]	81	A320-200	2010 Incremental Aircraft
[***]	[***]	56	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	71	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	83	A320-200	2010 Incremental Aircraft
[***]	[***]	84	A320-200	2010 Incremental Aircraft
[***]	[***]	73	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	85	A320-200	2010 Incremental Aircraft
[***]	[***]	58	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	59	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	74	A320-200	Second Batch of Incremental Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 7/10

[***]	[***]	60	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	70	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	75	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	61	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	86	A320-200	2010 Incremental Aircraft
[***]	[***]	87	A321-200	2010 Incremental Aircraft
[***]	[***]	88	A321-200	2010 Incremental Aircraft
[***]	[***]	57	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	89	A319-100	2010 Incremental Aircraft
[***]	[***]	90	A321-200	2010 Incremental Aircraft
[***]	[***]	91	A321-200	2010 Incremental Aircraft
[***]	[***]	63	A319-100	Second Batch of Incremental Aircraft
[***]	[***]	92	A320-200	2010 Incremental Aircraft
[***]	[***]	93	A320-200	2010 Incremental Aircraft
[***]	[***]	94	A321-200	2010 Incremental Aircraft
[***]	[***]	72	A320-200	Second Batch of Incremental Aircraft
[***]	[***]	95	A320-200	2010 Incremental Aircraft
[***]	[***]	96	A320-200	2010 Incremental Aircraft
[***]	[***]	97	A320-200	2010 Incremental Aircraft
[***]	[***]	98	A321-200	2010 Incremental Aircraft
[***]	[***]	99	A320-200	2010 Incremental Aircraft
[***]	[***]	100	A320-200	2010 Incremental Aircraft
[***]	[***]	101	A321-200	2010 Incremental Aircraft
[***]	[***]	102	A320-200	2010 Incremental Aircraft
[***]	[***]	103	A320-200	2010 Incremental Aircraft
[***]	[***]	104	A320-200	2010 Incremental Aircraft
[***]	[***]	105	A321-200	2010 Incremental Aircraft
[***]	[***]	106	A320-200	2010 Incremental Aircraft
[***]	[***]	107	A320-200	2010 Incremental Aircraft
[***]	[***]	108	A320-200	2010 Incremental Aircraft
[***]	[***]	109	A321-200	2010 Incremental Aircraft
[***]	[***]	110	A320-200	2010 Incremental Aircraft
[***]	[***]	111	A320-200	2010 Incremental Aircraft
[***]	[***]	112	A320-200	2010 Incremental Aircraft
[***]	[***]	113	A321-200	2010 Incremental Aircraft
[***]	[***]	114	A319-100	2010 Incremental Aircraft
[***]	[***]	115	A319-100	2010 Incremental Aircraft
[***]	[***]	116	A319-100	2010 Incremental Aircraft
[***]	[***]	117	A320-200	2010 Incremental Aircraft
[***]	[***]	118	A320-200	2010 Incremental Aircraft
[***]	[***]	119	A320-200	2010 Incremental Aircraft
[***]	[***]	120	A320-200	2010 Incremental Aircraft
[***]	[***]	121	A320-200	2010 Incremental Aircraft
[***]	[***]	122	A320-200	2010 Incremental Aircraft
[***]	[***]	123	A320-200	2010 Incremental Aircraft
[***]	[***]	124	A320-200	2010 Incremental Aircraft
[***]	[***]	125	A320-200	2010 Incremental Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 8/10

9.1.2 [***].

9.1.3 The Seller shall notify the Buyer, [***] of the concerned delivery quarter (the “Scheduled Delivery Quarter”), of the delivery month in respect of each such Aircraft. Each of such delivery months shall be, with respect to the corresponding Aircraft, the “Scheduled Delivery Month”.

UNQUOTE

5. EFFECT OF THE AMENDMENT

5.1. This Amendment No.11 contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes any previous understanding, commitments or representations whatsoever, whether oral or written.

5.2. The Purchase Agreement shall be deemed amended to the extent provided in this Amendment No.11 and, except as specifically amended hereby, shall continue in full force and effect in accordance with its original terms.

5.3. The Parties agree that this Amendment No.11 shall constitute an integral, non-severable part of the Purchase Agreement and be governed by all of its provisions.

5.4. In the event of any inconsistency between the terms and conditions of the Purchase Agreement and those of the present Amendment No.11, the latter shall prevail to the extent of such inconsistency, whereas the part not concerned by such inconsistency shall remain in full force and effect.

5.5. This Amendment No.11 will not be modified or varied except by an instrument in writing executed by both Parties.

5.6. Each of the Parties hereto agree that the provisions of this Amendment No.11 are personal to it and will not without the prior written consent of the other Parties disclose such information to any other Party. [***].

5.7. The Parties agree that clause 21 of the Second A320 Family Purchase Agreement shall govern the assignability and transferability of each Party’s rights and obligations under this Amendment No.11.

5.8. This Amendment No.11 may be signed by the Parties hereto in separate counterparts, each of which when so signed and delivered will be an original, but all such counterparts will together constitute but one and the same instrument.

5.9. This Amendment No.11 shall be governed by and construed in accordance with the laws of England.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 9/10

IN WITNESS WHEREOF this Amendment No.11 to the Second A320 Family Purchase Agreement was duly entered into the day and year first above written.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S
By:	By:
Its:	Its:
Date:	Date:
LAN AIRLINES S.A.
By:
Its:
Date:

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Ref: CT1105955 10/10

EX-4.2.5

Exhibit 4.2.5

Supplemental Agreement No. 30 (“SA-30”)

to

Purchase Agreement No. 2126

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft

THIS SUPPLEMENTAL AGREEMENT, entered into as of the 15 day of February 2011, by and between THE BOEING COMPANY, a Delaware corporation (hereinafter called “Boeing”), and LAN Airlines S.A., a Chilean corporation (hereinafter called “Customer”);

W I T N E S S E T H:

WHEREAS, the parties entered into that certain Purchase Agreement No. 2126, dated as of January 30, 1998 relating to the purchase and sale of Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F aircraft (hereinafter referred to as “Aircraft”) which agreement, including all tables, exhibits, supplemental exhibits and specifications thereto, together with all letter agreements then or thereafter entered into that by their terms constitute part of such purchase agreement and as such purchase agreement may be amended or supplemented from time to time, is hereinafter called the “Purchase Agreement;”

WHEREAS, Customer wishes to purchase three (3) aircraft scheduled for delivery in [***] and [***] in the 767-316ER configuration (hereinafter referred to as “2012 Additional Aircraft”), and incorporate such aircraft into the Purchase Agreement;

WHEREAS, Customer wishes to change seat and inflight entertainment equipment (IFE) suppliers: Contour for business class, BE Aerospace for economy and Panasonic for IFE, and

WHEREAS, Boeing and Customer have agreed to amend the Purchase Agreement to incorporate the above changes:

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree to amend the Purchase Agreement as follows:

P.A. 2126 Page 1           SA-30

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

1. Table of Contents, Articles, Tables, Exhibits and Supplemental Exhibits:

1.1. Table of Contents. The “Table of Contents” to the Purchase Agreement is deleted in its entirety and the new “Table of Contents” attached hereto is substituted in lieu thereof to reflect the changes made by this SA-30.

1.2. Revision of Supplemental Exhibit BFE1. “BFE Variables” is revised to add the BFE preliminary on-dock dates for the 2012 Additional Aircraft as shown below.

On-Dock Dates	Jun 2012	Jul 2012	Aug 2012	Sep 2012	Oct 2012
Seats	[***]	[***]	[***]	[***]	[***]
Galleys/Furnishings	[***]	[***]	[***]	[***]	[***]
Electronics	[***]	[***]	[***]	[***]	[***]
Cabin System Equipment	[***]	[***]	[***]	[***]	[***]
Miscellaneous/Emergency Equipment	[***]	[***]	[***]	[***]	[***]
Textiles/Raw Materials	[***]	[***]	[***]	[***]	[***]

1.3. Revision of Table 13. “Aircraft Information Table 13 to Purchase Agreement No. 2126, Aircraft Delivery, Description, Price and Advance Payments” is retitled “Aircraft Information Table 13 for 2012 Aircraft” and revised: 1) to add the scheduled delivery month, price and Advance Payments applicable to the 2012 Additional Aircraft; and 2) to revise the price for the Aircraft Airframe price to account for a revised value associated with compliance to FAR 25.859 Part 2, burnthrough, applicable to each 2012 Accelerated Aircraft and each 2012 Additional Aircraft (together hereinafter called the “2012 Aircraft”. The pricing for Table 13 is based on Customer’s Aircraft serial number 37802, block number VS925 SICMA 30 business class seat configuration. Customer is changing its seat and IFE suppliers. Exhibit A “Aircraft Configuration” will be updated to reflect these changes. However, Boeing has agreed not to charge Customer for Boeing’s costs related to these changes and so any revision to the Table 13 as a result of these changes should only relate to a changing estimate for Seller Purchased Equipment (SPE) and other changes agreed to by Customer.

P.A. 2126 Page 2           SA-30

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

1.4. Exhibit A-12: “Aircraft Configuration”. Exhibit A-12 provides the aircraft configuration for the 2012 Aircraft. This Exhibit A-12 is based on Customer’s Aircraft serial 37802, block number VS925 configuration and will be revised to reflect the change in seat and IFE suppliers.

2. Restricted Letter Agreements.

2.1. Applicability of Performance Guarantees Relating to the 2011 Accelerated Aircraft; the 2012 Deferral Aircraft and the Incremental Aircraft Letter. Letter Agreement 6-1162-ILK-0385 R2 entitled “Performance Guarantees Relating to the 2011 Accelerated Aircraft; the 2012 Deferral Aircraft and the Incremental Aircraft” shall apply to each 2012 Aircraft. The title of the Letter Agreement is revised to “Performance Guarantees Relating to the 2011 Accelerated Aircraft and 2012 Aircraft”.

2.2. Addition of Special Matters Letter Applicable to the 2012 Additional Aircraft. Letter Agreement 6-1162-ILK-451 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft” (Special Matters Letter Applicable to the 2012 Additional Aircraft), attached hereto, provides the terms and conditions, including the economic considerations, applicable to each 2012 Additional Aircraft.

2.3. Addition of Seller Purchased Equipment Letter Applicable to the 2012 Aircraft. Letter Agreement LA-110377, “Seller Purchased Equipment for 2012 Aircraft” attached hereto, is added to the Purchase Agreement.

3. Payment Due at Effective Date of this Supplemental Agreement.

To effect the implementation of this SA-30, payments to Boeing are due by Customer. The amount depends upon whether Customer elects the standard 30% advance payment schedule shown in Table 13 or the [***] deferred schedule shown in Letter Agreement 6-1162-ILK-451 paragraph 5.1. [***] The amount paid at signing is notice to Boeing of the payment schedule elected by Customer.

4. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Supplemental Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know

P.A. 2126 Page 3           SA-30

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Supplemental Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Supplemental Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009” and Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Relating to 2012 Accelerated Aircraft”, Article 6 of Letter Agreement 6-1162-ILK-00451 entitled “Special Matters Relating to 2012 Additional Aircraft”, Customer will not disclose this Supplemental Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

P.A. 2126 Page 4           SA-30

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY		LAN AIRLINES S.A.
By:		By:
	Ms. Kathie Weibel		Mr. Armando Valdivieso
Its	Attorney-In-Fact	Its:
		By:
			Mr. Damian Scokin
		Its:

P.A. 2126 Page 5           SA-30

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

PURCHASE AGREEMENT NUMBER 2126

between

THE BOEING COMPANY

and

LAN Airlines S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft

-

P.A. 2126 SA-30

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

TABLE OF CONTENTS

		Supplemental Agreement
ARTICLES
1.	Quantity, Model and Description		24
2.	Delivery Schedule		24
3.	Price		24
4.	Payment		24
5.	Miscellaneous		24
6.	Confidentiality		24
TABLE
1.	Aircraft Information Table 767 300ER Aircraft – 1995$		1
2.	Aircraft Information Table 767 300F Aircraft – 1997$		1
3.	Aircraft Information Table 767 300F Aircraft – 1998$		8
4.	Aircraft Information Table 767 300F Aircraft – 1999$		11
5.	Aircraft Information Table 767 300F Aircraft – 2003$		18
6.	Aircraft Information Table 767 316ER Aircraft – 2003$		21
7.	Aircraft Information Table 767 300F Aircraft – 2004$		24
8.	Aircraft Information Table 767 316ER Aircraft – 2004$		22
9.	Aircraft Information Table 767 316ER Aircraft – 2005 $		22
10.	Aircraft Information Table 767-316ER Aircraft – 2006 $		25
11.	Aircraft Information Table 767-316ER Aircraft – 2008 $		28
12.	Aircraft Information Table 767-316F Aircraft – 2008 $: DELETED		29
13.	Aircraft Information Table 767-316ER Aircraft – 2010 $		30
EXHIBITS
A.	Aircraft Configuration
A-1	Aircraft Configuration		1
A-2	Aircraft Configuration		5
A-3	Aircraft Configuration		10
A-4	Aircraft Configuration 767-316F Aircraft – 2003$		15
A-5	Aircraft Configuration 767-316ER Aircraft – 2003$		17
A-6	Aircraft Configuration 767-316ER Aircraft – 2004$		22
A-7	Aircraft Configuration 767-316ER Aircraft – 2005$		22
A-8	Aircraft Configuration 767-316ER Aircraft – 2006$		23
A-9	Aircraft Configuration 767-316ER Aircraft – 2008$		24
A-10	Aircraft Configuration 767-316F Aircraft – 2008$: DELETED		29
A-12	Aircraft Configuration 767-316ER Aircraft – 2010$		30
B.	Aircraft Delivery Requirements and Responsibilities		1

Table of Contents		SA-30
LAN PA 2126	BOEING PROPRIETARY	Page i

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

		Supplemental             Agreement (s)
SUPPLEMENTAL EXHIBITS
BFE1.	BFE Variables	30
CS1.	Customer Support Variables	1
EE1.	Engine Escalation/Engine Warranty and Patent Indemnity	1
EE1-1.	Engine Escalation/Engine Warranty and Patent Indemnity	5
EE1-2.	Engine Escalation/Engine Warranty and Patent Indemnity	13
EE1-2006$	Engine Escalation, Engine Warranty & Patent Indemnity	26
EE1-2010$	Engine Escalation, Engine Warranty & Patent Indemnity	29
SLP1.	Service Life Policy Components
AE1	Escalation adjustment-airframe and optional features	22
AE1 2008$	Escalation adjustment-airframe and optional features	24
AE1 2010$	Escalation adjustment-airframe and optional features	29
EE1-2008$	Engine Escalation, Engine Warranty & Patent Indemnity	26

LETTER AGREEMENTS
2126-1	Seller Purchased Equipment
2126-2R1	Cabin Systems Equipment	17
2126-3R4	Option Aircraft	13
RESTRICTED LETTER AGREEMENTS
6-1162-DMH-350	Performance Guarantees
6-1162-DMH-351	Promotion Support
6-1162-DMH-472	Performance Guarantees	1
6-1162-DMH-475	Configuration Matters	1
6-1162-DMH-1031R2	Special Provisions for Advance Payments	9
6-1162-LAJ-311	Special Matters Relating to the July 2001 and September 2001 Aircraft	11
6-1162-LAJ-956	Special Matters Relating to four 2006 Delivery Aircraft (February 4, 2005)
6-1162-LAJ-0895R6	Business Considerations	23
6-1162-ILK-0002R4	Special Matters Relating to Advance Payments Requirements	21
6-1162-ILK-0381 R2	Special Matters Letter Applicable to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft	29 DELETED
6-1162-ILK-0382	No longer applicable	26
6-1162-ILK-0383 R1	Aircraft Model Substitution Relating to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft	26

Table of Contents		SA-30
LAN PA 2126	BOEING PROPRIETARY	Page ii

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

		Supplemental     Agreement (s)
RESTRICTED LETTER AGREEMENTS, continued
6-1162-ILK-0384 R2	16G Seats	27
6-1162-ILK-0385 R2	Performance Guarantees Relating to the 2011 Accelerated Aircraft and the 2012 Aircraft	30 (Art 2.1)
6-1162-ILK-0388	Option Aircraft – DELETED	28 (Art 6.2	)
6-1162-ILK-0412	Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009	25
6-1162-ILK-0413	[***]	25
6-1162-KSW-6423	Special Matters Letter Applicable to the Incremental Aircraft	27
6-1162-KSW-6424	Aircraft Model Substitution Relating to the Incremental Aircraft	27
6-1162-KSW-6456	Performance Guarantees for Substitute 767 Freighter Aircraft: DELETED	29
6-1162-ILK-0450	Special Matters Letter Applicable to the 2012 Accelerated Aircraft	29
6-1162-ILK-0451	Special Matters Letter Applicable to the 2012 Additional Aircraft	30
LA-1103777	Seller Purchased Equipment for 2012 Aircraft	30

Table of Contents		SA-30
LAN PA 2126	BOEING PROPRIETARY	Page iii

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Aircraft Information Table No. 13

For 2012 Aircraft

Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:   767-300ER		412000 pounds	Detail Specification:	D019T001-L (2/10/2010)
Engine Model/Thrust:       CF6-80C2B6F		60200 pounds	Airframe Price Base Year/Escalation Formula:	Jul-10		ECI-MFG/CPI
Airframe Price:	$	125,875,000	Engine Price Base Year/Escalation Formula:	Jul-10		GE CF6-80 & GE90 (99 rev.)
Optional Features:	$	7,426,400
Sub-Total of Airframe and Features:	$	133,301,400	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	23,557,799	Base Year Index (ECI):		106.8
Aircraft Basic Price (Excluding BFE/SPE):	$	156,859,199	Base Year Index (CPI):		215.6
Buyer Furnished Equipment (BFE) Estimate:	$	0	Engine Escalation Data:
Seller Purchased Equipment (SPE) Estimate:	$	4,500,000	Base Year Index (ECI):		133.190
In-flight Entertainment Equipment (IFE):	$	1,900,000
Deposit per Aircraft:	$	0

			Escalation		Escalation		Manufacturer		Escalation Estimate		Advance Payment Per Aircraft (Amts. Due/Mos. Prior to  Delivery):
Delivery	Number of		Factor		Factor		Serial		Adv Payment Base		At Signing		24 Mos.		21/18/12/9/6 Mos.		Total
Date	Aircraft		(Airframe)		(Engine)		Number		Price Per A/P		1 %		4 %		5 %		30%
[***]		1		1.0391		1.081		40799	$	170,629,000	$	1,706,290	$	6,825,160	$	8,531,450	$	51,188,700
[***]		1		1.0405		1.084		40592	$	170,896,000	$	1,708,960	$	6,835,840	$	8,544,800	$	51,268,800
[***]		1		1.0405		1.084		41746	$	170,896,000	$	1,708,960	$	6,835,840	$	8,544,800	$	51,268,800
[***]		1		1.0425		1.087		41747	$	171,246,000	$	1,712,460	$	6,849,840	$	8,562,300	$	51,373,800
[***]		1		1.0441		1.091		41748	$	171,564,000	$	1,715,640	$	6,862,560	$	8,578,200	$	51,469,200
[***]		1		1.0455		1.093		40593	$	171,806,000	$	1,718,060	$	6,872,240	$	8,590,300	$	51,541,800
Total:		6

APR 55521		SA-30
LAN PA 2126	Boeing Proprietary

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Table 13, Page 1 of 1

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Exhibit A-12 to Purchase Agreement Number 2126

P.A. No. 2126	Exhibit A-12	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

AIRCRAFT CONFIGURATION

relating to

BOEING MODEL 767-300ER AIRCRAFT

THE LAN AIRCRAFT

The pricing for the 2012 Aircraft is based on the Aircraft serial number 37802, block number VS925 30 SICMA business class seat configuration, Customer Detail Specification D019T001LAN63E-1, Revision G dated as of November 6, 2009.

Customer is changing its seat and Inflight Entertainment Equipment (IFE) for the 2012 Aircraft. Exhibit A will be updated to the new configuration as soon as the record options making these changes are proposed and accepted by Customer. Boeing will furnish to Customer copies of the revised Detail Specification, which copies will reflect the Options below as revised to reflect the seat and IFE changes. The Aircraft Basic Price reflects and includes all effects of such Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased Equipment.

P.A. No. 2126	Exhibit A-12, Page 1	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 2

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
0110-000035	MAJOR MODEL 767 AIRPLANE		[***]
0110-000037	MINOR MODEL 767-300 PASSENGER AIRPLANE		[***]
0110-000092	MODEL 767-300ER PASSENGER AIRPLANE		[***]
0110A276A30	NEW LOOK INTERIOR - 767-300ER		[***]
0130B657J85	MP - INTERIOR ARRANGEMENT - REVISION		[***]
0130B657L12	MP - BUSINESS CLASS PASSENGER SEATS - REVISION - PASSENGER CABIN		[***]
0130B657L60	MP - INTERIOR ARRANGEMENT - REVISION		[***]
0130B657L79	MP - RELOCATION OF MONUMENT MOUNTED LCD MONITORS, LITERATURE POCKETS AND BASSINET FITTINGS - PASSENGER CABIN - SPE		[***]
0220B604D37	TYPE CERTIFICATON & EXPORT CERTIFICATE OF AIRWORTHINESS FOR AIRPLANE DELIVERY - REQUIREMENT - LAN 767-300ER		[***]
0221-000002	DISPATCH WITH GEAR EXTENDED FOR REVENUE FLIGHT		[***]
0221A251A19	ENGINE INOPERATIVE TEN-MINUTE TAKEOFF THRUST OPERATION - CF6-80C2B6F THRUST RATING		[***]
0221B401A43	TAKEOFF AND LANDING WITH TAILWIND UP TO 15-KNOTS		[***]
0224-000024	EXTENDED RANGE TWIN ENGINE OPERATIONS (ETOPS)		[***]
0228-000001	FLIGHT MANUALS IN FAA FORMAT		[***]
0228-000032	OPERATIONS MANUAL IN FAA FORMAT		[***]
0229A141A41	PERFORMANCE - CERTIFICATION FOR OPERATION AT AIRPORT ALTITUDES OF 9500 FEET AND BELOW		[***]
0252-000014	ENVIRONMENTAL CONTROL SYSTEM - TEMPERATURE INDICATIONS IN DEGREES CELSIUS		[***]
0252-000017	INSTRUMENTATION WITH METRIC UNITS - MODEL 767		[***]
0254-000003	USPHS CERTIFICATE OF SANITARY CONSTRUCTION		[***]
0315C417A53	CERTIFIED OPERATIONAL AND STRUCTURAL DESIGN WEIGHTS 767-300ER		[***]
0351B523A03	TEMPLATE - TAKEOFF PERFORMANCE IMPROVEMENT - ALTERNATE FORWARD CENTER OF GRAVITY LIMITS		[***]
0351C417B92	MP - CENTER-OF-GRAVITY LIMITS - REPLACE - TEMPLATE OPTION		[***]
0360C417A60	MISCELLANEOUS WEIGHT COLLECTOR		[***]
1110B657G71	EXTERIOR COLOR SCHEME AND MARKINGS		[***]
1110B657M33	MP - BFE - PREMASK - VERTICAL STABILIZER - EXTERIOR COLOR SCHEMES AND MARKINGS		[***]
1120-000019	MAINTENANCE MARKINGS - ACCESS PANELS - ENGINE STRUT AND COWLS		[***]
1130A931A06	IATA STANDARD MARKINGS - LOWER LOBE CARGO COMPARTMENT		[***]

P.A. No. 2126	Exhibit A-12, Page 2	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 3

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
1130B657G72	INTERIOR PASSENGER COMPARTMENT PLACARDS AND MARKINGS		[***]
1130B657J09	SEAT ROW MARKERS - PASSENGER CABIN		[***]
1130B657L11	MP - ECONOMY CLASS SEAT ROW MARKERS REVISION - INTERIOR PLACARDS		[***]
1130B657P19	MP - INTERIOR PLACARDS - REVISION - PASSENGER CABIN		[***]
1130B657P39	INTERIOR PLACARDS - REVISION - ADDITIONAL SEAT ROW MARKERS - CENTER OVERHEAD BINS INTERIOR		[***]
2145-000004	BULK CARGO AREA HEATING AND VENTILATING FOR ANIMAL CARRIAGE		[***]
2158A071A11	IN-FLIGHT ENTERTAINMENT EQUIPMENT COOLING SYSTEM, FWD OF DOOR 2 - 200 CFM INSTALLATION		[***]
2210-000003	AUTOFLIGHT - INHIBIT GLIDE SLOPE CAPTURE PRIOR TO LOCALIZER CAPTURE		[***]
2210-000030	AUTOFLIGHT - THREE DIGIT MACH NUMBER ON MODE CONTROL PANEL		[***]
2210-000031	AUTOFLIGHT - AUTOMATIC AUTOPILOT CHANNEL SELECTION IN APPROACH MODE		[***]
2210-000037	AUTOFLIGHT - BANK ANGLE HOLD AT AUTOPILOT COMMAND ENGAGE		[***]
2210-000039	AUTOFLIGHT - FULL TIME FLIGHT DIRECTOR		[***]
2210-000311	AUTOFLIGHT - FLIGHT CONTROL COMPUTER (FCC) WITHOUT ONBOARD SOFTWARE LOADING CAPABILITY		[***]
2210A064A02	AUTOFLIGHT - ALTITUDE ALERT - 300/900 FEET		[***]
2210B403A08	MODE CONTROL PANEL WITHOUT BACKCOURSE SWITCH		[***]
2230-000127	AUTOTHROTTLE - SELECTION OF CLIMB DERATES		[***]
2230-000133	AUTOTHROTTLE - FIXED PERCENTAGE DERATE LEVELS OF 10% AND 20%		[***]
2230-000135	AUTOTHROTTLE - CLIMB DERATE WASHOUT SCHEDULE - 10,000 TO 12,000 FEET		[***]
2311-000124	HF COMMUNICATIONS - DUAL GABLES HF CONTROL PANELS WITH SENSITIVITY AND DATALINK CONTROL - P/N G7401-16 - BFE/SPE		[***]
2311-000137	HF COMMUNICATIONS - PARTIAL PROVISIONS FOR DUAL ARINC 753 HF DATALINK		[***]
2311B401A29	DUAL HF DATA RADIO - ARINC 753 - ACTIVATION - AIRLINE DATA LINK COMMUNICATIONS ONLY		[***]

P.A. No. 2126	Exhibit A-12, Page 3	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 4

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2311B401A39	HF COMMUNICATIONS - EQUIPMENT INSTALLATION OF DUAL ROCKWELL HF VOICE/DATA TRANSCEIVERS - P/N 822-0990-004 AND DIGITAL HF COUPLERS - P/N 822-0987-004 BFE/SPE		[***]
2312-000703	VHF COMMUNICATIONS - ACTIVATION OF 8.33 KHZ CHANNEL SPACING		[***]
2312B401A16	VHF COMMUNICATIONS - EQUIPMENT INSTALLATION OF TRIPLE ROCKWELL ARINC 750 VHF-920 FM IMMUNE TRANSCEIVERS WITH 8.33 KHZ CHANNEL SPACING, VDL MODE 2, AND CMC INTERFACE CAPABILITY - P/N 822-1250-002 - BFE/SPE		[***]
2312B800D19	VHF COMMUNICATIONS - TRIPLE GABLES VHF TUNING PANELS (DUAL KNOB) - P/N G7400-227 - BFE/SPE		[***]
2321B401A04	SELCAL - AVTECH FIVE CHANNEL DECODER - P/N NA138-714C - BFE/SPE		[***]
2322B401A31	CMU - INSTALLATION OF ROCKWELL COLLINS ARINC 758 LEVEL AOA CMU - P/N 822-1239-151 - BFE / SPE		[***]
2322B800A68	AIRCRAFT COMMUNICATIONS ADDRESSING AND REPORTING SYSTEM (ACARS) - LARGE FORMAT MULTIPURPOSE INTERACTIVE DISPLAY UNIT (MIDU) - ROCKWELL - P/N 822-1626-105 - BFE/SPE		[***]
2322C939A05	CMU - INSTALLATION OF PARTIAL PROVISIONS FOR SINGLE CMU IN ACCORDANCE WITH ARINC 758		2322C939A05
2324B800D31	MP - EMERGENCY LOCATOR TRANSMITTER (ELT) - ELTA 3-FREQUENCY AUTOMATIC - FIXED - P/N 95N6088 - SPE		[***]
2324C485B12	MP - EMERGENCY LOCATOR TRANSMITTER (ELT) - INSTALLATION - ELTA 3 - FREQUENCY AUTOMATIC - FIXED - P/N 01N65900 - SPE		[***]
2331B702M61	PASSENGER ADDRESS (PA) SYSTEM - TWO CLASS - ROCKWELL COLLINS		[***]
2332A324A38	IN-FLIGHT ENTERTAINMENT SYSTEM POWER CONTROL SWITCH - HEAD END		[***]
2332A324A39	IN-FLIGHT ENTERTAINMENT SYSTEM POWER CONTROL SWITCH - SEAT AND AREA DISTRIBUTION		[***]
2332A324A40	IN-FLIGHT ENTERTAINMENT SYSTEM POWER CONTROL SWITCH - MASTER		[***]
2332B702M66	IN-FLIGHT ENTERTAINMENT - PARTIAL PROVISIONS - THALES - 767		[***]

P.A. No. 2126	Exhibit A-12, Page 4	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 5

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2332B702N44	IN-FLIGHT ENTERTAINMENT SYSTEM - THALES - WITH OVERHEAD VIDEO - FULL CABIN PC POWER - FUL CABIN AVOD - PAX - CSE		[***]
2332B702N67	MP - PASSENGER ENTERTAINMENT SYSTEM - PARTIAL PROVISIONS - PARTITION RELOCATION - MOBILE FRONTIER		[***]
2332B702P67	MP - PASSENGER ENTERTAINMENT SYSTEM - VIDEO - REVISION - THALES - CSE		[***]
2332C417B98	MP - PASSENGER ENTERTAINMENT SYSTEM - REPLACEMENT - THALES 15” MONITOR IN LIEU OF JAMCO 15” MONITOR - THALES - SPE		[***]
2332C522A02	MP - PASSENGER ENTERTAINMENT SYSTEM - REVISION - TPCU HANDSET - THALES - SPE		[***]
2332C817F17	MP - PASSENGER ENTERTAINMENT SYSTEM - VIDEO - REVISION - SOFTWARE PART NUMBERS - THALES - SPE		[***]
2340B800D47	CREW COMMUNICATIONS - PILOTS’ CALL PANEL - FLIGHT DECK		[***]
2342-000016	CABIN INTERPHONE SYSTEM - CABIN INTERPHONE HANDSET - FLIGHT COMPARTMENT		[***]
2350B800C71	AUDIO INTEGRATING - AUDIO SELECTOR PANELS - FLIGHT DECK		[***]
2350C164D44	MP - AUDIO SELECTOR PANEL (ASP) & PILOT’S CALL PLANEL - REPLACEMENT - SFE ASP WITH INTEGRATED SELCAL AND CREW CALL FUNCTIONS - 3 VHF/2 HF/2 SATCOM (P/N 285T0022-51)		[***]
2351-000033	HAND HELD MICROPHONE - CAPTAIN AND FIRST OFFICER - ELECTROVOICE - P/N 903-1342 - BFE/SPE		[***]
2351-000035	HAND HELD MICROPHONE - FIRST OBSERVER - ELECTROVOICE - P/N 903-1342 - BFE/SPE		[***]
2351-000042	CONTROL WHEEL PUSH TO TALK (PTT) SWITCH - STANDARD THREE POSITION		[***]
2351A213A33	AUDIO INTEGRATION - INSTALLATION - TWO-PLUG AUDIO JACKS IN THE FLIGHT DECK		[***]
2351A213B77	BOOM MICROPHONE HEADSETS - CAPTAIN AND FIRST OFFICER - TELEX AIRMAN 750 - P/N 64300-200 - BFE/SPE		[***]
2351A213B80	HEADPHONE - FIRST OBSERVER - TELEX - P/N 64400-200 - BFE/SPE		[***]
2351A213B81	HEADPHONE - SECOND OBSERVER - TELEX - P/N 64400-200 - BFE/SPE		[***]
2371-000009	NO MONITOR JACK IN THE WHEEL WELL		[***]

P.A. No. 2126	Exhibit A-12, Page 5	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 6

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2371-000017	SOLID STATE VOICE RECORDER ED56A AND SOLID STATE MICROPHONE/MONITOR ED56A - ALLIEDSIGNAL - 2 HOUR RECORDING TIME - P/N 980-6022-001 AND P/N 980-6116-002 - BFE/SPE		[***]
2432-000002	AUXILIARY POWER UNIT (APU) - ADDITIONAL STARTING CAPABILITY		[***]
2433-000021	STANDBY POWER - EXTENDED TIME CAPABILITY - BATTERY PARALELLING		[***]
2451-000002	90 KVA GALLEY POWER SUPPLY		[***]
2501A611A19	FORWARD MONUMENT COMPLEX 4		[***]
2504A611A14	AFT MONUMENT COMPLEX 3		[***]
2511-000022	MANUALLY OPERATED SEATS - CAPTAIN AND FIRST OFFICER		[***]
2511-000026	FIRST OBSERVER’S SEAT - WALL MOUNTED		[***]
2511B806J86	MP - SECOND OBSERVER STSATION WITH ARMRESTS - ADDITION		[***]
2513-000405	SUNVISOR INSTALLATION - NUMBER 1 AND 2 WINDOWS - FLIGHT DECK - SFE		[***]
2520B657G80	INTERIOR COLOR AND MATERIAL - STANDARD OFFERING		[***]
2520B657J42	UNIQUE DECORATIVE TEDLAR LAMINATE (DTL) - MONUMENTS - INTERIOR COLOR AND MATERIAL - SFE		[***]
2520B657K41	MP - BFE RAW CARPET, CURTAIN AND FLOOR MAT MATERIAL		[***]
2520B657M19	MP - INTERIOR DECOR - REVISION - PASSENGER CABIN		[***]
2520B657M35	MP - DECORATIVE TEDLAR LAMINATE (DTL) - REVISION - MONUMENT MOUNTED - INTERIOR COLOR AND MATERIAL - SFE		[***]
2520B657M56	MP - DECORATIVE TEDLAR LAMINATE (DTL) - REVISION - MONUMENT MOUNTED - INTERIOR COLOR AND MATERIAL - SFE		[***]
2523B657J10	ADDITIONAL PASSENGER SERVICE UNITS -		[***]
2523B657J31	PASSENGER SERVICE UNITS		[***]
2524B657G86	SPE - FULL HEIGHT CENTERLINE CLOSET - STA 353 - STA 379		[***]
2524B657G99	CURTAIN AND TRACK INSTALLATION - DOOR 1 LEFT AFT		[***]
2524B657H01	CURTAIN AND TRACK INSTALLATION - DOOR 1 RIGHT AFT		[***]
2524B657H04	CURTAIN AND TRACK INSTALLATION - DOOR 4		[***]
2524B657H95	UNDERBIN CENTERLIN CLASS DIVIDER - SPE		[***]
2524B657H96	LH UNDERBIN OUTBOARD CLASS DIVIDER - SPE		[***]
2524B657H97	RH UNDERBIN OUTBOARD CLASS DIVIDER - SPE		[***]
2524B657J00	CURTAIN AND TRACK INSTALLATION		[***]

P.A. No. 2126	Exhibit A-12, Page 6	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 7

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2524B657J01	CURTAIN AND TRACK INSTALLATION - BETWEEN BUSINESS CLASS AND ECONOMY CLASS		[***]
2524B657J13	LH UNDERBIN OUTBOARD CLASS DIVIDER - SPE		[***]
2524B657J15	RH UNDERBIN OUTBOARD CLASS DIVIDER - SPE		[***]
2524B657J40	SPE - CLOSET WITH INTEGRAL STOWAGE UNIT AND WALL MOUNTED ATTENDANT SEAT PROVISIONS - LH UNDERBIN - ECONOMY CLASS - FORWARD DOOR 4		[***]
2524B657J41	SPE - CLOSET WITH INTEGRAL STOWAGE UNIT AND WALL MOUNTED ATTENDANT SEAT PROVISIONS - RH UNDERBIN - ECONOMY CLASS - FORWARD DOOR 4		[***]
2524B657K50	MP - CLOSETS, PARTITION & CLASS DIVIDERS - REVISION - FULL HEIGHT CENTERLINE STA 344 - STA 366 - SPE		[***]
2524B657P10	MP - CURTAINS - REVISION - CURTAIN AND CURTAIN TRACK - PASSENGER CABIN		[***]
2524B657P16	MP - CLASS DIVIDERS - REPLACEMENT - BUSINESS CLASS - SPE		[***]
2524C417C49	MP - CURTAINS - REVISION - CURTAIN AND CURTAIN TRACK - PASSENGER CABIN		[***]
2524C707A33	MP - CLOSETS, PARTITION & CLASS DIVIDERS - REVISION - FULL HEIGHT SEAT TRACK MOUNTED CLOSETS - STA 1465.95 - STA 1478.95 AND STA 1467.95 - STA 1478.95 - SPE		[***]
2524C826C28	MP - CURTAINS - REVISION - BFE CURTAIN MATERIAL		[***]
2524C826R50	MP - CLOSETS, PARTITIONS AND CLASS DIVIDERS - REVISION - CURTAIN MATERIAL - NEO-TEX - BFE		[***]
2525B657H05	BUSINESS CLASS SEATS		[***]
2525B657H07	ECONOMY CLASS SEATS		[***]
2525B657J37	ATTENDANT SEATS FOR 767-300		[***]
2525B657L13	MP - ECONOMY CLASS PASSENGER SEATS - REVISION		[***]
2525B657N74	MP - BUSINESS CALSS SEATS - REVISION - REVIEW AND APPROVE SUPPLIER DATA - SPE		[***]
2525C485B41	MP - PASSENGER SEATS - REVISION - BUSINESS CLASS SEAT PART NUMBER REVISION - PASSENGER COMPARTMENT - SPE		[***]
2526B657H11	SPE - IF-1C VIDEO CONTROL CENTER - FORWARD COMPARTMENT OF THE F2 GALLEY		[***]
2527B657H12	ENTRYWAY FLOOR COVERING		[***]
2527B657H98	FLOOR COVERING - SPE		[***]
2527B657K59	MP - SEAT TRACK COVES AND RACEWAYS - REVISION - BFE IN LIEU OF SFE - ECONOMY CLASS		[***]
2527B657L92	MP - FLOOR COVERING - REVISION - FLOOR MAT MATERIAL - SCHNELLER - BFE		[***]

P.A. No. 2126	Exhibit A-12, Page 7	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 8

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2527B657N98	MP - FLOOR COVERING - REVISION - BUSINESS CLASS CARPET AND FLOOR MOUNTED EMERGENCY ESCAPE PATH LIGHTING SYSTEM		[***]
2527C006A05	FLOOR COVERING - CARPET, SERGED EDGES		[***]
2528B657H13	OVERHEAD STOWAGE BINS		[***]
2528B657H21	LITERATURE POCKETS		[***]
2528B657J03	CENTERLINE FLOOR MOUNTED STOWAGE UNIT - SPE		[***]
2528B657J23	MAGAZINE STOWAGE - MONUMENT MOUNTED		[***]
2528B657J29	LH OUTBOARD FLOOR MOUNTED STOWAGE UNIT - SPE		[***]
2528B657J30	RH OUTBOARD FLOOR MOUNTED STOWAGE UNIT - SPE		[***]
2528B657J59	BIN FAIRING AND CLOSEOUT PANEL - OUTBAOARD OVERHEAD STOWAGE BINS		[***]
2528B657K02	MP - STOWAGE COMPARTMENTS - REVISION - BUSTLE IN LIEU OF MAGAZINE BUSTLE - 4F-2LC AND 4F-2RC LAVATORIES		[***]
2529B657H43	CURTAIN AND CURTAIN TRACK INSTALLATION - IN-FLIGHT CREW REST - FORWARD OF DOOR 4R		[***]
2529B657N61	MP - PASSENGER AND CABIN ATTENDANTS’ ACCOMODATIONS - INSTALLATION - CURTAINS AND CURTAIN TRACK - IN-FLIGHT CREW REST ENCLOSURE - BUSINESS CLASS - AFT RH		[***]
2529B657R29	MP - PASSENGER AND CABIN ATTENDANTS ACCOMODATIONS - REVISION - LONGITUDINAL CURTAIN TRACK TO BIN SUPPORT FITTINGS - IN-FLIGHT CREW REST ENCLOSURE- BUSINESS CLASS - RH AFT		[***]
2529C417A72	ATTENDANT WORKSTATION		[***]
2530B657H31	F1 GALLEY		[***]
2530B657H33	F2 GALLEY		[***]
2530B657H35	F3 GALLEY		[***]
2530B657H37	A1 GALLEY		[***]
2530B657H39	A2 GALLEY		[***]
2530B657H40	A3 GALLEY		[***]
2530B657H41	GALLEY PART NUMBERS - BFE/SPE		[***]
2530B657H42	GALLEY INSERT PART NUMBERS - BFE/SPE		[***]
2530B657J92	MP - BUFFETS/GALLEYS - REPLACEMENT - F3 GALLEY WITH INTEGRAL CHILLER IN LIEU OF F3 GALLEY WITHOUT INTEGRAL CHILLER - SPE		[***]
2530B657N79	MP - BUFFET/GALLEY - REVISION - F3 GALLEY - SPE		[***]

P.A. No. 2126	Exhibit A-12, Page 8	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 9

Configuration Item Number	Title	2010 Dollars Follow On Price Per AC
2530B657N82	MP - BUFFET/GALLEY - REVISION - ALTERNATE GALLEY CART PART NUMBER - F2 GALLEY - SPE		[***]
2530C485B69	MP - GALLEY - REVISION - OVEN PART NUMBER - SPE		[***]
2530C635A24	MP - GALLEY - REVISION - CHILLER - BE AEROSPACE - SPE		[***]
2530C826R54	MP - GALLEY - REVISION - WATER BOILER - B.E. AEROSPACE - SPE		[***]
2531B657H99	PARTIAL PROVISIONS FOR NON-STANDARD A4 GALLEY - SPE		[***]
2533A798A01	CHILLERS (6800 BTUH) - THREE - GALLEY - FORWARD AND AFT - BFE/SPE - P/N 267-100		[***]
2540B657H46	1F-1L LAVATORY		[***]
2540B657H54	4F-2LC LAVATORY		[***]
2540B657H56	4F-2RC LAVATORY		[***]
2540B657H60	1A-1L LAVATORY		[***]
2540B657J34	2F-9L LAVATORY		[***]
2540B657J36	2F-9R LAVATORY		[***]
2540B657K45	MP - LAVATORIES - REVISION - ADDITONAL MIRROR IN 2F-9L AND 2F-9R LAVATORIES		[***]
2540B657L09	MP - LAVATORY REVISION - BABY CARE TABLE		[***]
2540B657P32	MP - LAVATORY EQUIPMENT - REVISION - 1A-1L LAVATORY MIRROR		[***]
2550-000040	NO PROVISIONS FOR LOADING LONG LIGHTWEIGHT ITEMS - FORWARD CARGO COMPARTMENT		[***]
2552-000135	CARGO COMPARTMENTS - PARTIAL FLOOR		[***]
2552-000223	FABRIC STA 744 ENDWALL		[***]
2552A931A07	SLOPING SIDEWALL - CARGO COMPARTMENTS - .020 THICKNESS OVERALL AND .030 THICKNESS AT CARGO DOORS - BMS 8-223		[***]
2553-000036	HARDWARE FOR STANDARD CONTAINERS IN THE AFT CARGO COMPARTMENT		[***]
2553-000042	NO SPOOL-TYPE LOADER INDEX FITTINGS - AFT CARGO COMPARTMENT		[***]
2553-000044	HARDWARE FOR CARRIAGE OF 88 X 125 AND 96 X 125 INCH PALLETS AND STANDARD CONTAINERS IN THE FORWARD CARGO COMPARTMENT		[***]
2553-000085	REMOTELY OPERATED CONTAINER ROLLOUT STOPS - AFT CARGO COMPARTMENT DOORWAY		[***]
2555-000022	STANDARD BULK CARGO AREA FLOOR		[***]
2555-000024	BULK CARGO DOOR PROTECTOR - NET		[***]
2560-000175	HALON FIRE EXTINGUISHER - FLIGHT DECK - WALTER KIDDE		[***]

P.A. No. 2126	Exhibit A-12, Page 9	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 10

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2560-000200	PROTECTIVE BREATHING EQUIPMENT - FLIGHT DECK - SCOTT AVIATION - P/N 802300-14 - BFE/SPE		[***]
2560B800A79	CREW LIFE VESTS - FLIGHT DECK - AIR CRUISER - P/N D21344-101 - BFE/SPE		[***]
2561A931A10	FORWARD ESCAPE HATCH POSITION FOR ESCAPE STRAP		[***]
2562B657J43	OVERWATER EMERGENCY EQUIPMENT		[***]
2562C826P97	MP - OVERWATER SURVIVAL EQUIPMENT - REVISION - PORTABLE EMERGENCY LOCATOR TRANSMITTER (ELT) - SPE		[***]
2562C826R66	MP - OVERWATER SURVIVAL EQUIPMENT - REPLACEMENT - LIFE VEST - SPE		[***]
2564B657J49	DETACHABLE EMERGENCY EQUIPMENT - PASSENGER COMPARTMENT		[***]
2564B657K19	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PASSENGER COMPARTMENT - SPE		[***]
2564B657L23	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PASSENGER COMPARTMENT		[***]
2564B657M21	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PASSENGER COMPARTMENT		[***]
2564B657M45	MP - DETACHABLE EMERGENCY EQUIPMENT - NON-RECHARGEABLE FLASHLIGHT IN LIEU OF RECHARGEABLE FLASHLIGHT - SPE		[***]
2564B657N93	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PASSENGER COMPARTMENT - SPE		[***]
2564B657P30	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PASSENGER COMPARTMENT		[***]
2564C826A13	MP - DETACHABLE EMERGENCY EQUIPMENT - REVISION - PORTABLE OXYGEN BOTTLE RELOCATION - PASSENGER COMPARTMENT		[***]
2566A649A46	ESCAPE SLIDE - DUAL LANE - TYPE III EXIT WITH VISUAL GUIDANCE		[***]
2566C522A04	MP - ESCAPE SLIDE - DUALLANE - TYPE 111 EXIT WITH VISUAL GUIDANCE		[***]
2610-000025	KIDDE FIRE DETECTION SYSTEM - GE CF6-80C2 ENGINES AND APU		[***]
2618-000009	SINGLE LOOP DUCT LEAK DETECTION SYSTEM - 3 ZONE		[***]
2622-000004	FIRE BOTTLE COMMONALITY - CF6-80C2 ENGINES AND DUAL APU FIRE EXTINGUISHING SYSTEM		[***]
2732-000002	STALL WARNING COMPUTER SPEED TAPE ACTIVATION - DISPLAY MINIMUM MANEUVER SPEED ON TAKEOFF		[***]
2811-000021	EXTENDED RANGE (ER) FUEL TANK AND FUEL JETTISON SYSTEMS		[***]

P.A. No. 2126	Exhibit A-12, Page 10	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 11

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
2844-000005	FUEL MEASURING STICKS IN KILOGRAMS WITH CONVERSION TABLES IN KILOGRAMS		[***]
2911-000003	AC MOTOR-DRIVEN HYDRAULIC PUMPS - EATON (VICKERS) S270T201-7		[***]
2911-000038	ENGINE-DRIVEN HYDRAULIC PUMPS - VICKERS INC. (60B00200-12)		[***]
3042-000003	WINDSHIELD WIPERS - TWO SPEED - SINGLE SWITCH		[***]
3080-000006	MANUAL ANTI-ICING SYSTEM - NO ICE DETECTION		[***]
3120-000011	ELECTRONIC CLOCKS - WITHOUT TENTHS OF MINUTE DISPLAY - MAIN INSTRUMENT PANEL		[***]
3131-000143	ACCELEROMETER - Honeywell P/N 971-4193-001 - BFE/SPE		[***]
3131-000187	DIGITAL FLIGHT DATA RECORDER - ALLIEDSIGNAL - 256 WORDS PER SECOND MAXIMUM DATA RATE - P/N 980-4700-042 BFE/SPE		[***]
3131A715A01	DIGITAL FLIGHT DATA ACQUISITION UNIT (DFDAU) WITH ACMS CAPABILITY AND INTERGRATED PCMCIA MEDIA INTERFACE-TELEDYNE CONTROLS-P/N 2233000-816-1 -BFE/SPE		[***]
3132-000095	AIRBORNE DATA LOADER/RECORDER - ARINC 615 - ALLIEDSIGNAL - 964-0401-006 - BFE/SPE		[***]
3132-000117	DATA LOADER SELECTOR SWITCH MODULE - 20 POSITION 3 WAY - SFE		[***]
3132A887A01	DUAL ARINC 615 DATA LOADER/RECORDER INTERFACE TO THE THREE WAY, TWENTY POSITION SYSTEM SELECTOR SWITCH - PORTABLE DATA LOADER/RECORDER CONNECTOR INSTALLATION IN P61 RIGHT SIDE PANEL - SFE		[***]
3133-000057	FULL FORMAT PRINTER - MILTOPE - ARINC 744 - P/N 706300-212 - BFE/SPE		[***]
3133-000125	ARINC 744 PRINTER PROVISIONS IN THE FLIGHT DECK AISLESTAND		[***]
3151-000042	FIREBELL AURAL WARNING - 1 SECOND ON, 9 SECONDS OFF		[***]
3151-000046	AUTOPILOT DISCONNECT - AURAL WARNING SIREN - AURAL WARNING AND MASTER WARNING LIGHT INHIBITED WHEN AUTOPILOT DISCONNECT SWITCH IS DOUBLE PRESSED QUICKLY		[***]
3151A065A47	RESETTABLE OVERSPEED AURAL WARNING - SIREN		[***]
3161-000135	HYDRAULIC PRESSURE ON EICAS STATUS PAGES		[***]
3161-000137	APU RPM ON EICAS STATUS PAGES		[***]
3161-000139	APU OIL QUANTITY LEVEL ON EICAS		[***]

P.A. No. 2126	Exhibit A-12, Page 11	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 12

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
3161-000141	ADDITIONAL ENVIRONMENTAL CONTROL SYSTEM (ECS) PARAMETERS - DISPLAY ON EICAS MAINTENANCE PAGE		[***]
3161-000144	GENERATOR OFF AND ENGINE OIL PRESSURE - EICAS ADVISORY LEVEL MESSAGES		[***]
3161-000147	ECS PRECOOLER OUTLET TEMPERATURE - (PW AND GE ENGINES) - DISPLAY ON EICAS		[***]
3161-000152	BULK CARGO COMPARTMENT TEMPERATURE - DISPLAY ON EICAS		[***]
3161-000154	RAM AIR OUTLET DOOR POSITION - DISPLAY ON EICAS		[***]
3161-000189	ENGINE FUEL FLOW - FULL TIME DISPLAY - LOWER EICAS DISPLAY		[***]
3162-000016	FLIGHT MODE ANNUNCIATION AT TOP OF ADI		[***]
3162-000021	AIRSPEED TAPE - ROLLING DIGITS AND TREND VECTOR - ADI		[***]
3162-000022	FLIGHT DIRECTOR COMMAND DISPLAY - SPLIT AXIS - ADI		[***]
3162-000026	DISPLAY OF ROUND DIAL AND DIGITAL RADIO ALTITUDE - ADI		[***]
3162-000030	RISING RUNWAY - DISPLAYED ON THE ADI		[***]
3162-000034	RADIO ALTITUDE HEIGHT ALERT DISPLAY - 2500 FEET - ADI		[***]
3162-000054	ILS DEVIATION WARNING - ADI		[***]
3162-000059	MAP MODE ORIENTATION - TRACK UP - NAVIGATION DISPLAY		[***]
3162-000066	TRUE AIRSPEED AND GROUND SPEED - NAVIGATION DISPLAY		[***]
3162-000070	WIND BEARING DIGITAL DISPLAY - NAVIGATION DISPLAY		[***]
3162-000081	ADF POINTER(S) - NAVIGATION DISPLAY		[***]
3221-000011	TORQUE ARM QUICK DISCONNECT - NOSE LANDING GEAR		[***]
3242A114B69	ANTISKID/AUTOBRAKE CONTROL UNIT (AACU) P/N 42-767-2 (S283T001-27) - INSTALLATION		[***]
3245-000230	WHEELS AND TIRES - NOSE LANDING GEAR - WHEELS - ALLIEDSIGNAL - INSTALLATION WITH SFE 24 PR, 235 MPH TIRES		[***]
3245A298A12	BRAKES - CARBON - MESSIER-BUGATTI		[***]
3245A438A27	OPERATIONAL TIRE SPEED LIMITS - 235MPH		[***]
3245A438A28	WHEELS AND TIRES - MAIN LANDING GEAR - HIGH GROSS WEIGHT WHEELS - MESSIER-BUGATTI - INSTALLATION WITH SFE 32 PR, 235 MPH TIRES.		[***]
3246-000005	BRAKE TEMPERATURE MONITORING SYSTEM		[***]
3320B657N77	MP - PASSENGER COMPARTMENT - REVISION - OUTBOARD OVERHEAD CLOSEOUT PANEL AREA LIGHT - LH/RH STA 792 - STA 813-95		[***]

P.A. No. 2126	Exhibit A-12, Page 12	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 13

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
3324-000117	NO-SMOKING LIGHT ON - HARD WIRE		[***]
3324B657H92	OVER AISLE EXIT SIGNS - PASSENGER CABIN		[***]
3324B657K03	MP - INFORMATION SIGNS - REPLACEMENT - STANDARD OVER AISLE EXIT SIGNS - PASSENGER CABIN		[***]
3342-000009	TAXI LIGHTS - NOSE GEAR MOUNTED - SPACE PROVISIONS		[***]
3350A704A30	EMERGENCY ESCAPE PATH LIGHTING - SEAT/MONUMENT MOUNTED		[***]
3350B657K04	MP - EMERGENCY ESCAPE PATH LIGLHTLING - REVISION - FLOOR MOUNTED INLIEU OF SEAT/MONUMENT MOUNTED - PASSENGER CABIN		[***]
3413-000027	MACH/AIRSPEED INDICATOR - TWO KNOT GRADUATIONS BELOW 250 KNOTS		[***]
3421-000042	FAA MACH/AIRSPEED LIMITS AND OVERSPEED ALERTING		[***]
3423-000006	STANDBY MAGNETIC COMPASS COMPENSATION FOR ELECTRICAL CIRCUITS (+/- 5 DEGREES)		[***]
3430-000187	ILS/GPS MULTI-MODE RECEIVER (MMR) - ROCKWELL - P/N 822-1152-002 - BFE/SPE		[***]
3433-000032	RADIO ALTIMETER (RA) - ROCKWELL INTERNATIONAL CORP - P/N 822-0334-002 - BFE/SPE		[***]
3443-000050	DUAL WEATHER RADAR CONTROL PANEL - ROCKWELL P/N 622-5130-114 - BFE/SPE		[***]
3443A065A34	DUAL WEATHER RADAR SYSTEM - WITH PREDICTIVE WINDSHEAR - ROCKWELL TRANSCEIVER P/N 622-5132-633 - BFE/SPE		[***]
3445A065A86	TCAS SYSTEM - ROCKWELL COLLINS TCAS COMPUTER P/N 822-1293-002 - TCAS CHANGE 7 COMPLIANT - BFE/SPE		[***]
3446-000045	STANDARD VOLUME FOR ALTITUDE CALLOUTS		[***]
3446-000048	ENHANCED GROUND PROXIMITY WARNING SYSTEM (EGPWS) - BANK ANGLE CALLOUT ENABLE		[***]
3446-000049	500 SMART CALLOUT INHIBITED		[***]
3446B800D17	GROUND PROXIMITY WARNING SYSTEM - MODE 6 ALTITUDE CALLOUTS - 2500, 1000, 500, 400, 300, 200, 100, 50, 40, 30, 20, 10, MINIMUMS		[***]
3451-000022	VOR/MARKER BEACON - ROCKWELL RECEIVER P/N 822-0297-001 - BFE/SPE		[***]
3453B866A16	ATC SYSTEM - ROCKWELL COLLINS ATC TRANSPONDER P/N 822-1338-003 - ELS/EHS/ES AND TCAS CHANGE 7 COMPLIANT - GABLES CONTROL PANEL P/N G6992-12 - BFE/SPE		[***]
3455-000019	DISTANCE MEASURING EQUIPMENT (DME) - ROCKWELL INTERROGATOR P/N 822-0329-001 - BFE/SPE		[***]

P.A. No. 2126	Exhibit A-12, Page 13	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 14

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
3457-000219	AUTOMATIC DIRECTION FINDER (ADF) - DUAL SYSTEM - ROCKWELL ADF-900/700 SERIES - ADF RECEIVER P/N 822-0299-001 - ADF ANTENNA P/N 622-5404-003 - BFE/SPE		[***]
3457-000289	DUAL ADF CONTROL PANEL - BOEING - 285T0557-2 - WITHOUT BFO OR TONE SWITCH - SFE		[***]
3461A425A03	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - OFFPATH DESCENT CIRCLES AND DISTANCE MEASURING EQUIPMENT RANGE RINGS DISPLAYED		[***]
3461A425A04	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - SCANNING DME OPERATIONS - ENABLE		[***]
3461A425A05	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - RUNWAY DISTANCE AND OFFSET POSITION SHIFT IN UNITS OF FEET		[***]
3461A425A10	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - NAVIGATION DATABASE - CUSTOMER SUPPLIED		[***]
3461A425A12	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - TAKEOFF DATA LINK - ENABLE		[***]
3461A425A13	FMCS - AIRLINE MODIFIABLE INFORMATION (AMI) - CUSTOMER SUPPLIED		[***]
3461A425A16	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIR TRAFFIC SERVICES DATA LINK (ATS DL) - FANS FEATURE ACTIVATION		[***]
3461A425A17	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIRLINE OPERATIONAL COMMUNICATIONS DATA LINK (AOC DL) - FANS FEATURE ACTIVATION		[***]
3461A425A18	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - PRINTER INTERFACE - FANS FEATURE ACTIVATION		[***]
3511B899B48	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE - CAPTAIN AND FIRST OFFICER - EROS - BFE/SPE		[***]
3511B899B49	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE - FIRST OBSERVER - EROS - BFE/SPE		[***]
3511B899B50	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE - SECOND OBSERVER - EROS/SCOTT AVIATION - BFE/SPE		[***]
3611-000005	HAMILTON STANDARD - INTERMEDIATE PRESSURE (IP) CHECK VALVES - GE\P&W ENGINES		[***]
3811-000022	POTABLE WATER - SERVICEABLE TO 149 GALLONS		[***]
3831-000008	WASTE TANK CAPACITY - 116 GALLONS		[***]
3832-000031	VACUUM WASTE SYSTEM - ENVIROVAC TOILET ASSEMBLIES		[***]

P.A. No. 2126	Exhibit A-12, Page 14	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit A-12

Purchase Agreement No. 2126

Page 15

Configuration Item Number	Title	2010 Dollars Follow On Price Per A/C
3910B800A77	CONTROL PANEL ARRANGEMENT - P8 AISLE STAND - FLIGHT DECK - LAN		[***]
4970-000046	APU CYCLEMETER - AFT ELECTRONIC EQUIPMENT (E/E) COMPARTMENT		[***]
4970-000047	APU HOURMETER - AFT ELECTRONIC EQUIPMENT (E/E) COMPARTMENT		[***]
5210-000024	TYPE A - III - III - A DOOR ARRANGEMENT		[***]
5300B657K48	MP - INSTALLATION OF SEAT TRACKS - BL 45.5 LEFT AND RIGHT - STA 389 TO STA 721.805		[***]
7200-000382	STANDARD FAN SPINNER - GE ENGINES		[***]
7200-000412	GE PROPULSION SYSTEM		[***]
7200A114C89	GENERAL ELECTRIC ENGINES - CF6-80C2-B6F - B6F RATING - WITH FADEC		[***]
7830-000012	MANUAL OPENING OF THRUST REVERSER ASSEMBLIES - GE CF6-80C2 ENGINES		[***]
7900-000117	LUBRICATING OIL - BP TURBO OIL 2380		[***]
8011-000006	HAMILTON STANDARD STARTERS AND STARTER VALVES - GE ENGINES		[***]
INT_ALLOWANCE	INTERIOR ALLOWANCE FOR ALL MINOR MODELS		[***]
MISC/FAA5	FIRE PENETRATION - BURNTHROUGH, FAR 25.865 (b)		[***]
OPTIONS: 298	TOTAL:		$7,426,400

P.A. No. 2126	Exhibit A-12, Page 15	SA-30
PA Exhibit A		Rev: 12/11/03

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

The Boeing Company P.O. Box 3707 Seattle, WA 98124-2207

6-1162-ILK-0451

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject: Special Matters Letter Applicable to the 2012 Additional Aircraft

Reference: Purchase Agreement No. 2126 (the Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 767-316F, Model 767-38EF and Model 767-316ER aircraft (hereinafter referred to as “Aircraft”)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

1. Definitions.

1.1 “STE” when used specifically in relation to any credit memorandum contained in this letter agreement shall mean that the relevant credit memorandum shall be escalated to the month of delivery in the same manner as the Airframe Price in accordance with the escalation formula reflected in Supplemental Exhibit AE1 2010$ to the Purchase Agreement entitled “Escalation adjustment - airframe and optional features”.

1.2 “Limitations on Use” when used in relation to any credit memorandum contained in this letter agreement shall mean that the applicable credit memorandum may be used for the purchase of Boeing goods and services or applied to the final delivery payment for the Aircraft for which the credit was issued, but that the relevant credit memorandum shall be prohibited from use for satisfaction of any Advance Payment obligation.

1.3 “2012 Additional Aircraft” shall mean each or all three, as the case may be, of the three 767-316ER Aircraft (as previously defined in Supplemental Agreement No. 30 to the Purchase Agreement) scheduled for delivery in [***], respectively.

1.4 “Table 13” shall mean the table entitled “Aircraft Information Table 767-316ER Aircraft – 2010 $”.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

2. Export License.

Customer understands and confirms that it is Customer’s responsibility to obtain any required Export License from the relevant U.S. authority. Without accepting any liability for any failure to do so, Boeing will use reasonable endeavors to alert Customer to any regulatory changes of which Boeing becomes aware and which require Customer to obtain such Export License.

3. Warranty Modification.

Notwithstanding paragraph 3.2 of Part 2 of Exhibit C to the AGTA, Boeing agrees that the warranty period for a Corrected Boeing Product resulting from a defect in material or workmanship is 6 months or the remainder of the initial warranty period, whichever is longer.

4. Credit Memoranda for the 2012 Additional Aircraft.

4.1 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide the Customer with a credit memorandum concurrently with the delivery of each 2012 Additional Aircraft, in description and amount which is identified in the credit memoranda table below.

Credit Memoranda Exclusive to the 2012 Additional Aircraft	Concession Stated as a Percentage of Airframe Price
Incentive Basic Credit Memorandum, STE	[***]
Incremental Aircraft Credit Memorandum, STE	[***]
Total Table 4.1 Credit Memoranda Exclusive to the 2012 Accelerated Aircraft	[***]

4.2 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide the Customer with a goods and services credit memorandum at the time of definitive agreement signing in the total amount of [***]

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

5. Deferred Advance Payments for the 2012 Additional Aircraft.

5.1 The parties agree that, in respect of each 2012 Additional Aircraft, the Customer may elect a [***] deferred advance payment schedule as shown below (the Deferred Advance Payment Schedule Applicable for the 2012 Additional Aircraft) in lieu of the standard advance payment schedule set forth in Article 4.2 of the Purchase Agreement and in Table 13, (the Standard Advance Payment Schedule). The election must be made at the time of singing this SA-30.

Due Date of Payment*	Amount Due per Aircraft (percentage of Aircraft’s Advance Payment Base Price)
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
Total Advance Payments	[***]

* - unless otherwise indicated, refers to the number of months prior to the first day of the scheduled delivery month of the Aircraft.

5.2 The parties agree that Customer will pay interest to Boeing on the difference between the payments made pursuant to the Article 4.1 Deferred Advance Payment Schedule Applicable to the 2012 Additional Aircraft and the amount which would otherwise have been payable to Boeing under the Standard Advance Payment Schedule. Such interest shall accrue from and including the date on which such payments would have been due if there were no deferral up to the but excluding the date on which such amounts are paid in full. The rate used to calculate such interest shall be the three-

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

month London Interbank Offered Rate (LIBOR) as set forth in The Wall Street Journal, US edition, plus [***] basis points. The effective rate will be the rate in effect on the first business day of the calendar quarter in which the advance payment was initially deferred, and will be reset every calendar quarter. Interest on unpaid amounts will be calculated using a 360 day year, and compounded quarterly.

6. Assignment.

Any assignment by Customer of any benefits, entitlements, or services described in this Letter Agreement requires Boeing’s prior written consent. Further, Customer will not reveal to any third party the amount of the credit memoranda provided to Customer by Boeing without Boeing’s prior written consent and subject to such circumstances as Boeing may reasonably require.

Boeing will not unreasonably withhold consent to Customer’s request to assign, as security, rights in the Purchase Agreement if done for purposes of obtaining financing or for such other purpose consistent with fulfilling its obligations under the Purchase Agreement. Boeing’s consent will be conditioned on all parties accepting Boeing’s customary conditions for consenting to an assignment, including, but not limited to, the following: assignor and assignee indemnification of Boeing for any actions taken by an assignee under any assignment agreement; Boeing’s right to exercise the manufacturer’s option to assume Customer’s rights under the Purchase Agreement in the event of a default under an assignment agreement; and confidentiality. A Party that is

i. bound by a customary confidentiality agreement;

ii. neither an airplane manufacturer nor an airline; and

iii. responding to a Customer request for proposals to provide financing of Aircraft pursuant to the Purchase Agreement, including pre-delivery payment financing

shall be deemed a “Financing Party”.

Without Boeing’s consent, Customer may represent to any Financing Party that Boeing will provide to that Financing Party, concurrently with the delivery of each of the Aircraft to that Financing Party, a financier credit memorandum equal to

(a) Concession ceiling for the passenger aircraft: [***]

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

(b) Concession ceiling for the freighter aircraft: [***]

escalated to the month of delivery in the same manner as the Airframe Price as described in Supplemental Exhibit AE1 2010$ and in conformance with terms and conditions of this Letter Agreement. Insofar as such Financing Party is concerned, this Financier Credit Memorandum shall be in lieu of any other provision in the Letter Agreement. When the Customer identifies a Financing Party and the preliminary terms of an assignment under which pre-delivery payment financing or aircraft purchase financing could be provided, at Customer’s request, Boeing agrees to enter into discussions with the Customer to consider whether an additional credit memorandum can be assigned, with the goal of helping Customer obtain third-party financing.

Boeing will consent to any reasonable request by Customer to assign the Purchase Agreement to an affiliate provided that Boeing is provided with an adequate guarantee of performance of all obligations under this Purchase Agreement and in a form reasonably satisfactory to Boeing.

Customer understands that Boeing is not required under any circumstances to consent to an assignment that would constitute a novation.

The foregoing provisions are intended to supplement, and not to supersede, the assignment provisions of the AGTA, which address delivery date and post-delivery assignments, merger-type assignments, and other matters.

7. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; and Article 6 herein, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

Very truly yours,

THE BOEING COMPANY

By:
	Kathie S. Weibel
Its:	Attorney-In-Fact

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 15 day of February of 2011.

LAN AIRLINES S.A.

By:
	Mr. Armando Valdivieso
Its:

By:
	Mr. Alejandro de la Fuente Goic
Its:	Chief Financial Officer

P.A. No. 2126	SA-30
Special Matters Letter Applicable to the 2012 Additional Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

LAN-2126-LA-1103777

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject:	Seller Purchased Equipment for 2012 Aircraft
Reference:	a) Purchase Agreement No. 2126 (Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 767-316ER, 767-3SEF,and Model 767-316F aircraft (Aircraft).
	b) Letter Agreement 2126-1, “Seller Purchased Equipment”

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.

For purposes of this Letter Agreement “2012 Aircraft” are the 2012 Accelerated Aircraft and the 2012 Additional Aircraft. Reference b) Letter Agreement continues to apply to the SPE equipment for the 2012 Aircraft. The additional terms provided in the Letter Agreement apply only to the Contour seats and the BE Aerospace seats.

1. Change in seat suppliers.

1.1 Customer has decided to change seat suppliers to Contour for business class and BE Aerospace for economy class.

1.2 Boeing has agreed to the change in seat suppliers for the 2012 Aircraft and has agreed that the change can be offered as a Seller Purchased Equipment program under certain conditions.

1.2.1 Notwithstanding the waiver language in Article 1, paragraph 2 of Letter Agreement 2126-1, [***]. This fee covers future Contour and BE Aerospace seats with the same part numbers and installed in Aircraft with the same interior configuration as the 2012 Additional Aircraft provided Contour and BE Aerospace are offerable seat supplier at the time the new aircraft purchase is made.

P.A. No. 2126	SA-30
Seller Purchased Equipment for 2012 Aircraft	02/11

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

LA-1103776

2. Missed Seat On Dock Dates.

2.1 If the seats miss their on-dock date and the delivery of a 2012 Aircraft is delayed for that reason, Customer is responsible for the storage fee.

2.1.1 Boeing agrees to store the 2012 Aircraft on a short term basis for up to 30 days and Customer agrees to pay Boeing’s storage fee [***].

2.1.2 If the storage is likely to extend beyond 30 days the parties will mutually agree on whether to extend the short term storage by Boeing beyond the initial 30 days or seek long term storage at a facility outside of Boeing.

2.1.3 Boeing agrees to waive the first fourteen days of the short term storage fee.

2.2 In addition, Customer will pay interest to Boeing on the unpaid Aircraft Price as shown on the 2012 Aircraft delivery invoice. For avoidance of doubt this would be the Aircraft Price as defined in paragraph 2.1.8 of AGTA-LAN minus advance payments already paid to Boeing and credit memoranda provided as part of the invoicing documents. Such interest shall accrue from and including the date on which such 2012 Aircraft was scheduled to deliver up to but excluding the date of delivery. The rate used to calculate such interest shall be the three-month London Interbank Offered Rate (LIBOR) as set forth in the Wall Street Journal, US edition, [***] basis points. The effective rate will be the rate in effect on the first business day of the calendar quarter in which the 2012 Aircraft was scheduled to deliver and will be reset every calendar quarter. Interest on unpaid amounts will be calculated using a 360 day year, and compounded quarterly.

2.2.3 Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this

P.A. No. 2126	SA-30
Seller Purchased Equipment for 2012 Aircraft	02/11

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

LA-1103776

Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; Article 6 of Letter Agreement 6-1162-ILK-0451 entitled “Special Matters Applicable to the 2012 Additional Aircraft”, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

P.A. No. 2126	SA-30
Seller Purchased Equipment for 2012 Aircraft	02/11

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

LA-1103776

Very truly yours,

THE BOEING COMPANY

Original signed by

By:
	Kathie S. Weibel
Its:	Attorney-In-Fact

P.A. No. 2126	SA-30
Seller Purchased Equipment for 2012 Aircraft	02/11

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

LA-1103776

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 15 day of February of 2011.

LAN AIRLINES S.A.

Original signed by

By:
	Armando Valdivieso
Its:	Gerente General de Pasajeros

Original signed by

By:
	Damian Scokin
Its:	Gerente General Negocio Internacional

P.A. No. 2126	SA-30
Seller Purchased Equipment for 2012 Aircraft	02/11

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

Supplemental Agreement No. 31 (“SA-31”)

to

Purchase Agreement No. 2126

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft

THIS SUPPLEMENTAL AGREEMENT, entered into as of the 10th day of May 2011, by and between THE BOEING COMPANY, a Delaware corporation (hereinafter called “Boeing”), and LAN Airlines S.A., a Chilean corporation (hereinafter called “Customer”);

W I T N E S S E T H:

WHEREAS, the parties entered into that certain Purchase Agreement No. 2126, dated as of January 30, 1998 relating to the purchase and sale of Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F aircraft (hereinafter referred to as “Aircraft”) which agreement, including all tables, exhibits, supplemental exhibits and specifications thereto, together with all letter agreements then or thereafter entered into that by their terms constitute part of such purchase agreement and as such purchase agreement may be amended or supplemented from time to time, is hereinafter called the “Purchase Agreement;”

WHEREAS, Customer wishes to purchase five (5) aircraft scheduled for delivery in [***] in the 767-316ER configuration (hereinafter referred to as “2013 Aircraft”), and incorporate such aircraft into the Purchase Agreement;

WHEREAS, Boeing and Customer have agreed to amend the Purchase Agreement to incorporate the above changes;

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree to amend the Purchase Agreement as follows:

P.A. 2126 Page 1           SA-31

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

1. Table of Contents, Articles, Tables, Exhibits and Supplemental Exhibits:

1.1. Table of Contents. The “Table of Contents” to the Purchase Agreement is deleted in its entirety and the new “Table of Contents”, attached hereto, is substituted in lieu thereof to reflect the changes made by this Supplemental Agreement 31 (SA-31).

1.2. Customer is developing a new configuration with 30 Contour business class seats and 191 BE Aerospace economy class seats and Panasonic inflight entertainment equipment (New Configuration). The configuration and pricing of SA-31 is based on Customer’s Aircraft serial number 37802, block number VS925. The parties will enter into a new supplemental agreement to update Table 14 “Aircraft Information Table 767-316ER 2013 Aircraft 2010$” and the Exhibit A, “Aircraft Configuration” as soon as Customer has agreed on the changes representing the New Configuration.

1.3. Table 14 “Aircraft Information Table 767-316ER 2013 Aircraft 2010$”. Table 14 provides the scheduled delivery month, price and Advance Payments applicable to the 2013 Aircraft.

1.4. Exhibit A-12 “Aircraft Configuration”. Exhibit A-l2 provides the aircraft configuration for the 2013 Aircraft for pricing purposes.

1.4.1. The 2013 Aircraft will be configured to the New Configuration.

1.4.2. If Customer provides Boeing with written notice by the date specified in column B of the table below for a 2013 Aircraft specified in column A of the table below, then Customer may select a configuration of 18 Contour business class seats and 220 BE Aerospace economy class seats and Panasonic IFE (Alternate Configuration) for such applicable 2013 Aircraft as the first instance of this configuration. Once Customer has selected the Alternate Configuration for one of the specified 2013 Aircraft, subsequent 2013 Aircraft specified in Column A may also be selected for the Alternate Configuration with written notice by the date specified in column C of the table below for a 2013 Aircraft specified in column A of the table below.

P.A. 2126 Page 2           SA-31

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

Column A Delivery Month	Column B Due Date for Customer’s Notice of Alternate Configuration Selection for the 2013 Aircraft Specified in Column A (first instance)	Column C Due Date for Customer’s Notice of Alternate Configuration Selection for the 2013 Aircraft Specified in Column A (subsequent instance)
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

1.5. Supplemental Exhibit BFE2, “BFE Variables”, attached hereto, provides the BFE preliminary on-dock dates for the 2012 Aircraft and the 2013 Aircraft.

2. Restricted Letter Agreements.

2.1. Letter Agreement 6-1162-ILK-0385 R2 entitled “Performance Guarantees Relating to the 2011 Accelerated Aircraft and 2012 Aircraft” provides the performance guarantees for the 2013 Aircraft. The title of the Letter Agreement is revised to “Performance Guarantees Relating to the 2011 Accelerated Aircraft, 2012 and 2013 Aircraft”.

2.2. Letter Agreement 6-1162-ILK-451 entitled “Special Matters Letter Applicable to the 2012 Additional Aircraft” is revised to provide the terms and conditions, including the economic considerations, applicable to each 2013 Aircraft. The revised Letter Agreement, 6-1162-ILK-451R1, is attached hereto.

2.3. Letter Agreement LA-11033876, “Option Aircraft”, attached hereto, is added to the Purchase Agreement.

3. Payment Due at Effective Date of this Supplemental Agreement.

To effect the implementation of this SA-31, payments to Boeing are due by Customer. Customer has elected the [***] deferred schedule shown in Letter Agreement 6-1162-ILK-0451R1 paragraph 5.1. Therefore [***] is owed at signing of this SA-31.

4. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Supplemental Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and

P.A. 2126 Page 3           SA-31

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Supplemental Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Supplemental Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”, Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Relating to 2012 Accelerated Aircraft”, Article 6 of Letter Agreement 6-1162-ILK-00451 entitled “Special Matters Relating to 2012 Additional Aircraft” and Article 7 of Letter Agreement 6-1162-ILK-00451R1 entitled “Special Matters Relating to 2012 Additional Aircraft and 2013 Aircraft, Customer will not disclose this Supplemental Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

P.A. 2126 Page 4           SA-31

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY		LAN AIRLINES S.A.
Original Signed by		Original Signed by
By:		By:
	Ms. Irma L. Krueger		Roberto Alvo
Its	Attorney-In-Fact	Its:	Senior VP Corporate Planning & Development
		Original Signed by
		By:
			Armando Valdivieso
		Its:	Gerente General de Pasajeros

P.A. 2126 Page 5           SA-31

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

PURCHASE AGREEMENT NUMBER 2126

between

THE BOEING COMPANY

and

LAN Airlines S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft

P.A. 2126 SA-31

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

TABLE OF CONTENTS

		Supplemental Agreement
ARTICLES
1.	Quantity, Model and Description		24
2.	Delivery Schedule		24
3.	Price		24
4.	Payment		24
5.	Miscellaneous		24
6.	Confidentiality		24
TABLE
1.	Aircraft Information Table 767 300ER Aircraft – 1995$		1
2.	Aircraft Information Table 767 300F Aircraft – 1997$		1
3.	Aircraft Information Table 767 300F Aircraft – 1998$		8
4.	Aircraft Information Table 767 300F Aircraft – 1999$		11
5.	Aircraft Information Table 767 300F Aircraft – 2003$		18
6.	Aircraft Information Table 767 316ER Aircraft – 2003$		21
7.	Aircraft Information Table 767 300F Aircraft – 2004$		24
8.	Aircraft Information Table 767 316ER Aircraft – 2004$		22
9.	Aircraft Information Table 767 316ER Aircraft – 2005 $		22
10.	Aircraft Information Table 767-316ER Aircraft – 2006 $		25
11.	Aircraft Information Table 767-316ER Aircraft – 2008 $		28
12.	Aircraft Information Table 767-316F Aircraft – 2008 $: DELETED		29
13.	Aircraft Information Table 767-316ER Aircraft – 2010 $		30
14.	Aircraft Information Table 767-316ER 2013 Aircraft – 2010 $		31
EXHIBITS
A.	Aircraft Configuration
A-1	Aircraft Configuration		1
A-2	Aircraft Configuration		5
A-3	Aircraft Configuration		10
A-4	Aircraft Configuration 767-316F Aircraft – 2003$		15
A-5	Aircraft Configuration 767-316ER Aircraft – 2003$		17
A-6	Aircraft Configuration 767-316ER Aircraft – 2004$		22
A-7	Aircraft Configuration 767-316ER Aircraft – 2005$		22
A-8	Aircraft Configuration 767-316ER Aircraft – 2006$		23
A-9	Aircraft Configuration 767-316ER Aircraft – 2008$		24
A-10	Aircraft Configuration 767-316F Aircraft – 2008$: DELETED		28
A-11	Aircraft Configuration 767-316ER Aircraft – 2010$		29
A-12	Aircraft Configuration 767-316ER Aircraft – 2010$		31 (Art 1.4	)
B.	Aircraft Delivery Requirements and Responsibilities		1

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Page 1 of 1

BOEING PROPRIETARY

		Supplemental Agreement (s)
SUPPLEMENTAL EXHIBITS
BFE1.	BFE Variables		30
BFE2.	BFE Variables for 2012 and 2013 Aircraft		31
CS1.	Customer Support Variables		1
EE1.	Engine Escalation/Engine Warranty and Patent Indemnity		1
EE1-1.	Engine Escalation/Engine Warranty and Patent Indemnity		5
EE1-2.	Engine Escalation/Engine Warranty and Patent Indemnity		13
EE1-2006$	Engine Escalation, Engine Warranty & Patent Indemnity		26
EE1-2008$	Engine Escalation, Engine Warranty & Patent Indemnity		26
EE1-2010$	Engine Escalation, Engine Warranty & Patent Indemnity		29
SLP1.	Service Life Policy Components
AE1	Escalation adjustment-airframe and optional features		22
AE1 2008$	Escalation adjustment-airframe and optional features		24
AE1 2010$	Escalation adjustment-airframe and optional features		29
LETTER AGREEMENTS
2126-1	Seller Purchased Equipment
2126-2R1	Cabin Systems Equipment		17
2126-3R4	Option Aircraft		13
RESTRICTED LETTER AGREEMENTS
6-1162-DMH-350	Performance Guarantees
6-1162-DMH-351	Promotion Support
6-1162-DMH-472	Performance Guarantees		1
6-1162-DMH-475	Configuration Matters		1
6-1162-DMH-1031R2	Special Provisions for Advance Payments		9
6-1162-LAJ-311	Special Matters Relating to the July 2001 and September 2001 Aircraft		11
6-1162-LAJ-956	Special Matters Relating to four 2006 Delivery Aircraft (February 4, 2005)
6-1162-LAJ-0895R6	Business Considerations		23
6-1162-ILK-0002R4	Special Matters Relating to Advance Payments Requirements		21
6-1162-ILK-0381 R2	Special Matters Letter Applicable to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft		29 DELETED
6-1162-ILK-0382	No longer applicable		26
6-1162-ILK-0383 R1	Aircraft Model Substitution Relating to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft		26

P.A. 2126 SA-31

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

		Supplemental Agreement (s)
RESTRICTED LETTER AGREEMENTS, continued
6-1162-ILK-0384 R2	16G Seats		27
6-1162-ILK-0385 R2	Performance Guarantees Relating to the 2011, Accelerated Aircraft, 2012 and 2013 Aircraft		31(Art 2.1)
6-1162-ILK-0388	Option Aircraft – DELETED		28 (Art 6.2	)
6-1162-ILK-0412	Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009		25
6-1162-ILK-0413	[***]		25
6-1162-KSW-6423	Special Matters Letter Applicable to the Incremental Aircraft		27
6-1162-KSW-6424	Aircraft Model Substitution Relating to the Incremental Aircraft		27
6-1162-KSW-6456	Performance Guarantees for Substitute 767 Freighter Aircraft: DELETED		29
6-1162-ILK-0450	Special Matters Letter Applicable to the 2012 Accelerated Aircraft		29
6-1162-ILK-0451	Special Matters Letter Applicable to the 2012 Additional Aircraft		30
6-1162-ILK-0451R1	Special Matters Letter Applicable to the 2012 Additional Aircraft and 2013 Aircraft		31
LA-1103777	Seller Purchased Equipment for 2012 Aircraft		30
LA-11033876	Option Aircraft		31

P.A. 2126 SA-31

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Aircraft Information Table No. 14 for 2013 Aircraft

Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:     767-300ER		412000 pounds	Detail Specification:	D019T001-L (2/10/2010)	*
Engine Model/Thrust: CF6-80C2B6F		60200 pounds	Airframe Price Base Year/Escalation Formula:	Jul-10		ECI-MFG/CPI
Airframe Price:	$	125,875,000	Engine Price Base Year/Escalation Formula:	Jul-10		GE CF6-80 & GE90 (99 rev.)
Optional Features:	$	7,426,400
Sub-Total of Airframe and Features:	$	133,301,400	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	23,557,799	Base Year Index (ECI):	106.8
Aircraft Basic Price (Excluding BFE/SPE):	$	156,859,199	Base Year Index (CPI):	215.6
Buyer Furnished Equipment (BFE) Estimate:	$	0	Engine Escalation Data:
Seller Purchased Equipment (SPE) Estimate:	$	6,400,000	Base Year Index (CPI):	133.190
Refundable Deposit/Aircraft at Proposal Accept:	$	0

						Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Manufacturer Serial Number	Escalation Estimate Adv Payment Base Price Per A/P	At Signing 1%	24 Mos. 4%	21/18/12/9/6 Mos. 5%	Total 30%
[***]	1	1.0499	1.098	41993	$172,539,000	$1,725,390	$6,901,560	$8,626,950	$51,761,700
[***]	1	1.0555	1.106	41994	$173,510,000	$1,735,100	$6,940,400	$8,675,500	$52,053,000
[***]	1	1.0619	1.115	41995	$174,616,000	$1,746,160	$6,984,640	$8,730,800	$52,384,800
[***]	1	1.0638	1.118	41996	$174,952,000	$1,749,520	$6,998,080	$8,747,600	$52,485,600
[***]	1	1.068	1.124	41997	$175,680,000	$1,756,800	$7,027,200	$8,784,000	$52,704,000
Total:	5

* This pricing is based on Customer's Aircraft with serial number 37802, block number VS925. This will be revised to reflect Customer's New Configuration.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

between

THE BOEING COMPANY

and

LAN Airlines S.A.

Supplemental Exhibit BFE2

to Purchase Agreement Number PA-2126

LAN-PA-2126		SA-31
	BOEING PROPRIETARY	Supp. Exh. BFE2, Page 1

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

relating to

BOEING MODEL 767-316ER AIRCRAFT

This Supplemental Exhibit BFE2 contains supplier selection dates, on-dock dates and other requirements applicable to the Aircraft.

1. Supplier Selection.

Customer will:

Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:

Galley System	Complete
Galley Inserts	Complete
Seats (Suites)	Complete
Seats (F/C, B/C, Premium E/C)	Complete
Seats (Economy class)	Complete
Overhead & Audio System	Complete
In-Seat Video System	Complete
Miscellaneous Emergency Equipment	Complete

LAN-PA-2126		SA-31
	BOEING PROPRIETARY	Supp. Exh. BFE2, Page 2

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2. On-dock Dates and Other Information.

Boeing will provide to Customer the BFE Requirements electronically in My Boeing Fleet (MBF), through My Boeing Configuration (MBC). These requirements may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-sequence installation of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:

Item	Preliminary On-Dock Dates [Month of Delivery]
	[***]	[***]	[***]	[***]	[***]
Seats	[***]	[***]	[***]	[***]	[***]
Galleys Furnishings	[***]	[***]	[***]	[***]	[***]
Electronics	[***]	[***]	[***]	[***]	[***]
Cabin Systems Equipment	[***]	[***]	[***]	[***]	[***]
Miscellaneous/Emergency Equipment	[***]	[***]	[***]	[***]	[***]
Textiles/Raw Materials	[***]	[***]	[***]	[***]	[***]

Item	Preliminary On-Dock Dates [Month of Delivery]
	[***]	[***]	[***]	[***]	[***]
Seats	[***]	[***]	[***]	[***]	[***]
Galleys Furnishings	[***]	[***]	[***]	[***]	[***]
Electronics	[***]	[***]	[***]	[***]	[***]
Cabin Systems Equipment	[***]	[***]	[***]	[***]	[***]
Miscellaneous/Emergency Equipment	[***]	[***]	[***]	[***]	[***]
Textiles/Raw Materials	[***]	[***]	[***]	[***]	[***]

LAN-PA-2126		SA-31
	BOEING PROPRIETARY	Supp. Exh. BFE2, Page 3

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3. Additional Delivery Requirements—Import.

Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE imported into the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply with U.S. Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for Customer’s BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S. Customs Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the requirements in the “International Shipment Routing Instructions”, including the Customs Trade Partnership Against Terrorism (C-TPAT), as set out on the Boeing website referenced below. Customer agrees to include the International Shipment Routing Instructions, including C-TPAT requirements, in each contract between Customer and BFE supplier.

http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html

LAN-PA-2126		SA-31
	BOEING PROPRIETARY	Supp. Exh. BFE2, Page 2

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

The Boeing Company P.O. Box 3707 Seattle, WA 98124-2207

6-1162-ILK-0451R1

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject:	Special Matters Letter Applicable to the 2012 Additional Aircraft and 2013 Aircraft
Reference:	Purchase Agreement No. 2126 (the Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 767-316F, Model 767-38EF and Model 767-316ER aircraft (hereinafter referred to as “Aircraft”)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

1. Definitions.

1.1 “STE” when used specifically in relation to any credit memorandum contained in this letter agreement shall mean that the relevant credit memorandum shall be escalated to the month of delivery in the same manner as the Airframe Price in accordance with the escalation formula reflected in Supplemental Exhibit AE1 2010$ to the Purchase Agreement entitled “Escalation adjustment - airframe and optional features”.

1.2 “Limitations on Use” when used in relation to any credit memorandum contained in this letter agreement shall mean that the applicable credit memorandum may be used for the purchase of Boeing goods and services or applied to the final delivery payment for the Aircraft for which the credit was issued, but that the relevant credit memorandum shall be prohibited from use for satisfaction of any Advance Payment obligation.

1.3 “2012 Additional Aircraft” shall mean each or all three, as the case may be, of the three 767-316ER Aircraft (as previously defined in Supplemental Agreement No. 30 to the Purchase Agreement) scheduled for delivery in [***].

1.4 ““2013 Aircraft” shall mean each or all five, as the case may be, of the five 767-316ER Aircraft (as previously defined in [***], respectively.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

1.5 Table 13 shall mean the table entitled “Aircraft Information Table 767-316ER Aircraft – 2010 $”as revised.

1.6 Table 14 shall mean the table entitled “Aircraft Information Table 767-316ER 2013 Aircraft – 2010 $”as revised

2. Export License.

Customer understands and confirms that it is Customer’s responsibility to obtain any required Export License from the relevant U.S. authority. Without accepting any liability for any failure to do so, Boeing will use reasonable endeavors to alert Customer to any regulatory changes of which Boeing becomes aware and which require Customer to obtain such Export License.

3. Warranty Modification.

Notwithstanding paragraph 3.2 of Part 2 of Exhibit C to the AGTA, Boeing agrees that the warranty period for a Corrected Boeing Product resulting from a defect in material or workmanship is 6 months or the remainder of the initial warranty period, whichever is longer.

4. Credit Memoranda for the 2012 Additional Aircraft and 2013 Aircraft.

4.1 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide the Customer with a credit memorandum concurrently with the delivery of each 2012 Additional Aircraft and 2013 Aircraft, in description and amount which is identified in the credit memoranda table below.

Credit Memoranda Exclusive to the 2012 Additional Aircraft and the 2013 Aircraft	Concession Stated as a Percentage of Airframe Price
Incentive Basic Credit Memorandum, STE	[***]
Incremental Aircraft Credit Memorandum, STE	[***]
Total Table 4.1 Credit Memoranda Exclusive to the 2012 Additional Aircraft and 2013 Aircraft	[***]

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

4.2 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide Customer with a goods and services credit memorandum at the time of definitive agreement signing of SA-30 in the total amount of [***].

4.3 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide Customer with a goods and services credit memorandum [***].

5. Deferred Advance Payments for 2012 Additional Aircraft and 2013 Aircraft.

5.1 The parties agree that, in respect of each 2012 Additional Aircraft and 2013 Aircraft, Customer may elect a [***] deferred advance payment schedule as shown below (the Deferred Advance Payment Schedule Applicable for the 2012 Additional Aircraft and 2013 Aircraft) in lieu of the standard advance payment schedule set forth in Article 4.2 of the Purchase Agreement and in Table 13 and Table 14, as applicable, (the Standard Advance Payment Schedule). Customer has elected the [***] schedule for its 2012 Additional Aircraft and 2013 Aircraft.

Due Date of Payment*	Amount Due per Aircraft (percentage of Aircraft’s Advance Payment Base Price)
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

* - unless otherwise indicated, refers to the number of months prior to the first day of the scheduled delivery month of the Aircraft.

5.2 The parties agree that Customer will pay interest to Boeing on the difference between the payments made pursuant to the Article 5.1 Deferred Advance Payment Schedule Applicable to the 2012 Additional Aircraft and 2013 Aircraft and the amount which would otherwise have been payable to Boeing under the Standard Advance Payment Schedule. Such interest shall accrue from and including the date on which such payments would have been due if there were no deferral up to the but excluding the date on which such amounts are paid in full. The rate used to calculate such interest shall be

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

the three-month London Interbank Offered Rate (LIBOR) as set forth in The Wall Street Journal, US edition, [***]. The effective rate will be the rate in effect on the first business day of the calendar quarter in which the advance payment was initially deferred, and will be reset every calendar quarter. Interest on unpaid amounts will be calculated using a 360 day year, and compounded quarterly.

6. Delivery Flexibility for 2013 Aircraft.

Boeing reserves the right to accelerate or delay the delivery months by up to [***]. Boeing must exercise the right by providing written notice to Customer on or before eighteen (18) months prior to the delivery month.

7. 16G Compliant Seats for the 2013 Aircraft.

The parties agree that both the New Configuration and the Alternate Configuration (if selected by the Customer for any of the specified 2013 Aircraft) comply with enacted RIN 2120-AC84, Improved Seats in Air Carrier Transport Category Airplanes. Accordingly, Letter Agreement 6-1162-ILK-0384R2 does not apply to any of the 2013 Aircraft.

8. SPE Fee Clarification.

The fee charged in Article 1.2.1 of Letter Agreement 1103776 entitled Seller Purchased Equipment (SPE) for 2012 Aircraft shall not apply to the 2013 Aircraft. For the avoidance of doubt, Boeing will [***]. Customer requested changes to the SPE after execution of this Letter Agreement shall be made by Customer in writing directly to Boeing for approval and for coordination by Boeing with the SPE supplier. Any Customer initiated change to the configuration of the Aircraft shall be subject to price and offerability through Boeing's master change or other process for amendment of the Purchase Agreement including an SPE charge equal to [***] of the SPE cost. Notwithstanding any of the preceding, the parties agree that the aggregate amount for the SPE fee shall not exceed [***] without written mutual agreement.

9. Assignment.

Any assignment by Customer of any benefits, entitlements, or services described in this Letter Agreement requires Boeing's prior written consent. Further, Customer will not reveal to any third party the amount of the credit memoranda provided to Customer by Boeing without Boeing’s prior written consent and subject to such circumstances as Boeing may reasonably require.

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Boeing will not unreasonably withhold consent to Customer’s request to assign, as security, rights in the Purchase Agreement if done for purposes of obtaining financing or for such other purpose consistent with fulfilling its obligations under the Purchase Agreement. Boeing’s consent will be conditioned on all parties accepting Boeing’s customary conditions for consenting to an assignment, including, but not limited to, the following: assignor and assignee indemnification of Boeing for any actions taken by an assignee under any assignment agreement; Boeing’s right to exercise the manufacturer’s option to assume Customer’s rights under the Purchase Agreement in the event of a default under an assignment agreement; and confidentiality. A Party that is

i. bound by a customary confidentiality agreement;

ii. neither an airplane manufacturer nor an airline; and

iii. responding to a Customer request for proposals to provide financing of Aircraft pursuant to the Purchase Agreement, including pre-delivery payment financing

shall be deemed a “Financing Party”.

Without Boeing’s consent, Customer may represent to any Financing Party that Boeing will provide to that Financing Party, concurrently with the delivery of each of the Aircraft to that Financing Party, a financier credit memorandum equal to

(a) Concession ceiling for the passenger aircraft: [***]

(b) Concession ceiling for the freighter aircraft: [***]

escalated to the month of delivery in the same manner as the Airframe Price as described in Supplemental Exhibit AE1 2010$ and in conformance with terms and conditions of this Letter Agreement. Insofar as such Financing Party is concerned, this Financier Credit Memorandum shall be in lieu of any other provision in the Letter Agreement. When the Customer identifies a Financing Party and the preliminary terms of an assignment under which pre-delivery payment financing or aircraft purchase financing could be provided, at Customer’s request, Boeing agrees to enter into discussions with the Customer to consider whether an additional credit memorandum can be assigned, with the goal of helping Customer obtain third-party financing.

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Boeing will consent to any reasonable request by Customer to assign the Purchase Agreement to an affiliate provided that Boeing is provided with an adequate guarantee of performance of all obligations under this Purchase Agreement and in a form reasonably satisfactory to Boeing.

Customer understands that Boeing is not required under any circumstances to consent to an assignment that would constitute a novation.

The foregoing provisions are intended to supplement, and not to supersede, the assignment provisions of the AGTA, which address delivery date and post-delivery assignments, merger-type assignments, and other matters.

10. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; Article 6 of Letter Agreement 6-1162-ILK-0451 entitled Special Matters Applicable to the 2012 Additional Aircraft and Article 7 herein, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

Very truly yours,

THE BOEING COMPANY

Original signed by

By:                                                            

                    Ms. Irma L. Krueger

Its:                 Attorney-In-Fact                

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 10th day of May of 2011.

LAN AIRLINES S.A.

Original signed by

By:                                                                              

                        Roberto Alvo

Its: Senior VP Corporate Planning & Development

Original signed by

By:                                                                              

                        Armando Valvieso

Its:                 Gerente General de Pasajeros              

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN-2126-LA-1103876

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject:	Option Aircraft
Reference:	Purchase Agreement No. 2126 (Purchase Agreement) between The Boeing Company (Boeing) and LAN  Airlines S.A. (Customer) relating to Model 767-316F, Model 767-38EF and Model 767-316ER aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.

4. Right to Purchase Option Aircraft.

Subject to the terms and conditions contained in this Letter Agreement, in addition to the 2013 Aircraft, Customer will have the option to purchase additional Model 767-316ER aircraft as option aircraft (Option Aircraft).

5. Delivery.

The number of aircraft and delivery quarters are listed in Attachment 1 to this Letter Agreement. The delivery month within the quarter will be identified at option exercise. Boeing will provide Customer with delivery month information for each aircraft in Attachment 1 to this Letter Agreement [***].

6. Configuration.

6.1 Subject to the provisions of Article 3.2, below, the configuration for the Option Aircraft will be the Detail Specification for model 767-316ER aircraft at the revision level in effect at the time of Definitive Agreement. Such Detail Specification will be revised to include (i) changes applicable to the basic Model 767-300ER which are developed by Boeing between the date of the Detail Specification and the signing of the definitive agreement to purchase the Option Aircraft, (ii) changes required to obtain required regulatory certificates, and (iii) other changes as mutually agreed.

6.2 Boeing reserves the right to configure the Option Aircraft starting from a different configuration specification, provided that it can achieve the same configuration which would result pursuant to the provisions of Article 3.1 provided, however, that there is no adverse economic impact for the Customer.

7. Price.

7.1 The Airframe Price, Engine Price, Optional Features Prices, and Aircraft Basic Price for each of the Option Aircraft shall be determined in accordance with the

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

provisions of the Purchase Agreement using Boeing’s then current prices as of the date of execution of the Definitive Agreement. Since the Option Exercise Date for all Option Aircraft is July 1, 2010, all the Option Aircraft will be priced in 2010 dollars.

7.2 The Airframe Price, Engine Price, Optional Features Prices, and Aircraft Basic Price for each of the Option Aircraft shall be adjusted in accordance with the terms set forth in Article 2.1.5 (Escalation Adjustment) of the AGTA.

7.3 The Advance Payment Base Price shall be developed in accordance with the terms of the Purchase Agreement and determined at the time of Definitive Agreement.

8. Business Considerations for Option Aircraft.

The Option Aircraft will receive the same business considerations as the 2013 Aircraft which are from Letter Agreement 6-1162-ILK-0451R1 paragraph 4.1 the [***] Table 4.1 Credit Memoranda and from paragraph 4.3 the [***] per Option Aircraft goods and services credit memorandum.

9. Payment.

9.1 Customer will pay a non-refundable option deposit to Boeing [***] per Option Aircraft (Option Deposit) on the date of execution of this Letter Agreement. This Option Deposit has been reduced from [***] standard option deposit because Customer has accepted the Boeing Call Rights discussed in paragraph 8 below and the Delivery Flexibility for 2013 Aircraft in paragraph 6 of Letter Agreement 6-1162-ILK-0451R1. The Option Deposit will be credited against the first advance payment due. If Customer does not exercise an option, Boeing will retain the Option Deposit for that Option Aircraft.

9.2 At Definitive Agreement for the Option Aircraft, advance payments will be payable as specified in the Purchase Agreement. The remainder of the Aircraft Price for the Option Aircraft will be paid at the time of delivery.

9.3 For the avoidance of doubt, if Customer exercises its rights in an Option Aircraft, then Customer may elect a [***] deferred advance payment schedule specified in Article 5.2 of Letter Agreement 6-1162-ILK-0451R1 entitled “Special Matters Letter Applicable to the 2012 Additional Aircraft and 2013 Aircraft” for each such Option Aircraft.

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

10. Option Exercise.

10.1 Customer may exercise an option by giving written notice to Boeing on or before the [***]. (Option Exercise Date).

10.2 If Boeing must make production decisions which are dependent on Customer's exercising an option earlier than the Option Exercise Date, Boeing may accelerate the Option Exercise Date and/or the delivery date for the Option Aircraft subject to Customer's agreement. If Boeing and Customer fail to agree to a revised Option Exercise Date and/or delivery date, either party may terminate the option and Boeing will refund to Customer, without interest, any Option Deposit and advance payments, if any, received by Boeing with respect to the terminated Option Aircraft.

11. Boeing Call Rights.

11.1 The Option Aircraft delivery dates identified in the Attachment are subject to a call notice by Boeing (Call Options). At any time prior to the Option Exercise Date for such Call Options, Boeing may provide to Customer written notice that such Call Option(s) must be exercised by Customer within thirty (30) days of Boeing’s written notice. Should Customer not exercise its option within such thirty (30) days of Boeing’s written notice, Boeing may terminate the option and refund to Customer, without interest, any deposit and advance payments, if any, received by Boeing with respect to the terminated Option Aircraft.

11.2 Boeing shall only have the right to issue a call notice for the Call Options when it has reason to believe that such delivery positions for such Call Options will be purchased by another customer as a firm sale. In consideration for this call right, the Option Deposit for such Call Options is reduced as reflected in the Attachment.

12. Definitive Agreement.

Following Customer’s exercise of an option and Boeing’s confirmation of delivery positions Boeing and Customer will use their best efforts to reach a definitive agreement for the purchase of an Option Aircraft (Definitive Agreement) within sixty (60) calendar days of such exercise. The Definitive Agreement will include the provisions of the

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Purchase Agreement as modified to reflect the provisions of this Letter Agreement. In the event the parties have not entered into a Definitive Agreement within sixty (60) days following option exercise, either party may terminate the option to purchase such Option Aircraft by giving written notice to the other within five (5) days. If Customer and Boeing fail to enter into the Definitive Agreement, Boeing will retain the Option Deposit for that Option Aircraft and shall have no further obligation with respect to that Option Aircraft.

13. Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the 2013 Aircraft and cannot be assigned in whole or, in part.

14. Confidential Treatment.

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 8 of Letter Agreement 6-1162-ILK-0381R2 entitled “Special Matters Letter Applicable to the 2011 Accelerated Aircraft”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Three Aircraft Originally Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; Article 6 of Letter Agreement 6-1162-ILK-0451 entitled Special Matters Applicable to the 2012 Additional Aircraft and Article 7 of Letter Agreement 6-1162-ILK-0451R1 entitled “Special Matters Applicable to the 2012 Additional Aircraft and 2013 Aircraft”, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

Very truly yours,

THE BOEING COMPANY

Original signed by

By:                                                  

                Ms. Irma L. Krueger

Its:           Attorney-In-Fact                

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 10th day of May of 2011.

LAN AIRLINES S.A.

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0451R1

Original signed by

By:                                                                          

                        Roberto Alvo

Its: Senior VP Corporate Planning & Development

Original signed by

By:                                                                          

                        Armadno Valdivieso

Its: Gerente General de Pasajeros

P.A. No. 2126	SA-31
Special Matters Letter: 2012 Additional Aircraft & 2013 Aircraft

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Attachment 1 to Letter Agreement 1103876

767-316ER Option Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:       767-300ER	412000 pounds		Detail Specification:	D019T001-L (2/10/2010)*
Engine Model/Thrust:             CF6-80C2B6F		60200 pounds	Airframe Price Base Year/Escalation Formula:	Jul-10	ECI-MFG/CPI
Airframe Price:	$	125,875,000	Engine Price Base Year/Escalation Formula:	Jul-10	GE CF6-80 & GE90 (99 rev.)
Optional Features:	$	7,426,400
Sub-Total of Airframe and Features:	$	133,301,400	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	23,557,799	Base Year Index (ECI):	106.8
Aircraft Basic Price (Excluding BFE/SPE):	$	156,859,199	Base Year Index (CPI):	215.6
Buyer Furnished Equipment (BFE) Estimate:	$	0	Engine Escalation Data:
Seller Purchased Equipment (SPE) Estimate:	$	6,400,000	Base Year Index (CPI):	133.190
Nonrefundable Option Deposit:	$	790,000

									Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft		Escalation Factor (Airframe)		Escalation Factor (Engine)		Escalation Estimate Adv Payment Base Price Per A/P		At Signing 1%		24 Mos. 4%		21/18/12/9/6 Mos. 5%		Total 30%
[***]		1		1.0555		1.106	$	173,510,000	$	945,100	$	6,940,400	$	8,675,500	$	52,053,000
[***]		1		1.068		1.124	$	175,680,000	$	966,800	$	7,027,200	$	8,784,000	$	52,704,000
[***]		1		1.068		1.124	$	175,680,000	$	966,800	$	7,027,200	$	8,784,000	$	52,704,000
[***]		1		1.0731		1.132	$	176,581,000	$	975,810	$	7,063,240	$	8,829,050	$	52,974,300
Total:		4

Notes: The midmonth of each quarter was used for pricing purposes. When an Option is exercised, the delivery month within the quarter will be assigned.

* [***].

* Pricing has been based on Customer's Aircraft serial number 37802, block number VS925. This will be revised to reflect Customer's New Configuration.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

Supplemental Agreement No. 32 (“SA-32”)

to

Purchase Agreement No. 2126

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF and Model 767-316F Aircraft

THIS SUPPLEMENTAL AGREEMENT, entered into as of the_22nd day of December 2011, by and between THE BOEING COMPANY, a Delaware corporation (hereinafter called “Boeing”), and LAN Airlines S.A., a Chilean corporation (hereinafter called “Customer”);

W I T N E S S E T H:

WHEREAS, the parties entered into that certain Purchase Agreement No. 2126, dated as of January 30, 1998 relating to the purchase and sale of Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F aircraft (hereinafter referred to as “Aircraft”) which agreement, as amended and supplemented, together with all tables, exhibits, supplemental exhibits and specifications and letter agreements related or attached thereto by Supplemental Agreements No. 1 through No. 31, is hereinafter called the “Purchase Agreement;”

WHEREAS, Customer and Boeing desire to amend the Purchase Agreement to exercise two (2) 767-316ER Option Aircraft to two (2) firm 767-316ER Aircraft with scheduled delivery months of [***] (hereinafter referred to as “2013 Additional Aircraft”);

WHEREAS, Customer and Boeing desire to amend the Purchase Agreement to terminate the two (2) remaining 767-316ER Option Aircraft and transfer the Option Deposits for the total four (4) 767-316ER Option Aircraft to the Advance Payments due for the 2013 Additional Aircraft, described above;

WHEREAS, Customer and Boeing desire to amend the Purchase Agreement to reflect the updated configuration for thirteen (13) firm Aircraft;

P.A. 2126 1           SA-32

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

WHEREAS, Customer and Boeing have agreed to replace Table 2 787-8 aircraft with Table 6 787-8 aircraft in Supplemental Agreement No. 3 to the Purchase Agreement 3256; and

WHEREAS, Customer and Boeing have agreed to amend the Purchase Agreement to incorporate the above changes;

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree to amend the Purchase Agreement as follows:

1. Table of Contents, Articles, Tables, Exhibits and Supplemental Exhibits:

1.1. Table of Contents. The “Table of Contents” to the Purchase Agreement is deleted in its entirety and a new “Table of Contents”, is attached hereto to reflect the changes made by this Supplemental Agreement 32.

1.2. Revision of Table 13. “Aircraft Information Table 13 for 2012 Aircraft” is deleted in its entirety and replaced with a new “Table 13 Aircraft Information for 2012 Aircraft—SA32” to reflect Aircraft configuration of Exhibit A-13, which is a new interior with 30 Contour business class seats and 191 BE Aerospace economy class seats and Panasonic in-flight entertainment equipment (“New Configuration”).

1.2.1. For clarification purposes, the new Table 13 Aircraft in this SA-32 to the Purchase Agreement includes the three (3) 2012 Accelerated Aircraft as defined in SA-29 and the three (3) 2012 Additional Aircraft as defined in SA-30 to the Purchase Agreement (“2012 Aircraft”).

1.3. Revision of Table 14. “Aircraft Information Table 14 for 2013 Aircraft” is deleted in its entirety and replaced with a new “Table 14 Aircraft Information for 2013 Aircraft—SA32” to reflect the New Configuration and add the 2013 Additional Aircraft.

1.3.1. For clarification purposes, the new Table 14 Aircraft in this SA-32 to the Purchase Agreement includes the five (5) 2013 Aircraft as defined in SA-31 and the two (2) 2013 Additional Aircraft defined in this SA-32 to the Purchase Agreement.

1.4. Exhibit A-13 “Aircraft Configuration”. Exhibit A-l3 provides the aircraft configuration for new Table 13 and new Table 14 Aircraft and reflects thirty (30) Contour business class seats, one hundred ninety-one (191) BE Aerospace economy class seats and Panasonic EX2 in-flight entertainment equipment.

P.A. 2126 2           SA-32

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

1.5. Revision of Supplemental Exhibit BFE2. “BFE Variables” is revised to add the BFE preliminary on-dock dates for the 2013 Additional Aircraft.

2. Restricted Letter Agreement.

2.1. Letter Agreement 6-1162-ILK-0385 R2 entitled “Performance Guarantees Relating to the 2011 Accelerated Aircraft, 2012 and 2013 Aircraft” is deleted in its entirety and replaced with 6-1162-ILK-0385R3 “Performance Guarantees Relating to the 2011 Aircraft, 2012 Aircraft, 2013 Aircraft and 2013 Additional Aircraft” to clearly define the Aircraft in the cover letter and to correct references to other Letter Agreements included in the confidentiality paragraph.

2.1.1. For avoidance of doubt, the content of the Attachment to Letter Agreement 6-1162-ILK-0385R3 is unchanged from SA-27, only the Letter Agreement reference has been updated to reflect the current revision.

2.2 Letter Agreement 6-1162-ILK-451R1 entitled “Special Matters Letter Applicable to the 2012 Additional Aircraft” is revised to provide the terms and conditions, including the economic considerations, applicable to each 2013 Aircraft and 2013 Additional Aircraft. The revised Letter Agreement, 6-1162-ILK-451R2 and with its Attachment A, is attached hereto.

2.3 Letter Agreement LA-1103876 entitled “Option Aircraft” is no longer applicable and is deleted in its entirety in this SA-32.

3. Payment Due at Effective Date of this Supplemental Agreement.

To effect the implementation of this SA-32, payments to Boeing are due by Customer. Customer has elected the [***] deferred schedule shown in Letter Agreement 6-1162-ILK-0451R2 paragraph 5.1.

[***].

Therefore, [***] is owed by Customer to Boeing at signing of this SA-32.

4. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Supplemental Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information

P.A. 2126 3           SA-32

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Supplemental Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Supplemental Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”, Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Relating to 2012 Accelerated Aircraft”, Article 6 of Letter Agreement 6-1162-ILK-00451 entitled “Special Matters Relating to 2012 Additional Aircraft”, Article 9 to Letter Agreement 6-1162-ILK0451R1 entitled “Special Matters Applicable to the 2012 Additional Aircraft and 2013 Aircraft” and Article 13 of Letter Agreement 6-1162-ILK-00451R2 entitled “Special Matters Relating to 2012 Additional Aircraft and 2013 Aircraft”, Customer will not disclose this Supplemental Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

P.A. 2126 4           SA-32

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.2.5

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY		LAN AIRLINES S.A.
Original Signed by		Original signed by
By:		By:
	Melanie A. Gauthier		Roberto Alvo
Its	Attorney-In-Fact	Its:	Senior VP Corporate Planning & Development
		Original Signed by
		By:
			Andres Del Valle E.
		Its:	Corporate Finance Director

P.A. 2126 5           SA-32

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

PURCHASE AGREEMENT NUMBER 2126

between

THE BOEING COMPANY

and

LAN Airlines S.A.

Relating to Boeing Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft

P.A. 2126 SA-32

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

TABLE OF CONTENTS

		Supplemental Agreement
ARTICLES
1.	Quantity, Model and Description		24
2.	Delivery Schedule		24
3.	Price		24
4.	Payment		24
5.	Miscellaneous		24
6.	Confidentiality		24
TABLE
1.	Aircraft Information Table 767 300ER Aircraft – 1995$		1
2.	Aircraft Information Table 767 300F Aircraft – 1997$		1
3.	Aircraft Information Table 767 300F Aircraft – 1998$		8
4.	Aircraft Information Table 767 300F Aircraft – 1999$		11
5.	Aircraft Information Table 767 300F Aircraft – 2003$		18
6.	Aircraft Information Table 767 316ER Aircraft – 2003$		21
7.	Aircraft Information Table 767 300F Aircraft – 2004$		24
8.	Aircraft Information Table 767 316ER Aircraft – 2004$		22
9.	Aircraft Information Table 767 316ER Aircraft – 2005 $		22
10.	Aircraft Information Table 767-316ER Aircraft – 2006 $		25
11.	Aircraft Information Table 767-316ER Aircraft – 2008 $		28
12.	Aircraft Information Table 767-316F Aircraft – 2008 $		29 Deleted
13.	Aircraft Information Table 767-316ER 2012 Aircraft – 2010 $ - SA-32		32
14.	Aircraft Information Table 767-316ER 2013 Aircraft – 2010 $ - SA-32		32
EXHIBITS
A.	Aircraft Configuration
A-1	Aircraft Configuration		1
A-2	Aircraft Configuration		5
A-3	Aircraft Configuration		10
A-4	Aircraft Configuration 767-316F Aircraft – 2003$		15
A-5	Aircraft Configuration 767-316ER Aircraft – 2003$		17
A-6	Aircraft Configuration 767-316ER Aircraft – 2004$		22
A-7	Aircraft Configuration 767-316ER Aircraft – 2005$		22
A-8	Aircraft Configuration 767-316ER Aircraft – 2006$		23
A-9	Aircraft Configuration 767-316ER Aircraft – 2008$		24
A-10	Aircraft Configuration 767-316F Aircraft – 2008$ DELETED		28
A-11	Aircraft Configuration 767-316ER Aircraft – 2010$		29
A-12	Aircraft Configuration 767-316ER Aircraft – 2010$		31 (Art 1.4	)
A-13	Aircraft Configuration 767-316ER Aircraft – 2010$		32
B.	Aircraft Delivery Requirements and Responsibilities		1

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

		Supplemental Agreement (s)
SUPPLEMENTAL EXHIBITS
BFE1.	BFE Variables		30
BFE2.	BFE Variables		32
CS1.	Customer Support Variables		1
EE1.	Engine Escalation/Engine Warranty and Patent Indemnity		1
EE1-1.	Engine Escalation/Engine Warranty and Patent Indemnity		5
EE1-2.	Engine Escalation/Engine Warranty and Patent Indemnity		13
EE1-2006$	Engine Escalation, Engine Warranty & Patent Indemnity		26
EE1-2008$	Engine Escalation, Engine Warranty & Patent Indemnity		26
EE1-2010$	Engine Escalation, Engine Warranty & Patent Indemnity		29
SLP1.	Service Life Policy Components
AE1	Escalation adjustment-airframe and optional features		22
AE1 2008$	Escalation adjustment-airframe and optional features		24
AE1 2010$	Escalation adjustment-airframe and optional features		29
LETTER AGREEMENTS
2126-1	Seller Purchased Equipment
2126-2R1	Cabin Systems Equipment		17
2126-3R4	Option Aircraft		13
RESTRICTED LETTER AGREEMENTS
6-1162-DMH-350	Performance Guarantees
6-1162-DMH-351	Promotion Support
6-1162-DMH-472	Performance Guarantees		1
6-1162-DMH-475	Configuration Matters		1
6-1162-DMH-1031R2	Special Provisions for Advance Payments		9
6-1162-LAJ-311	Special Matters Relating to the July 2001 and September 2001 Aircraft		11
6-1162-LAJ-956	Special Matters Relating to four 2006 Delivery Aircraft (February 4, 2005)
6-1162-LAJ-0895R6	Business Considerations		23
6-1162-ILK-0002R4	Special Matters Relating to Advance Payments Requirements		21
6-1162-ILK-0381 R2	Special Matters Letter Applicable to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft		29 DELETED
6-1162-ILK-0382	No longer applicable		26

P.A. 2126 SA-32

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

RESTRICTED LETTER AGREEMENTS	Continued	Supplement Agreement(s)
6-1162-ILK-0383 R1	Aircraft Model Substitution Relating to the 2011 Accelerated Aircraft and the Substitute 767 Freighter Aircraft		26
6-1162-ILK-0384 R2	16G Seats		27
6-1162-ILK-0385 R3	Performance Guarantees Relating to 2011 Aircraft, 2012 Aircraft, 2013 Aircraft, and 2013 Additional Aircraft		32
6-1162-ILK-0388	Option Aircraft – DELETED		28
6-1162-ILK-0412	Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009		25
6-1162-ILK-0413	[***]		25
6-1162-KSW-6423	Special Matters Letter Applicable to the Incremental Aircraft		27
6-1162-KSW-6424	Aircraft Model Substitution Relating to the Incremental Aircraft		27
6-1162-KSW-6456	Performance Guarantees for Substitute 767 Freighter Aircraft:		29 DELETED
6-1162-ILK-0450	Special Matters Letter Applicable to the 2012 Accelerated Aircraft		29
6-1162-ILK-0451	Special Matters Letter Applicable to the 2012 Additional Aircraft		30
6-1162-ILK-0451R1	Special Matters Letter Applicable to the 2012 Additional Aircraft and 2013 Aircraft		31
6-1162-ILK-0451R2	Special Matters Letter Applicable to 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft		32
LA-1103777	Seller Purchased Equipment for 2012 Aircraft		30
LA-1103876	Option Aircraft		32 DELETED

P.A. 2126 SA-32

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Table 13 Aircraft Information for 2012 Aircraft - SA32 to Purchase Agreement No. PA-02126

Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:                  767-300ER		412,000 pounds	Detail Specification:	D019T001-M (6/22/2011)
Engine Model/Thrust:                       CF6-80C2B6F		60,200 pounds	Airframe Price Base Year/ Escalation Formula:	Jul-10	ECI-MFG/CPI
Airframe Price:	$	125,875,000	Engine Price Base Year/Escalation Formula:	Jul-10	GE CF6-80 & GE90 (99 rev.)
Optional Features:	$	7,482,000
Sub-Total of Airframe and Features:	$	133,357,000	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	23,557,799	Base Year Index (ECI):	106.8
Aircraft Basic Price (Excluding BFE/SPE):	$	156,914,799	Base Year Index (CPI):	215.6
Buyer Furnished Equipment (BFE) Estimate:	$	0	Engine Escalation Data:
Seller Purchased Equipment (SPE) Estimate:	$	6,400,000	Base Year Index (CPI):	133.190
Refundable Deposit/Aircraft at Proposal Accept:	$	0

											Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft		Escalation Factor (Airframe)		Escalation Factor (Engine)		Manufacturer Serial Number		Escalation Estimate Adv Payment Base Price Per A/P		At Signing 1%		24 Mos. 4%		21/18/12/9/6 Mos. 5%		Total 30%
Jun-2012		1		1.0395		1.084		40799	$	170,814,000	$	1,708,140	$	6,832,560	$	8,540,700	$	51,244,200
Jul-2012		1		1.041		1.088		40592	$	171,118,000	$	1,711,180	$	6,844,720	$	8,555,900	$	51,335,400
Jul-2012		1		1.041		1.088		41746	$	171,118,000	$	1,711,180	$	6,844,720	$	8,555,900	$	51,335,400
Aug-2012		1		1.0428		1.091		41747	$	171,440,000	$	1,714,400	$	6,857,600	$	8,572,000	$	51,432,000
Sep-2012		1		1.0445		1.094		41748	$	171,749,000	$	1,717,490	$	6,869,960	$	8,587,450	$	51,524,700
Oct-2012		1		1.0453		1.097		40593	$	171,931,000	$	1,719,310	$	6,877,240	$	8,596,550	$	51,579,300
Total:		6

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Table 14 Aircraft Information for 2013 Aircraft - SA32 To Purchase Agreement No. PA-02126

Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:                 767-300ER		412,000 pounds	Detail Specification:	D019T001-M (6/22/2011)
Engine Model/Thrust:                     CF6-80C2B6F		60,200 pounds	Airframe Price Base Year /Escalation Formula:	Jul-10	ECI-MFG/CPI
Airframe Price:	$	125,875,000	Engine Price Base Year/ Escalation Formula:	Jul-10	GE CF6-80 & GE90 (99 rev.)
Optional Features:	$	7,482,000
Sub-Total of Airframe and Features:	$	133,357,000	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	23,557,799	Base Year Index (ECI):	106.8
Aircraft Basic Price (Excluding BFE/SPE):	$	156,914,799	Base Year Index (CPI):	215.6
Buyer Furnished Equipment (BFE) Estimate:	$	0	Engine Escalation Data:
Seller Purchased Equipment (SPE) Estimate:	$	6,400,000	Base Year Index (CPI):	133.190
Refundable Deposit/Aircraft at Proposal Accept:	$	0

										Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)		Escalation Factor (Engine)		Manufacturer Serial Number		Escalation Estimate Adv Payment Base Price Per A/P		At Signing 1%		24 Mos. 4%		21/18/12/9/6 Mos. 5%		Total 30%
[***]	1		1.0466		1.1		44213	$	172,183,000	$	1,721,830	$	6,887,320	$	8,609,150	$	51,654,900
[***]	1		1.0485		1.103		44214	$	172,520,000	$	1,725,200	$	6,900,800	$	8,626,000	$	51,756,000
[***]	1		1.0485		1.103		41993	$	172,520,000	$	1,725,200	$	6,900,800	$	8,626,000	$	51,756,000
[***]	1		1.0537		1.112		41994	$	173,459,000	$	1,734,590	$	6,938,360	$	8,672,950	$	52,037,700
[***]	1		1.0596		1.121		41995	$	174,494,000	$	1,744,940	$	6,979,760	$	8,724,700	$	52,348,200
[***]	1		1.0616		1.125		41996	$	174,868,000	$	1,748,680	$	6,994,720	$	8,743,400	$	52,460,400
[***]	1		1.0652		1.131		41997	$	175,513,000	$	1,755,130	$	7,020,520	$	8,775,650	$	52,653,900
Total:	7

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Exhibit A-13 to Purchase Agreement Number 2126

P.A. 2126 Exhibit A-13, page 2 SA-32

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

AIRCRAFT CONFIGURATION

relating to

BOEING MODEL 767-300ER AIRCRAFT

THE LAN AIRCRAFT

For the 2012 Aircraft, 2013 Aircraft and 2013 Additional Aircraft identified in Table 13 and Table 14, the detail specification is Boeing Detail Specification D019T001LAN63E-2, scheduled to be released on or about May 1, 2012. The Detail Specification provides further description of Customer’s configuration set forth in this Exhibit A. Such Detail Specification will be comprised of Customer’s existing Boeing detail specification of D019T001LAN63E-1, Revision H dated as of April 29, 2011 as amended to incorporate the Boeing configuration specification Boeing Configuration Specification D019T001, Revision M dated June 22, 2011 which incorporates the Options listed below, including the effects on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW).

The Aircraft Basic Price in Tables 13 and 14 reflects and includes all effects of such Options as of this date, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased Equipment.

P.A. 2126 Exhibit A-13, page 2 SA-32

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
0110-000035	MAJOR MODEL 767 AIRPLANE		[***]
0110-000037	MINOR MODEL 767-300 PASSENGER AIRPLANE		[***]
0110-000092	MODEL 767-300ER PASSENGER AIRPLANE		[***]
0110A276A30	NEW LOOK INTERIOR - 767-300ER		[***]
0220D241A42	TYPE CERTIFICATION & EXPORT CERTIFICATE OF AIRWORTHINESS FOR AIRPLANE DELIVERY - REQUIREMENT		[***]
0221-000002	DISPATCH WITH GEAR EXTENDED FOR REVENUE FLIGHT		[***]
0221A251A19	ENGINE INOPERATIVE TEN-MINUTE TAKEOFF THRUST OPERATION - CF6-80C2B6F THRUST RATING		[***]
0221B401A43	TAKEOFF AND LANDING WITH TAILWIND UP TO 15-KNOTS		[***]
0224-000024	EXTENDED RANGE TWIN ENGINE OPERATIONS (ETOPS)		[***]
0228-000001	FLIGHT MANUALS IN FAA FORMAT		[***]
0228-000032	FLIGHT CREW OPERATIONS MANUAL IN FAA FORMAT		[***]
0229A141A41	PERFORMANCE - CERTIFICATION FOR OPERATION AT AIRPORT PRESSURE ALTITUDES OF 9500 FEET AND BELOW		[***]
0252-000014	ENVIRONMENTAL CONTROL SYSTEM - TEMPERATURE INDICATIONS IN DEGREES CELSIUS		[***]
0252-000017	INSTRUMENTATION WITH METRIC UNITS - MODEL 767		[***]
0254-000003	USPHS CERTIFICATE OF SANITARY CONSTRUCTION		[***]
0315C417A53	CERTIFIED OPERATIONAL AND STRUCTURAL DESIGN WEIGHTS 767-300ER		[***]
0351C417B91	TAKEOFF PERFORMANCE IMPROVEMENT - ALTERNATE FORWARD CENTER OF GRAVITY LIMITS		[***]
1110D225A71	EXTERIOR COLOR SCHEME AND MARKINGS		[***]
1120-000019	MAINTENANCE MARKINGS - ACCESS PANELS - ENGINE STRUT AND COWLS		[***]
1130A931A06	IATA STANDARD MARKINGS - LOWER LOBE CARGO COMPARTMENT		[***]
1130D413A64	INTERIOR PASSENGER COMPARTMENT PLACARDS AND MARKINGS		[***]
2145-000004	BULK CARGO AREA HEATING AND VENTILATING FOR ANIMAL CARRIAGE		[***]
2158A071A11	IN-FLIGHT ENTERTAINMENT EQUIPMENT COOLING SYSTEM, FWD OF DOOR 2 - 200 CFM INSTALLATION		[***]
2210-000003	AUTOFLIGHT - INHIBIT GLIDE SLOPE CAPTURE PRIOR TO LOCALIZER CAPTURE		[***]
2210-000030	AUTOFLIGHT - THREE DIGIT MACH NUMBER ON MODE CONTROL PANEL		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2210-000031	AUTOFLIGHT - AUTOMATIC AUTOPILOT CHANNEL SELECTION IN APPROACH MODE		[***]
2210-000037	AUTOFLIGHT - BANK ANGLE HOLD AT AUTOPILOT COMMAND ENGAGE		[***]
2210-000039	AUTOFLIGHT - FULL TIME FLIGHT DIRECTOR		[***]
2210-000311	AUTOFLIGHT - FLIGHT CONTROL COMPUTER (FCC) WITHOUT ONBOARD SOFTWARE LOADING CAPABILITY		[***]
2210A064A02	AUTOFLIGHT - ALTITUDE ALERT - 300/900 FEET		[***]
2210B403A08	MODE CONTROL PANEL WITHOUT BACKCOURSE SWITCH		[***]
2230-000127	AUTOTHROTTLE - SELECTION OF CLIMB DERATES		[***]
2230-000133	AUTOTHROTTLE - FIXED PERCENTAGE DERATE LEVELS OF 10% AND 20%		[***]
2230-000135	AUTOTHROTTLE - CLIMB DERATE WASHOUT SCHEDULE - 10,000 TO 12,000 FEET		[***]
2311-000124	HF COMMUNICATIONS - DUAL GABLES HF CONTROL PANELS WITH SENSITIVITY AND DATALINK CONTROL - P/N G7401-16 - BFE/SPE		[***]
2311-000137	HF COMMUNICATIONS - PARTIAL PROVISIONS FOR DUAL ARINC 753 HF DATALINK		[***]
2311B401A29	DUAL HF DATA RADIO - ARINC 753 - ACTIVATION - AIRLINE DATA LINK COMMUNICATIONS ONLY		[***]
2311B401A39	HF COMMUNICATIONS - EQUIPMENT INSTALLATION OF DUAL ROCKWELL HF VOICE/DATA TRANSCEIVERS - P/N 822-0990-004 AND DIGITAL HF COUPLERS - P/N 822-0987-004 BFE/SPE		[***]
2312-000703	VHF COMMUNICATIONS - ACTIVATION OF 8.33 KHZ CHANNEL SPACING		[***]
2312B401A16	VHF COMMUNICATIONS - EQUIPMENT INSTALLATION OF TRIPLE ROCKWELL ARINC 750 VHF-920 FM IMMUNE TRANSCEIVERS WITH 8.33 KHZ CHANNEL SPACING, VDL MODE 2, AND CMC INTERFACE CAPABILITY - P/N 822-1250-002 - BFE/SPE		[***]
2312B800D19	VHF COMMUNICATIONS - TRIPLE GABLES VHF TUNING PANELS (DUAL KNOB) - P/N G7400-227 - BFE/SPE		[***]
2321B401A04	SELCAL - AVTECH FIVE CHANNEL DECODER - P/N NA138-714C - BFE/SPE		[***]
2322B800A68	AIRCRAFT COMMUNICATIONS ADDRESSING AND REPORTING SYSTEM (ACARS) - LARGE FORMAT MULTIPURPOSE INTERACTIVE DISPLAY UNIT (MIDU) - ROCKWELL - P/N 822-1626-105 - BFE/SPE		[***]
2322C594A89	CMU - INSTALLATION OF ROCKWELL COLLINS ARINC 758 LEVEL AOA CMU W/SITA SERVICE PROVIDER - DATA LINK RECORDING CAPABLE - P/N 822-1239-151 - BFE / SPE		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2322C939A05	CMU - INSTALLATION OF PARTIAL PROVISIONS FOR A SINGLE CMU IN ACCORDANCE WITH ARINC 758		[***]
2322C939A06	COMMUNICATIONS MANAGEMENT UNIT (CMU) - DATA LINK RECORDING ACTIVATION		[***]
2324B595G65	EMERGENCY LOCATOR TRANSMITTER - FIXED/AUTOMATIC INSTALLATION - ELTA P/N 01N65900 - BFE/SPE		[***]
2331B702M61	PASSENGER ADDRESS (PA) SYSTEM - TWO CLASS - ROCKWELL COLLINS		[***]
2333D413B96	PASSENGER SERVICE SYSTEM - REVISION - AFT LH CHIME MODULE AND FUNCTION		[***]
2340B007A03	CREW COMMUNICATION - PILOT'S CALL PANEL - WITHOUT ““PA IN USE”” - THREE BLUE CABIN CALL INDICATORS/SWITCHES		[***]
2342-000016	CABIN INTERPHONE SYSTEM - CABIN INTERPHONE HANDSET - FLIGHT COMPARTMENT		[***]
2350-000226	AUDIO SELECTOR PANEL (ASP) - SFE ASP WITH INTEGRATED SELCAL AND CREW CALL FUNCTIONS - 3 VHF/2 HF/2 SATCOM P/N 285T0022-51 - INSTALLATION		[***]
2351-000033	HAND HELD MICROPHONE - CAPTAIN AND FIRST OFFICER - ELECTROVOICE - P/N 903-1342 - BFE/SPE		[***]
2351-000035	HAND HELD MICROPHONE - FIRST OBSERVER - ELECTROVOICE - P/N 903-1342 - BFE/SPE		[***]
2351-000040	PUSH TO TALK (PTT) SWITCH ON GLARESHIELD		[***]
2351-000042	CONTROL WHEEL PUSH TO TALK (PTT) SWITCH - STANDARD THREE POSITION		[***]
2351A213A33	AUDIO INTEGRATION - INSTALLATION - TWO-PLUG AUDIO JACKS IN THE FLIGHT DECK		[***]
2351A213B77	BOOM MICROPHONE HEADSETS - CAPTAIN AND FIRST OFFICER - TELEX AIRMAN 750 - P/N 64300-200 - BFE/SPE		[***]
2351A213B80	HEADPHONE - FIRST OBSERVER - TELEX - P/N 64400-200 - BFE/SPE		[***]
2351A213B81	HEADPHONE - SECOND OBSERVER - TELEX - P/N 64400-200 - BFE/SPE		[***]
2371-000009	NO MONITOR JACK IN THE WHEEL WELL		[***]
2371B628B34	VOICE RECORDER AND MICROPHONE/MONITOR - HONEYWELL - 2 HOUR RECORDING TIME - WITH DATALINK RECORDING CAPABILITY - P/N 980-6032-001 & P/N 980-6116-002 - BFE/SPE		[***]
2432-000002	AUXILIARY POWER UNIT (APU) - ADDITIONAL STARTING CAPABILITY		[***]
2433-000021	STANDBY POWER - EXTENDED TIME CAPABILITY - BATTERY PARALELLING		[***]
2451-000002	90 KVA GALLEY POWER SUPPLY		[***]
2454D253B46	FLIGHTDECK PED POWER OUTLET- CAPTAINS SIDEWALL - KID SYSTEME - CSE		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2501A611A19	FORWARD MONUMENT COMPLEX 4		[***]
2504A611A14	AFT MONUMENT COMPLEX 3		[***]
2511-000022	MANUALLY OPERATED SEATS - CAPTAIN AND FIRST OFFICER		[***]
2511-000026	FIRST OBSERVER’S SEAT - WALL MOUNTED		[***]
2511-000270	SECOND OBSERVER STATION, WITH ARMRESTS - ADDITION		[***]
2513-000405	SUNVISOR INSTALLATION - NUMBER 1 AND 2 WINDOWS - FLIGHT DECK - SFE		[***]
2520D413A68	INTERIOR COLOR AND MATERIAL - STANDARD OFFERING		[***]
2520D413C64	PASSENGER COMPARTMENT - NON-ICO DECORATIVE LAMINATE		[***]
2523D413C10	PASSENGER SERVICE UNITS WITH SUPPLEMENTAL CALL LIGHT AND CHIME MODULE (WITHOUT VOLUME REDUCTION)		[***]
2524D159G54	UNDERBIN OUTBOARD CLASS DIVIDER - RH		[***]
2524D159G55	UNDERBIN OUTBOARD CLASS DIVIDER - LH		[***]
2524D413A74	FULL HEIGHT CENTERLINE CLOSET - STA 344 - STA 366 - SPE		[***]
2524D413A75	CURTAIN AND TRACK INSTALLATION - DOOR 1 LEFT AFT		[***]
2524D413A76	CURTAIN AND TRACK INSTALLATION - DOOR 1 RIGHT AFT		[***]
2524D413A77	CURTAIN AND TRACK INSTALLATION - DOOR 1 RIGHT FWD		[***]
2524D413A78	CURTAIN AND TRACK INSTALLATION - LH AND RH - AFT		[***]
2524D413A79	CURTAIN AND TRACK INSTALLATION - AFT DOOR - GALLEY AREA		[***]
2524D413A85	RH FULL HEIGHT SEAT TRACK MOUNTED CLOSET WITH INTEGRAL TRACK MOUNTED STOWAGE - STA 1467.95 - STA 1478.95 - SPE		[***]
2524D413A86	CURTAIN AND CURTAIN TRACK - BETWEEN BUSINESS CLASS AND ECONOMY CLASS		[***]
2524D413C04	UNDERBIN CENTERLINE CLASS DIVIDER - 46”” WIDE		[***]
2524D413C12	LH FULL HEIGHT SEAT TRACK MOUNTED CLOSET - STA 1465.95 - STA 1478.95 - SPE		[***]
2524D413C88	RH FULL HEIGHT, SEAT TRACK MOUNTED PARTITION WITH INTEGRAL FORWARD STOWAGE AND INTEGRAL AFT SIDEWALL TRACK MOUNTED STOWAGE BOX - UPPER AFT FACE AT STA 791, LOWER AFT FACE AT STA 794 - SPE		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2524D413D26	LH FULL HEIGHT, SEAT TRACK MOUNTED PARTITION WITH INTEGRAL AFT SIDEWALL TRACK MOUNTED STOWAGE BOX - UPPER AFT FACE AT STA 791, LOWER AFT FACE AT STA 794 - SPE		[***]
2525D413A87	ATTENDANT SEATS FOR 767-300		[***]
2525D413B68	ECONOMY CLASS SEATS - SPE		[***]
2525D413B69	PASSENGER COMPARTMENT CREW REST SEATS - INSTALLATION - AFT OF E/C SEATS- SPE		[***]
2525D413C05	BUSINESS CLASS SEATS - WITH UNDERCARPET RACEWAYS		[***]
2526D413A94	1F-1C VIDEO CONTROL CENTER		[***]
2527C006A05	FLOOR COVERING - CARPET, SERGED EDGES		[***]
2527D413A93	ENTRYWAY FLOOR COVERING		[***]
2527D413C57	FLOOR COVERING - CUSTOMER DIRECTED CARPET SEGMENTS DEFINITION		[***]
2527D413C65	FLOOR COVERING - CARPET RAW MATERIAL - SPE		[***]
2528D413A24	STOWAGE COMPARTMENTS - ADDITION OF INSERTS - SECOND TO LAST LH OVERHEAD STOWAGE BIN		[***]
2528D413B00	CENTERLINE STOWAGE BUSTLE		[***]
2528D413B01	CENTERLINE FLOOR MOUNTED STOWAGE UNIT - SPE		[***]
2528D413B38	LITERATURE POCKETS		[***]
2528D413B67	BIN FAIRING AND CLOSEOUT PANEL - OUTBOARD OVERHEAD STOWAGE BINS		[***]
2528D413B70	MAGAZINE STOWAGE - MONUMENT MOUNTED		[***]
2528D413C13	FLOOR MOUNTED STOWAGE - FORWARD OF AFT LH ENTRY DOOR - SPE		[***]
2528D413C66	OVERHEAD STOWAGE BINS WITH MIRRORS		[***]
2529D413B03	ATTENDANT WORKSTATION		[***]
2529D413C59	CURTAIN AND CURTAIN TRACK INSTALLATION - IN-FLIGHT CREW REST ENCLOSURE - ECONOMY CLASS - AFT RH		[***]
2529D413C60	CURTAIN AND CURTAIN TRACK INSTALLATION - IN-FLIGHT CREW REST ENCLOSURE - ECONOMY CLASS - AFT LH		[***]
2529D413D44	CURTAINS AND CURTAIN TRACK INSTALLATION - IN-FLIGHT CREW REST ENCLOSURE - BUSINESS CLASS - AFT RH		[***]
2530B657H31	F1 GALLEY		[***]
2530B657H33	F2 GALLEY		[***]
2530B657H37	A1 GALLEY		[***]
2530B657L84	F3 GALLEY WITH INTEGRAL CHILLER		[***]
2530C826X42	A2 GALLEY		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2530C826X43	A3 GALLEY		[***]
2530D241A46	SUBSTITUTE/BFBI GALLEY INSERT CERTIFICATION - BFE/SPE		[***]
2530D413B07	GALLEY PART NUMBERS - BFE/SPE		[***]
2530D413B09	GALLEY INSERT PART NUMBERS-BFE/SPE		[***]
2533C635A20	CHILLERS (7000 BTUH) - THREE - GALLEY - FORWARD AND AFT - ACUREX P/N 267-500 - BFE/SPE		[***]
2540D159G49	2F-10R LAVATORY - WITH PROVISIONS FOR TWO MONITORS		[***]
2540D159G50	2F-10L LAVATORY -WITH PROVISIONS FOR TWO MONITORS		[***]
2540D159G57	1F-1L LAVATORY		[***]
2540D413B78	1A-1L LAVATORY		[***]
2540D413B79	4F-2RC LAVATORY		[***]
2540D413D11	LAVATORIES - NON-STANDARD FLOOR PAN INSERT - SPE		[***]
2540D413D12	LAVATORIES - NON-ICO INTERIOR COLORS		[***]
2540D413D14	4F-2LC LAVATORY - WITH DOT LAVATORY FEATURES		[***]
2550-000040	NO PROVISIONS FOR LOADING LONG LIGHTWEIGHT ITEMS - FORWARD CARGO COMPARTMENT		[***]
2552-000135	CARGO COMPARTMENTS - PARTIAL FLOOR		[***]
2552-000223	FABRIC STA 744 ENDWALL		[***]
2552A931A07	SLOPING SIDEWALL - CARGO COMPARTMENTS - .020 THICKNESS OVERALL AND .030 THICKNESS AT CARGO DOORS - BMS 8-223		[***]
2553-000036	HARDWARE FOR STANDARD CONTAINERS IN THE AFT CARGO COMPARTMENT		[***]
2553-000042	NO SPOOL-TYPE LOADER INDEX FITTINGS - AFT CARGO COMPARTMENT		[***]
2553-000044	HARDWARE FOR CARRIAGE OF 88 X 125 AND 96 X 125 INCH PALLETS AND STANDARD CONTAINERS IN THE FORWARD CARGO COMPARTMENT		[***]
2553-000085	REMOTELY OPERATED CONTAINER ROLLOUT STOPS - AFT CARGO COMPARTMENT DOORWAY		[***]
2555-000022	STANDARD BULK CARGO AREA FLOOR		[***]
2555-000024	BULK CARGO DOOR PROTECTOR - NET		[***]
2560-000175	HALON FIRE EXTINGUISHER - FLIGHT DECK - WALTER KIDDE		[***]
2560-000200	PROTECTIVE BREATHING EQUIPMENT - FLIGHT DECK - SCOTT AVIATION - P/N 802300-14 - BFE/SPE		[***]
2560D174A02	CREW LIFE VESTS - FLIGHT DECK - AIR CRUISER - P/N 66601-501 - BFE/SPE		[***]
2561A931A10	FORWARD ESCAPE HATCH POSITION FOR ESCAPE STRAP		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
2562D413B72	OVERWATER EMERGENCY EQUIPMENT		[***]
2564D413C20	DETACHABLE EMERGENCY EQUIPMENT - PASSENGER COMPARTMENT - NO AFT WHEEL CHAIR STOWAGE - BFE/SPE		[***]
2610-000025	KIDDE FIRE DETECTION SYSTEM - GE CF6-80C2 ENGINES AND APU		[***]
2618-000009	SINGLE LOOP DUCT LEAK DETECTION SYSTEM - 3 ZONE		[***]
2622-000004	FIRE BOTTLE COMMONALITY - CF6-80C2 ENGINES AND DUAL APU FIRE EXTINGUISHING SYSTEM		[***]
2732-000002	STALL WARNING COMPUTER SPEED TAPE ACTIVATION - DISPLAY MINIMUM MANEUVER SPEED ON TAKEOFF		[***]
2811-000021	EXTENDED RANGE (ER) FUEL TANK AND FUEL JETTISON SYSTEMS		[***]
2844-000005	FUEL MEASURING STICKS IN KILOGRAMS WITH CONVERSION TABLES IN KILOGRAMS		[***]
2911-000003	AC MOTOR-DRIVEN HYDRAULIC PUMPS - EATON (VICKERS) S270T201-7		[***]
2911-000038	ENGINE-DRIVEN HYDRAULIC PUMPS - EATON (VICKERS INC.) (60B00200-12)		[***]
3042-000003	WINDSHIELD WIPERS - TWO SPEED - SINGLE SWITCH		[***]
3080-000006	MANUAL ANTI-ICING SYSTEM - NO ICE DETECTION		[***]
3120-000011	ELECTRONIC CLOCKS - WITHOUT TENTHS OF MINUTE DISPLAY - MAIN INSTRUMENT PANEL		[***]
3131-000143	ACCELEROMETER - HONEYWELL P/N 971-4193-001 - BFE/SPE		[***]
3131B628B16	DIGITAL FLIGHT DATA RECORDER (DFDR) - HONEYWELL - 1024 WORDS PER SECOND MAXIMUM DATA RATE - P/N 980-4750-009 - BFE/SPE		[***]
3131D156A55	DIGITAL FLIGHT DATA ACQUISITION UNIT (DFDAU) WITH ACMS CAPABILITY AND INTEGRATED PCMCIA MEDIA INTERFACE - TELEDYNE CONTROLS - 512 WPS CAPABLE - 737-7 OR 767-6 DATA FRAME ACTIVE - P/N 2233000-816 - BFE/SPE		[***]
3132-000095	AIRBORNE DATA LOADER/RECORDER - ARINC 615 - ALLIEDSIGNAL - 964-0401-006 - BFE/SPE		[***]
3132-000117	DATA LOADER SELECTOR SWITCH MODULE - 20 POSITION 3 WAY - SFE		[***]
3132A887A01	DUAL ARINC 615 DATA LOADER/RECORDER INTERFACE TO THE THREE WAY, TWENTY POSITION SYSTEM SELECTOR SWITCH - PORTABLE DATA LOADER/RECORDER CONNECTOR INSTALLATION IN P61 RIGHT SIDE PANEL - SFE		[***]
3133-000057	FULL FORMAT PRINTER - MILTOPE - ARINC 744 - P/N 706300-212 - BFE/SPE		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
3133-000125	ARINC 744 PRINTER PROVISIONS IN THE FLIGHT DECK AISLESTAND		[***]
3151-000042	FIREBELL AURAL WARNING - 1 SECOND ON, 9 SECONDS OFF		[***]
3151-000046	AUTOPILOT DISCONNECT - AURAL WARNING SIREN - AURAL WARNING AND MASTER WARNING LIGHT INHIBITED WHEN AUTOPILOT DISCONNECT SWITCH IS DOUBLE PRESSED QUICKLY		[***]
3151A065A47	RESETTABLE OVERSPEED AURAL WARNING - SIREN		[***]
3161-000135	HYDRAULIC PRESSURE ON EICAS STATUS PAGES		[***]
3161-000137	APU RPM ON EICAS STATUS PAGES		[***]
3161-000139	APU OIL QUANTITY LEVEL ON EICAS		[***]
3161-000141	ADDITIONAL ENVIRONMENTAL CONTROL SYSTEM (ECS) PARAMETERS - DISPLAY ON EICAS MAINTENANCE PAGE		[***]
3161-000144	GENERATOR OFF AND ENGINE OIL PRESSURE - EICAS ADVISORY LEVEL MESSAGES		[***]
3161-000147	ECS PRECOOLER OUTLET TEMPERATURE - (PW AND GE ENGINES) - DISPLAY ON EICAS		[***]
3161-000152	BULK CARGO COMPARTMENT TEMPERATURE - DISPLAY ON EICAS		[***]
3161-000154	RAM AIR OUTLET DOOR POSITION - DISPLAY ON EICAS		[***]
3161-000189	ENGINE FUEL FLOW - FULL TIME DISPLAY - LOWER EICAS DISPLAY		[***]
3162-000016	FLIGHT MODE ANNUNCIATION AT TOP OF ADI		[***]
3162-000021	AIRSPEED TAPE - ROLLING DIGITS AND TREND VECTOR - ADI		[***]
3162-000022	FLIGHT DIRECTOR COMMAND DISPLAY - SPLIT AXIS - ADI		[***]
3162-000026	DISPLAY OF ROUND DIAL AND DIGITAL RADIO ALTITUDE - ADI		[***]
3162-000030	RISING RUNWAY - DISPLAYED ON THE ADI		[***]
3162-000034	RADIO ALTITUDE HEIGHT ALERT DISPLAY - 2500 FEET - ADI		[***]
3162-000054	ILS DEVIATION WARNING - ADI		[***]
3162-000059	MAP MODE ORIENTATION - TRACK UP - NAVIGATION DISPLAY		[***]
3162-000066	TRUE AIRSPEED AND GROUND SPEED - NAVIGATION DISPLAY		[***]
3162-000070	WIND BEARING DIGITAL DISPLAY - NAVIGATION DISPLAY		[***]
3162-000081	ADF POINTER(S) - NAVIGATION DISPLAY		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
3221-000011	TORQUE ARM QUICK DISCONNECT - NOSE LANDING GEAR		[***]
3242A114B69	ANTISKID/AUTOBRAKE CONTROL UNIT (AACU) P/N 42-767-2 (S283T001-27) - INSTALLATION		[***]
3245-000230	WHEELS AND TIRES - NOSE LANDING GEAR - WHEELS - ALLIEDSIGNAL - INSTALLATION WITH SFE 24 PR, 235 MPH TIRES		[***]
3245A298A12	BRAKES - CARBON - MESSIER-BUGATTI		[***]
3245A438A27	OPERATIONAL TIRE SPEED LIMITS - 235MPH		[***]
3245A438A28	WHEELS AND TIRES - MAIN LANDING GEAR - HIGH GROSS WEIGHT WHEELS - MESSIER-BUGATTI - INSTALLATION WITH SFE 32 PR, 235 MPH TIRES.		[***]
3246-000005	BRAKE TEMPERATURE MONITORING SYSTEM		[***]
3321D413B46	PASSENGER COMPARTMENT ILLUMINATION - SIDE WALL LIGHTS - AFT LH AND RH IN-FLIGHT CREW REST CURTAIN ENCLOSURE AREAS		[***]
3324-000117	NO-SMOKING LIGHT ON - HARD WIRE		[***]
3342-000009	TAXI LIGHTS - NOSE GEAR MOUNTED - SPACE PROVISIONS		[***]
3350B657N97	EMERGENCY ESCAPE PATH LIGHTING SYSTEM - FLOOR MOUNTED		[***]
3413-000027	MACH/AIRSPEED INDICATOR - TWO KNOT GRADUATIONS BELOW 250 KNOTS		[***]
3421-000042	FAA MACH/AIRSPEED LIMITS AND OVERSPEED ALERTING		[***]
3423-000006	STANDBY MAGNETIC COMPASS COMPENSATION FOR ELECTRICAL CIRCUITS (+/- 5 DEGREES)		[***]
3430B866A33	ILS/GPS MULTI-MODE RECEIVER (MMR) - ROCKWELL COLLINS - P/N 822-1821-001 - BFE/SPE		[***]
3433-000032	RADIO ALTIMETER (RA) - ROCKWELL INTERNATIONAL CORP - P/N 822-0334-002 - BFE/SPE		[***]
3443A065B20	DUAL WEATHER RADAR CONTROL PANEL - WITH MULTISCAN FUNCTIONALITY - ROCKWELL COLLINS P/N 622-5130-801 - BFE/SPE		[***]
3443C594A20	DUAL WEATHER RADAR SYSTEM - WITH PREDICTIVE WINDSHEAR AND MULTISCAN CAPABILITY - ROCKWELL COLLINS WRT-2100 TRANSCEIVER - P/N 822-1710-002 - BFE/SPE		[***]
3445A065A86	TCAS SYSTEM - ROCKWELL COLLINS TCAS COMPUTER P/N 822-1293-002 - TCAS CHANGE 7 COMPLIANT - BFE/SPE		[***]
3446-000045	STANDARD VOLUME FOR ALTITUDE CALLOUTS		[***]
3446-000048	ENHANCED GROUND PROXIMITY WARNING SYSTEM (EGPWS) - BANK ANGLE CALLOUT ENABLE		[***]
3446-000049	500 SMART CALLOUT INHIBITED		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
3446B800D17	GROUND PROXIMITY WARNING SYSTEM - MODE 6 ALTITUDE CALLOUTS - 2500, 1000, 500, 400, 300, 200, 100, 50, 40, 30, 20, 10, MINIMUMS		[***]
3451-000022	VOR/MARKER BEACON - ROCKWELL RECEIVER P/N 822-0297-001 - BFE/SPE		[***]
3453B866A16	ATC SYSTEM - ROCKWELL COLLINS ATC TRANSPONDER P/N 822-1338-003 - ELS/EHS/ES AND TCAS CHANGE 7 COMPLIANT - GABLES CONTROL PANEL P/N G6992-12 - BFE/SPE		[***]
3455-000019	DISTANCE MEASURING EQUIPMENT (DME) - ROCKWELL INTERROGATOR P/N 822-0329-001 - BFE/SPE		[***]
3457-000219	AUTOMATIC DIRECTION FINDER (ADF) - DUAL SYSTEM - ROCKWELL ADF-900/700 SERIES - ADF RECEIVER P/N 822-0299-001 - ADF ANTENNA P/N 622-5404-003 - BFE/SPE		[***]
3457-000289	DUAL ADF CONTROL PANEL - BAE SYSTEMS - 285T0557-2 - WITHOUT BFO OR TONE SWITCH - SFE		[***]
3461A425A03	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - OFFPATH DESCENT CIRCLES AND DISTANCE MEASURING EQUIPMENT RANGE RINGS DISPLAYED		[***]
3461A425A04	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - SCANNING DME OPERATIONS - ENABLE		[***]
3461A425A05	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - RUNWAY DISTANCE AND OFFSET POSITION SHIFT IN UNITS OF FEET		[***]
3461A425A10	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - NAVIGATION DATABASE - CUSTOMER SUPPLIED		[***]
3461A425A12	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - TAKEOFF DATA LINK - ENABLE		[***]
3461A425A13	FMCS - AIRLINE MODIFIABLE INFORMATION (AMI) - CUSTOMER SUPPLIED		[***]
3461A425A16	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIR TRAFFIC SERVICES DATA LINK (ATS DL) - FANS FEATURE ACTIVATION		[***]
3461A425A17	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIRLINE OPERATIONAL COMMUNICATIONS DATA LINK (AOC DL) - FANS FEATURE ACTIVATION		[***]
3461A425A18	FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - PRINTER INTERFACE - FANS FEATURE ACTIVATION		[***]
3511B899B48	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE WITH SEPARATE SMOKE GOGGLES - CAPTAIN AND FIRST OFFICER - AVOX - BFE/SPE		[***]
3511B899B49	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE WITH SEPARATE SMOKE GOGGLES - FIRST OBSERVER - AVOX - BFE/SPE		[***]
3511B899B50	CREW OXYGEN MASKS - AUTOMATIC PRESSURE BREATHING TYPE WITH SEPARATE SMOKE GOGGLES - SECOND OBSERVER - AVOX - BFE/SPE		[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Configuration Item Number	Title	2010 Dollars 13 Aircraft Price Per A/C
3611-000005	HAMILTON STANDARD - INTERMEDIATE PRESSURE (IP) CHECK VALVES - GE\P&W ENGINES		[***]
3811-000022	POTABLE WATER - SERVICEABLE TO 149 GALLONS		[***]
3831-000008	WASTE TANK CAPACITY - 116 GALLONS		[***]
3832-000031	VACUUM WASTE SYSTEM - ENVIROVAC TOILET ASSEMBLIES		[***]
3910B800A77	CONTROL PANEL ARRANGEMENT - P8 AISLE STAND - FLIGHT DECK - LAN		[***]
4420C991A03	INFLIGHT ENTERTAINMENT SYSTEM - PARTIAL PROVISIONS - 3GCN COMPLIANT		[***]
4420D253B36	IFE SYSTEM - IN-SEAT VIDEO FEATURES - 221 PASSENGERS - PANASONIC EX2 - CSE		[***]
4420D253B40	IFE SYSTEM - DISTRIBUTION EQUIPMENT - PANASONIC EX2 - CSE		[***]
4420D253B44	IFE SYSTEM - EXTERNAL INTERFACES - NAV DATA, ACARS, ALL DOORS CLOSED DISCRETE - PANASONIC EX2 - CSE		[***]
4420D253C19	IFE SYSTEM - VIDEO CONTROL CENTER EQUIPMENT - PANASONIC EX2 - CSE		[***]
4420D253C20	IFE SYSTEM - IN-SEAT IFE EQUIPMENT - 221 PASSENGERS WITH 10 MONUMENT MOUNTED MONITORS - PANASONIC EX2 - CSE		[***]
4420D253C26	IFE SYSTEM - OVERHEAD VIDEO DISPLAYS - ONE 23 INCH DISPLAY AND TWO 15.4 INCH DISPLAYS - PANASONIC EX2 - CSE		[***]
4970-000046	APU CYCLEMETER - AFT ELECTRONIC EQUIPMENT (E/E) COMPARTMENT		[***]
4970-000047	APU HOURMETER - AFT ELECTRONIC EQUIPMENT (E/E) COMPARTMENT		[***]
5210-000024	TYPE A - III - III - A DOOR ARRANGEMENT		[***]
5300B657K49	SEAT TRACK - BL 45.5 LEFT AND RIGHT - STA 389 TO STA 721.805.		[***]
7200-000382	STANDARD FAN SPINNER - GE ENGINES		[***]
7200-000412	GE PROPULSION SYSTEM		[***]
7200A114C89	GENERAL ELECTRIC ENGINES - CF6-80C2-B6F - B6F RATING - WITH FADEC		[***]
7830-000012	MANUAL OPENING OF THRUST REVERSER ASSEMBLIES - GE CF6-80C2 ENGINES		[***]
7900-000117	LUBRICATING OIL - BP TURBO OIL 2380		[***]
8011-000006	HAMILTON STANDARD STARTERS AND STARTER VALVES - GE ENGINES		[***]
INT_ALLOWANCE	INTERIOR ALLOWANCE FOR ALL MINOR MODELS (FOR USE ON DCAC-CONFIGURED AIRPLANES ONLY)		[***]
OPTIONS: 249	TOTAL:		$7,482,000

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

between

THE BOEING COMPANY

and

LAN Airlines S.A.

Supplemental Exhibit BFE2

to Purchase Agreement Number PA-2126

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

relating to

BOEING MODEL 767-316ER AIRCRAFT

This Supplemental Exhibit BFE2 contains supplier selection dates, on-dock dates and other requirements applicable to the Aircraft.

1. Supplier Selection.

Customer will:

Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:

Galley System	Complete
Galley Inserts	Complete
Seats (Suites)	Complete
Seats (F/C, B/C, Premium E/C)	Complete
Seats (Economy class)	Complete
Overhead & Audio System	Complete
In-Seat Video System	Complete
Miscellaneous Emergency Equipment	Complete

2. On-dock Dates and Other Information.

Boeing will provide to Customer the BFE Requirements electronically in My Boeing Fleet (MBF), through My Boeing Configuration (MBC). These requirements

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-sequence installation of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:

Item	Preliminary On-Dock Dates [Month of Delivery]
	[***]	[***]	[***]	[***]	[***]
Seats	[***]	[***]	[***]	[***]	[***]
Galleys Furnishings	[***]	[***]	[***]	[***]	[***]
Electronics	[***]	[***]	[***]	[***]	[***]
Cabin Systems Equipment	[***]	[***]	[***]	[***]	[***]
Miscellaneous/Emergency Equipment	[***]	[***]	[***]	[***]	[***]
Textiles/Raw Materials	[***]	[***]	[***]	[***]	[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Item	Preliminary On-Dock Dates [Month of Delivery]
	[***]	[***]	[***]	[***]	[***]	[***]
Seats	[***]	[***]	[***]	[***]	[***]	[***]
Galleys Furnishings	[***]	[***]	[***]	[***]	[***]	[***]
Electronics	[***]	[***]	[***]	[***]	[***]	[***]
Cabin Systems Equipment	[***]	[***]	[***]	[***]	[***]	[***]
Miscellaneous/Emergency Equipment	[***]	[***]	[***]	[***]	[***]	[***]
Textiles/Raw Materials	[***]	[***]	[***]	[***]	[***]	[***]

3. Additional Delivery Requirements—Import.

Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE imported into the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply with U.S. Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for Customer’s BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S. Customs Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the requirements in the “International Shipment Routing Instructions”, including the Customs Trade Partnership Against Terrorism (C-TPAT), as set out on the Boeing website referenced below. Customer agrees to include the International Shipment Routing Instructions, including C-TPAT requirements, in each contract between Customer and BFE supplier.

http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

The Boeing Company                                   

P.O. Box 3707                                                 

Seattle, WA 98124-2207                                

6-1162-ILK-0385R3

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject: Performance Guarantees Relating to the 2011 Aircraft, 2012 Aircraft, 2013 Aircraft and 2013 Additional Aircraft

Reference: Purchase Agreement No. 2126 (the Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 767-316F, Model 767-38EF and Model 767-316ER aircraft (hereinafter referred to as “Aircraft”)

This letter agreement (Letter Agreement) cancels and supercedes Letter Agreement 6-1162-ILK-0385R2 and amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

“2011 Aircraft” shall mean each or all three (3) new Boeing Model 767-316ER scheduled for delivery [***], respectively, as shown in Table 11 in Supplemental Agreement No. 31 to the Purchase Agreement.

“2012 Aircraft” shall mean each or all six (6) 767-316ER scheduled for delivery in [***], respectively as shown in Table 13 in Supplemental Agreement No. 32 to the Purchase Agreement.

“2013 Aircraft” shall mean each or five (5) 767-316ER Aircraft, with deliveries in [***] as shown in Table 14 in Supplemental Agreement No. 32 to the Purchase Agreement.

“2013 Additional Aircraft” shall mean each or two (2) 767-316ER Aircraft with deliveries in [***] as shown in Table 14 in Supplemental Agreement No. 32 to the Purchase Agreement.

Boeing agrees to provide Customer with the performance guarantees in the Attachment. These guarantees are exclusive and expire upon delivery of the Aircraft to Customer.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer becoming the operator of the Aircraft and cannot be assigned, in whole or in part.

P.A. No. 2126	SA-32
Performance Guarantees

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0385 R3 Page 23

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”; and Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; Article 6 of Letter Agreement 6-1162-ILK-0451 entitled “Special Matters Applicable to the 2012 Additional Aircraft” and Article 9 to Letter Agreement 6-1162-ILK0451R1 entitled “Special Matters Applicable to the 2012 Additional Aircraft and 2013 Aircraft”, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

P.A. No. 2126	SA-32
Performance Guarantees

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-ILK-0385 R3 Page 24

Very truly yours,
THE BOEING COMPANY
Original Signed by
By:
	Melanie A. Gauthier
Its:	Attorney-In-Fact

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 22nd day of December of 2011.

LAN AIRLINES S.A.
Original signed by
By:
	Roberto Alvo
Its:	Senior VP Corporate Planning & Development

Original signed by
By:
	Andres Del Valle E.
Its:	Corporate Finance Director

P.A. No. 2126	SA-32
Performance Guarantees

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

MODEL 767-300ER PERFORMANCE GUARANTEES

FOR LAN AIRLINES S.A.

SECTION	CONTENTS
1	AIRCRAFT MODEL APPLICABILITY
2	FLIGHT PERFORMANCE
3	MANUFACTURER'S EMPTY WEIGHT
4	AIRCRAFT CONFIGURATION
5	GUARANTEE CONDITIONS
6	GUARANTEE COMPLIANCE
7	EXCLUSIVE GUARANTEES

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1 AIRCRAFT MODEL APPLICABILITY

The guarantees contained in this Attachment (the "Performance Guarantees") are applicable to the 767-300ER Aircraft [***].

2 FLIGHT PERFORMANCE

2.1 Takeoff

[***]

2.2 Landing

[***]

2.3 Cruise Range

[***].

3 MANUFACTURER'S EMPTY WEIGHT

[***].

4 AIRCRAFT CONFIGURATION

4.1 [***].

4.2 [***].

5 GUARANTEE CONDITIONS

5.1 [***].

5.2 [***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5.3 [***].

5.4 [***].

5.5 [***].

5.6 [***].

5.7 [***].

6 GUARANTEE COMPLIANCE

6.1 [***].

6.2 [***].

6.3 [***].

6.4 [***]

6.5 [***].

6.6 [***].

7 EXCLUSIVE GUARANTEES

The only performance guarantees applicable to the Aircraft are those set forth in this Attachment.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6-1162-ILK-0451R2

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject: Special Matters Letter Applicable to the 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft

Reference: Purchase Agreement No. 2126 (the Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 767-316F, Model 767-38EF and Model 767-316ER aircraft (hereinafter referred to as “Aircraft”)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

1. Definitions.

1.1 “STE” when used specifically in relation to any credit memorandum contained in this letter agreement shall mean that the relevant credit memorandum shall be escalated to the month of delivery in the same manner as the Airframe Price in accordance with the escalation formula reflected in Supplemental Exhibit AE1 2010$ to the Purchase Agreement entitled “Escalation adjustment - airframe and optional features”.

1.2 “Limitations on Use” when used in relation to any credit memorandum contained in this letter agreement shall mean that the applicable credit memorandum may be used for the purchase of Boeing goods and services or applied to the final delivery payment for the Aircraft for which the credit was issued, but that the relevant credit memorandum shall be prohibited from use for satisfaction of any Advance Payment obligation.

1.3 “2012 Additional Aircraft” shall mean each or all three, as the case may be, of the three 767-316ER Aircraft (as previously defined in Supplemental Agreement No. 30 to the Purchase Agreement) scheduled for delivery in [***], respectively.

1.4 “2013 Aircraft” shall mean each or all five (5) 767-316ER Aircraft, with deliveries in [***] as shown in Table 14 in Supplemental Agreement No. 32 to the Purchase Agreement.

1.5 “2013 Additional Aircraft” shall mean each or two (2) 767-316ER Aircraft with deliveries in [***] as shown in Table 14 in Supplemental Agreement No. 32 to the Purchase Agreement.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1.6 “Table 13” shall mean the table entitled “Table 13 Aircraft Information Table for 2012 Aircraft – SA-32”

1.7 “Table 14” shall mean the table entitled “Table 14 Aircraft Information Table for 2013 Aircraft – SA-32”

2. Export License.

Customer understands and confirms that it is Customer’s responsibility to obtain any required Export License from the relevant U.S. authority. Without accepting any liability for any failure to do so, Boeing will use reasonable endeavors to alert Customer to any regulatory changes of which Boeing becomes aware and which require Customer to obtain such Export License.

3. Warranty Modification.

Notwithstanding paragraph 3.2 of Part 2 of Exhibit C to the AGTA, Boeing agrees that the warranty period for a Corrected Boeing Product resulting from a defect in material or workmanship is [***] or the remainder of the initial warranty period, whichever is longer.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4. Credit Memoranda for the 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft.

4.1 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide the Customer with a credit memorandum concurrently with the delivery of each 2012 Additional Aircraft, 2013 Aircraft, and 2013 Aircraft Additional Aircraft in description and amount which is identified in the credit memoranda table below.

Credit Memoranda Exclusive to the 2012 Additional Aircraft, 2013 Aircraft, and 2013 Additional Aircraft	Concession Stated as a Percentage of Airframe Price
Incentive Basic Credit Memorandum, STE	[***]
Incremental Aircraft Credit Memorandum, STE	[***]
Total Table 4.1 Credit Memoranda Exclusive to the 2012 Additional Aircraft, 2013 Aircraft, and 2013 Additional Aircraft	[***]

4.2 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide Customer with a goods and services credit memorandum at the time of definitive agreement signing of SA-30 in the total amount of [***].

4.3 Subject to Customer’s adherence to the Limitations on Use, Boeing will provide Customer with a goods and services credit memorandum at the delivery of each 2013 Aircraft and 2013 Additional Aircraft in the fixed amount of [***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5. Deferred Advance Payments for 2012 Additional Aircraft, 2013 Aircraft, and 2013 Additional Aircraft.

5.1 The parties agree that, in respect of each 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft, Customer may elect [***] deferred advance payment schedule as shown below (the Deferred Advance Payment Schedule Applicable for the 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft) in lieu of the standard advance payment schedule set forth in Article 4.2 of the Purchase Agreement and in Table 13 and Table 14, as applicable, (the Standard Advance Payment Schedule). Customer has elected the [***] schedule for its 2012 Additional Aircraft, 2013 Aircraft, and 2013 Additional Aircraft.

Due Date of Payment*	Amount Due per Aircraft (percentage of Aircraft's Advance Payment Base Price)
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

* - unless otherwise indicated, refers to the number of months prior to the first day of the scheduled delivery month of the Aircraft.

6. The parties agree that Customer will pay interest to Boeing on the difference between the payments made pursuant to the Article 5.1 Deferred Advance Payment Schedule Applicable to the 2012 Additional Aircraft, 2013 Aircraft, and 2013 Additional Aircraft and the amount which would otherwise have been payable to Boeing under the Standard Advance Payment Schedule. Such interest shall accrue from and including the date on which such payments would have been due if there were no deferral up to the but excluding the date on which such amounts are paid in full. The rate used to calculate such interest shall be the three-month London Interbank Offered Rate (LIBOR) as set forth in The Wall Street Journal, US edition, [***] basis points. The effective rate will be the rate in effect on the first business day of the calendar quarter in which the advance payment was initially deferred, and will be reset every calendar quarter. Interest on unpaid amounts will be calculated using a 360 day year, and compounded quarterly.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6. Transfer of 767 Option Deposits to the [***] (2013 Additional Aircraft).

The parties agree that [***] Option Deposits for the four (4) Option Aircraft identified in Letter Agreement LA-1103876 to the Purchase Agreement will be applied toward the advance payments due for the two (2) 2013 Additional Aircraft as of the date of execution of this Letter Agreement and concurrent execution of this Supplemental Agreement No. 32 to the Purchase Agreement.

7. Transfer of 787-8 advance payments to 2012 Accelerated Aircraft, 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft.

7.1 The parties agree that [***] will be transferred from the advance payments already paid by Customer for the Table 2 787-8 aircraft in Purchase Agreement No. 3256 and will be applied toward the Advance Payments due for the updated configuration of the 2012 Accelerated Aircraft and 2012 Additional Aircraft in Table 13 and 2013 Aircraft and 2013 Additional Aircraft in Table 14.

7.2 For avoidance of doubt, Attachment A to this Letter Agreement depicts the Advance Payments due for the 2012 Accelerated Aircraft, 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft as of the date of execution of Supplemental Agreement No. 32. This assumes that Customer has elected to defer the Advance Payments for the 2012 Accelerated Aircraft, 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft as set forth in Article 5 of this Letter Agreement.

7.3 Therefore, [***] is owed at signing of this SA-32.

8. Execution of this Supplemental No. 32 and Supplemental Agreement No. 3 to Purchase Agreement No. 3256.

The parties further agree to execute Supplemental Agreement No. 3 to Purchase Agreement No. 3256 within thirty (30) days of execution of this Supplement Agreement No. 32 to this Purchase Agreement, or as otherwise mutually agreed.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9. Deferred Advance Payment interest payment for 2013 Additional Aircraft.

In consideration of Customer’s execution of Supplement Agreement No. 3 to Purchase Agreement No. 3256 within thirty (30) days of execution (or as otherwise mutually agreed) of this Supplement Agreement No. 32, [***].

10. Delivery Flexibility for 2013 Aircraft.

Boeing reserves the right to accelerate or delay the delivery months [***]. Boeing must exercise the right by providing written notice to Customer on or before eighteen (18) months prior to the delivery month.

11. 16G Compliant Seats for the 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft.

The parties agree that both the New Configuration and the Alternate Configuration (if selected by the Customer for any of the specified 2013 Aircraft) comply with enacted RIN 2120-AC84, Improved Seats in Air Carrier Transport Category Airplanes. Accordingly, Letter Agreement 6-1162-ILK-0384R2 does not apply to any of the 2012 Accelerated Aircraft, 2012 Additional Aircraft, 2013 Aircraft and 2013 Additional Aircraft.

12. SPE Fee Clarification.

The fee charged in Article 1.2.1 of Letter Agreement 1103777 entitled Seller Purchased Equipment (SPE) for 2012 Aircraft shall not apply to the 2013 Aircraft and 2013 Additional Aircraft. For the avoidance of doubt, Boeing will [***] for any of the 2013 Aircraft nor any of the 2013 Additional Aircraft. Customer requested changes to the SPE after execution of this Letter Agreement shall be made by Customer in writing directly to Boeing for approval and for coordination by Boeing with the SPE supplier. Any Customer initiated change to the configuration of the Aircraft shall be subject to price and offerability through Boeing's master change or other process for amendment of the Purchase Agreement including an SPE charge equal to [***] of the SPE cost. Notwithstanding any of the preceding, the parties agree that the aggregate amount [***] without written mutual agreement.

13. Assignment.

Any assignment by Customer of any benefits, entitlements, or services described in this Letter Agreement requires Boeing's prior written consent. Further, Customer will not reveal to any third party the amount of the credit memoranda provided to Customer by Boeing without Boeing’s prior written consent and subject to such circumstances as Boeing may reasonably require.

Boeing will not unreasonably withhold consent to Customer’s request to assign, as security, rights in the Purchase Agreement if done for purposes of obtaining financing or for such other purpose consistent with fulfilling its obligations under the Purchase Agreement. Boeing’s consent will be conditioned on all parties accepting Boeing’s customary conditions for consenting to an assignment, including, but not

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

limited to, the following: assignor and assignee indemnification of Boeing for any actions taken by an assignee under any assignment agreement; Boeing’s right to exercise the manufacturer’s option to assume Customer’s rights under the Purchase Agreement in the event of a default under an assignment agreement; and confidentiality. A Party that is

i. bound by a customary confidentiality agreement;

ii. neither an airplane manufacturer nor an airline; and

iii. responding to a Customer request for proposals to provide financing of Aircraft pursuant to the Purchase Agreement, including pre-delivery payment financing

shall be deemed a “Financing Party”.

Without Boeing’s consent, Customer may represent to any Financing Party that Boeing will provide to that Financing Party, concurrently with the delivery of each of the Aircraft to that Financing Party, a financier credit memorandum equal to

(a) Concession ceiling for the passenger aircraft: [***]

(b) Concession ceiling for the freighter aircraft: [***]

escalated to the month of delivery in the same manner as the Airframe Price as described in Supplemental Exhibit AE1 2010$ and in conformance with terms and conditions of this Letter Agreement. Insofar as such Financing Party is concerned, this Financier Credit Memorandum shall be in lieu of any other provision in the Letter Agreement. When the Customer identifies a Financing Party and the preliminary terms of an assignment under which pre-delivery payment financing or aircraft purchase financing could be provided, at Customer’s request, Boeing agrees to enter into discussions with the Customer to consider whether an additional credit memorandum can be assigned, with the goal of helping Customer obtain third-party financing.

Boeing will consent to any reasonable request by Customer to assign the Purchase Agreement to an affiliate provided that Boeing is provided with an adequate guarantee of performance of all obligations under this Purchase Agreement and in a form reasonably satisfactory to Boeing.

Customer understands that Boeing is not required under any circumstances to consent to an assignment that would constitute a novation.

The foregoing provisions are intended to supplement, and not to supersede, the assignment provisions of the AGTA, which address delivery date and post-delivery assignments, merger-type assignments, and other matters.

14. Confidentiality.

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 7 of Letter Agreement 6-1162-KSW-6423 entitled “Special Matters Applicable to the Incremental Aircraft”; Article 21 of Letter Agreement 6-1162-LAJ-0895R6 entitled “Business Considerations”;; Article 9 of Letter Agreement 6-1162-ILK-0412 entitled “Special Matters Relating to Three Aircraft Originally Scheduled to Deliver in 2009”; Article 6 of Letter Agreement 6-1162-ILK-0450 entitled “Special Matters Letter Applicable to the 2012 Accelerated Aircraft”; Article 6 of Letter Agreement 6-1162-ILK-0451 entitled “Special Matters Applicable to the 2012 Additional Aircraft”, Article 9 to Letter Agreement 6-1162-ILK0451R1 entitled “Special Matters Applicable to the 2012 Additional Aircraft and 2013 Aircraft” and Article 13 herein, Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement shall be deemed amended to the extent herein provided and as amended shall continue in full force and effect.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Very truly yours,
THE BOEING COMPANY
Original signed by
By:
	Melanie A. Gauthier
Its:	Attorney-In-Fact

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated herein, please indicate your acceptance, agreement and approval.

ACCEPTED AND AGREED TO this 22nd day of December of 2011.

LAN AIRLINES S.A.
Original signed by
By:
	Roberto Alvo
Its:	Senior VP Corporate Planning & Development
Original signed by
By:
	Andres Del Valle E.
Its:	Corporate Finance Director

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EX-4.4.2

Exhibit 4.4.2

Supplemental Agreement No. 3

to

Purchase Agreement No. 3194

between

The Boeing Company

and

LAN AIRLINES S.A.

Relating to Boeing Model 777-FREIGHTER Aircraft

THIS SUPPLEMENTAL AGREEMENT, entered into as of September 24, 2011, by and between THE BOEING COMPANY, a Delaware corporation (hereinafter called “Boeing”) and LAN AIRLINES S.A., a Chilean corporation (hereinafter called “Customer”).

W I T N E S S E T H:

WHEREAS, Boeing and Customer entered into Purchase Agreement No. 3194, dated as of July 3, 2007 relating to purchase and sale of Boeing Model 777-FREIGTHER aircraft (Aircraft) which agreement, including all tables, exhibits, supplemental exhibits and specifications thereto, together with all letter agreements then or thereafter entered into that by their terms constitute part of such purchase agreement and as such purchase agreement may be amended or supplemented from time to time (the “Purchase Agreement”);

WHEREAS, Customer and Boeing have agreed to accelerate the Aircraft scheduled to be delivered in [***] (hereinafter called “[***]”).

AGREEMENT:

NOW THEREFORE, and in consideration of the mutual covenants herein contained, the parties agree to amend the Purchase Agreement as follows:

1. Revision of Table of Contents and Aircraft Information Table to the Purchase Agreement:

1.1 Table of Contents: The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced by a new Table of Contents, attached hereto as Exhibit 1.

1.2 Table 1, “Aircraft Delivery, Description, Price and Advance Payments” to the Purchase Agreement is deleted in its entirety and replaced by a new Table 1 to reflect the acceleration of the [***] Aircraft to [***] and is attached hereto as Exhibit 2.

2. Supplemental Exhibit BFE1, “Buyer Furnished Equipment Variables”: is deleted in its entirety and replaced by a new Supplemental Exhibit BFE1 to reflect the acceleration of the [***] Aircraft to [***] and to correct some dates and is attached hereto as Exhibit 3.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.4.2

3. Revision to Letter Agreements: Letter Agreement 6-1162-KSW-6454R1 “Option Aircraft” is deleted in its entirety and replaced by Letter Agreement 6-1166-KSW-6454R2 “Option Aircraft” to clarify Option Aircraft and is attached hereto as Exhibit 4.

4. Confidentiality. Boeing and Customer understand that the commercial and financial information contained in this Purchase Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Purchase Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Purchase Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Article. Except as provided in the assignment provisions of Article 8 of the Special Matters Letter, Customer will not disclose this Purchase Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

The Purchase Agreement will be deemed to be amended to the extent provided herein and as amended shall in full force and effect. In the event of any inconsistency between the above provisions and the provisions contained in the referenced exhibits to this Supplemental Agreement, the terms of the exhibits will control.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.4.2

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY Original signed by		LAN AIRLINES S.A. Original signed by
By:		By:
	Melanie A. Gauthier		Roberto Alvo
Its	Attorney-In-Fact	Its:	Sr. VP Corporate Planning and Development
		By:	Original signed by
			Andres Del Valle E.
		Its:	Gerente de Finanzas Corporativas

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.4.2

TABLE OF CONTENTS

	ARTICLES	SA NUMBER
1.	Quantity, Model and Description
2.	Delivery Schedule
3.	Price
4.	Payment
5.	Miscellaneous
	TABLE
1	777-FREIGHTER Aircraft Information Table 1		SA-3
2	777-FREIGHTER Aircraft Information Table 2		SA-2
	EXHIBIT
A.	777-FREIGHTER Aircraft Configuration		SA-2, Art 3.
B.	Aircraft Delivery Requirements & Responsibilities
	SUPPLEMENTAL EXHIBITS
AE1	Escalation Adjustment/Airframe & Optional Features
AE2	Escalation Adjustment/Airframe & Optional Features		SA-2
BFE1	Buyer Furnished Equipment Variables		SA-3
CS1	Customer Support Document
EE1	Engine Escalation And Engine Warranty
SLP1	Service Life Policy Components
	LETTER AGREEMENTS
3194-01	777 Spare Parts Initial Provisioning
3194-02	Open Configuration Matters
3194-03	Seller Purchased Equipment
	RESTRICTED LETTER AGREEMENTS
6-1162-ILK-0270R2	Special Matters		SA-2
6-1162-ILK-0271	AGTA Terms Revisions
6-1162-ILK-0272	Promotional Support (First of Minor Model)		SA-2, Art. 5.2
6-1162-ILK-0273	EULA Special Matters

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.4.2

6-1162-ILK-0274	Performance Guarantees
	RESTRICTED LETTER AGREEMENTS (continued)	SA NUMBER
6-1162-ILK-0275	Liquidated Damages
6-1162-ILK-0277	777-FREIGHTER Performance Retention Commitment	SA-2, Art. 5.3
6-1162-ILK-0276	Special Matters Relating to Advance Payments Requirements
6-1162-KSW-6454R2	Option Aircraft	SA-3
LA-1002327	Aircraft Performance Guarantees for Table 2 Aircraft	SA-2

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Exhibit 4.4.2

Table 1

Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:	777-Freighter		750000 pounds	Detail Specification:	D019W007-NEW (7/24/2006)		2nd Qtr 2006 Forecast
Engine Model/Thrust:	GE90-110B1L		110100 pounds	Airframe Price Base Year/Escalation Formula:	Jul-06		ECI-MFG/ CPI
Airframe Price:		$	231,629,000	Engine Price Base Year/Escalation Formula:	N/A		N/A
Optional Features:		$	1,900,000
Sub-Total of Airframe and Features:		$	233,529,000	Airframe Escalation Data:
Engine Price (Per Aircraft):		$	0	Base Year Index (ECI):		180.3
Aircraft Basic Price (Excluding BFE/SPE):		$	233,529,000	Base Year Index (CPI):		195.4
Buyer Furnished Equipment (BFE) Estimate:		$	1,950,000
Seller Purchased Equipment (SPE) Estimate:		$	0
Deposit per Aircraft:		$	230,000

	Number of Aircraft		Escalation Factor (Airframe)		Escalation Factor (Engine)	Manufacturer Serial Number	Escalation Estimate Adv Payment Base Price Per A/P		Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date									At Signing 1%		24 Mos. 4%		21/18/12/9/6 Mos. 5%		Total 30%
[***]		1		1.1847			$	276,662,000	$	2,536,620	$	11,066,480	$	13,833,100	$	96,831,700
Total:		1

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

between

THE BOEING COMPANY

and

LAN AIRLINES S.A.

Supplemental Exhibit BFE1 to Purchase Agreement Number 3194

P.A. No. 3194	BFE1	Exhibit 3 to S.A. 3
	BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

BUYER FURNISHED EQUIPMENT VARIABLES

relating to

BOEING MODEL 777F AIRCRAFT

This Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates and other variables applicable to the Aircraft.

1. Supplier Selection.

Customer will:

Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:

Avionics **[***] ** must be previously certified equipment

2. On-dock Dates and Other Information

On or before [***], Boeing will provide to Customer the BFE Requirements electronically in My Boeing Fleet (MBF), through My Boeing Configuration (MBC). These requirements may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-sequence installation of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:

Item	Preliminary On-Dock Dates (Month of Delivery)
	[***]	[***]
Avionics	[***]	[***]

3. Additional Delivery Requirements - Import.

Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE imported into the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply with U.S. Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for Customer’s BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S. Customs Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the requirements in the “Shipment Routing Instructions—International”, including the Boeing Customs Trade Partnership Against Terrorism (C-TPAT) Security Guidelines, as set out on the Boeing website referenced below. Customer agrees to include the Shipment Routing Instructions - International, including Boeing C-TPAT requirements, in each contract between Customer and BFE supplier.

http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html

P.A. No. 3194 BFE1 Exhibit 3 to S.A. 3

BOEING PROPRIETARY

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-KSW-6454R2

LAN Airlines S.A.

Avenida Presidente Riesco 5711

Piso 19

Las Condes

Santiago, Chile

Subject: Option Aircraft

Reference: Purchase Agreement 3194 (Purchase Agreement) between The Boeing Company (Boeing) and LAN Airlines S.A. (Customer) relating to Model 777 Freighter aircraft (Aircraft)

This letter agreement (Letter Agreement) cancels and supercedes Letter Agreement 6-1162-KSW-6454R1 and amends the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement. Under Letter Agreement 6-1162-KSW-6454 the right to purchase two (2) Option Aircraft was transferred from the 767 Purchase Agreement 2126, Letter Agreement 6-1162-ILK-0388 to the 777F Purchase Agreement 3194.

Customer exercised one (1) of the two Option Aircraft in Supplemental Agreement No. 2 to the Purchase Agreement.

1. Right to Purchase Option Aircraft.

Customer will have the option to purchase one (1) additional Model 777F aircraft as option aircraft (Option Aircraft).

2. Delivery.

The delivery month is listed in the Attachment to this Letter Agreement.

3. Configuration.

3.1 The configuration for the Option Aircraft will be based on the Detail Specification developed for the first Customer 777F to deliver. Such Detail Specification will be revised to include (i) changes applicable to the Detail Specification that are developed by Boeing between the Option Exercise Date (as defined below) and the signing of the Definitive Agreement, (ii) changes required to obtain required regulatory certificates, and (iii) other changes as mutually agreed.

P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines S.A.

6-1162-KSW-6454R2

4. Price.

4.1 The Attachment to this Letter Agreement provides indicative pricing for the Option Aircraft.

4.2 The Airframe Price, Engine Price, if applicable, Optional Features Prices, and Aircraft Basic Price for each of the Option Aircraft shall be determined in accordance with the provisions of the Purchase Agreement using Boeing’s then current prices as of the date of execution of the Definitive Agreement.

4.3 The Airframe Price, Engine Price, if applicable, Optional Features Prices, and Aircraft Basic Price for each of the Option Aircraft shall be adjusted in accordance with the terms set forth in Article 2.1.5 (Escalation Adjustment) of the AGTA.

4.4 The Advance Payment Base Price shall be developed in accordance with the terms of the Purchase Agreement and determined at the time of Definitive Agreement.

5. Payment.

5.1 In Supplemental Agreement No. 2, the non-refundable option deposits [***] for two (2) 767 Option Aircraft reserved for a scheduled delivery [***] was transferred to two (2) 777F Option Aircraft that were reserved for a scheduled delivery in [***]

5.2 As part of Supplemental Agreement No. 2, Customer exercised the [***] 777F Option Aircraft and requested it to be accelerated [***]

5.3 [***]

5.2 At Definitive Agreement for the Option Aircraft, advance payments will be payable as specified in the Purchase Agreement. The remainder of the Aircraft Price for the Option Aircraft will be paid at the time of delivery.

P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

LAN Airlines S.A.

6-1162-KSW-6454R2

6. Option Exercise.

6.1 Customer may exercise an option by giving written notice to Boeing on or before the date twenty-four (24) months prior to the first day of the delivery month listed in the Attachment (Option Exercise Date).

6.2 If Boeing must make production decisions which are dependent on Customer's exercising an option earlier than the Option Exercise Date, Boeing may accelerate the Option Exercise Date subject to Customer's agreement. If Boeing and Customer fail to agree to a revised Option Exercise Date and/or the delivery date for Option Aircraft, either party may terminate the option and Boeing will refund to Customer, without interest, any Option Deposit received by Boeing with respect to the terminated Option Aircraft.

7. Economic Considerations.

The economic considerations for the Option Aircraft are those provided in Letter Agreement 6-1162-ILK-0270R2, paragraph 2.

8. Definitive Agreement.

Following Customer’s exercise of an option and Boeing’s confirmation of delivery positions, the parties will sign a definitive agreement for the purchase of such Option Aircraft (Definitive Agreement) within thirty (30) calendar days of such exercise. The Definitive Agreement will be in the same form as the Purchase Agreement (as currently amended) subject only to the changes which are necessary to reflect the provisions of this Letter Agreement. In the event the parties have not entered into a Definitive Agreement within thirty (30) days following option exercise, either party may terminate the option to purchase such Option Aircraft by giving written notice to the other within five (5) days. If Customer and Boeing, having acted diligently and in good faith, fail to enter into the Definitive Agreement, Boeing will retain the Option Deposit for that Option Aircraft and shall have no further obligation with respect to that Option Aircraft.

9. Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned in whole or, in part.

10. Confidential Treatment.

Boeing and Customer understand that the commercial and financial information contained in this Letter Agreement is considered by the parties as confidential (Confidential Information) and both agree not to disclose such Confidential Information except as provided herein. In addition to the parties’ respective officers, directors and employees who need to know the Confidential Information and who understand the obligation to keep it confidential, the parties may disclose Confidential Information (1) to the extent required by law and (2) to its agents, auditors and advisors who need to know the Confidential Information for purposes of enabling each party to understand, perform its obligations under, or receive the benefits of, this Letter Agreement and who have agreed not to use or disclose the Confidential Information for any other purpose without the other party’s prior written consent. In the event that a party concludes that disclosure of Confidential Information contained in this Letter Agreement is required by applicable law, the party will so advise the other party promptly in writing and endeavor to protect the confidentiality of such Confidential Information to the widest extent possible. In the event of a legal dispute with Boeing, nothing herein will preclude Customer from sharing with its legal counsel information necessary for purposes of enabling counsel to advise or represent Customer provided that so long as Customer causes its legal counsel to maintain the confidentiality of information that is the subject of this Letter Agreement. Customer will not disclose this Letter Agreement for purposes of financing payments without the prior written consent of Boeing, which consent will be provided once the financier enters into a Non Disclosure Agreement with Boeing in form and substance reasonably satisfactory to Boeing, which will include agreeing not to disclose or

P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

LAN Airlines S.A.

6-1162-KSW-6454R2

use Confidential Information except for the purpose set forth herein. This provision shall not apply to any Confidential Information that is in the public domain except that a party will be liable to the other for breach of its obligations under this provision if the Confidential Information entered the public domain as a consequence of a wrongful act or omission on its part.

P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

LAN Airlines S.A.

6-1162-KSW-6454R2

Very truly yours,

THE BOEING COMPANY

Original signed by

By
	Melanie A. Gauthier
Its	Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date: September 24, 2011

LAN Airlines S.A.

Original signed by

By
	Roberto Alvo
Its	Sr. VP Corporate Planning & Development

Original signed by

By
	Andres Del Valle E.
Its	Gerente de Finanzas Corporativas

P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

Attachment To Letter Agreement 6-1162-KSW-6454R2

Option Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW: 777-Freighter		750000 pounds	Detail Specification:	D019W007-NEW (7/24/2006	)
Engine Model/Thrust:     GE90-110B1L		110100 pounds	Airframe Price Base Year/Escalation Formula:	Jul-06		ECI-MFG/CPI
Airframe Price:	$	231,629,000	Engine Price Base Year/Escalation Formula:	N/A		N/A
Optional Features:	$	1,900,000
Sub-Total of Airframe and Features:	$	233,529,000	Airframe Escalation Data:
Engine Price (Per Aircraft):	$	0	Base Year Index (ECI):	180.3
Aircraft Basic Price (Excluding BFE/SPE):	$	233,529,000	Base Year Index (CPI):	195.4
Buyer Furnished Equipment (BFE) Estimate:	$	1,950,000
Seller Purchased Equipment (SPE) Estimate:	$	0
Refundable Deposit/Aircraft at Proposal Accept:	$	0
Non-Refundable Deposit/ Aircraft at Def Agreemt:	$	750,000

	Number		Escalation			Escalation Estimate Adv		Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	of Aircraft		Factor (Airframe)			Payment Base Price Per A/P		At Signing 1%		24 Mos. 4%		21/18/12/9/6 Mos. 5%		Total 30%
[***]		1		1.1828		$	276,218,000	$	2,012,180	$	11,048,720	$	13,810,900	$	96,676,300
[***]		1		1.2136	Exercised SA-2	$	283,411,000	$	2,084,110	$	11,336,440	$	14,170,550	$	99,193,850
Total:		2

[XXX] P.A. No. 3194	Exhibit 4 to S.A. 3
Option Aircraft

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EX-4.15

Exhibit 4.15

GE – Aviation

General Electric Company

One Neumann Way

Cincinnati, OH 45215-1988 USA

Tel: 513/243-2000

July 11, 2011

LETTER AGREEMENT NO. 12

GTA No. 6-9576

(GE Ref No. 1-2492950911)

LAN Airlines, S.A.

Ave. Americo Vespucio

No. 901

Santiago, Chile

Gentlemen:

WHEREAS, General Electric Company, acting through its GE – Aviation business unit, (“GE”) and LAN Airlines S.A. (f/k/a Lan Chile S.A.) (“LAN”) are parties (GE, and LAN being sometimes hereinafter individually and/or collectively referred to as a “Party” or the “Parties”) to (i) General Terms Agreement No. 6-9576 dated as of January 1, 1996 (the “GTA”) which represents the agreement between the Parties with respect to Engine support for Airline’s fleet of CF6-80C2 series engine powered Boeing 767-300 model aircraft and (ii) Letter Agreements Nos. 1 thru 11 thereto, which represent additional agreements between the Parties with respect to certain of such aircraft (the GTA and such Letter Agreements Nos. 1 thru 11 being collectively referred to as the “Prior Agreements” between the Parties with respect to such fleet of aircraft); and

WHEREAS, the Parties wish to extend the terms given in the GTA with respect to the purchase by LAN of [***] CF6-80C2B6F Boeing 767-300 passenger aircraft and [***] CF6 80CB6F spare Engines and purchase rights granted by Boeing to LAN for the purchase of [***]CF6-80C2B6F powered Boeing 767-300 passenger aircraft and granted by GE to LAN for the purchase of additional [***] CF6 80CB6F spare Engine, whether directly or indirectly through any of its affiliates and/or subsidiaries within the Lan Airlines Group of companies, (hereinafter (“Airline”); and

PROPRIETARY INFORMATION NOTICE

The information contained in this document is GE Proprietary Information and is disclosed in confidence. It is the property of GE and shall not be used, disclosed to others, or reproduced without the express written consent of GE. If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document shall appear on any such reproduction. Export control laws may also control the information contained in this document. Unauthorized export or re-export is prohibited.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

WHEREAS, the Parties now wish to further expand the GTA, from the date hereof forward, by the inclusion of this Letter Agreement No. 12;

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

All capitalized terms used herein without definition shall have the meaning attributed to them in the GTA.

1. Firm Order for Aircraft Engines

Airline agrees to purchase and take delivery direct from Boeing [***] CF6-80C2B6F powered 767-300 aircraft in accordance with the Aircraft Delivery Schedule set forth in Attachment A hereto (the “Firm Order Aircraft”).

Spare Engine Firm Order

1.1 Airline agrees to purchase and take delivery direct from [***] CF6-80C2B6F spare Engines to be delivered in accordance with the Spare Engines Delivery Schedule set forth in Attachment A hereto (the “Firm Order Spare Engines”), subject to any agreed adjustments to such delivery schedule.

2. Purchase Rights

Airline has purchase rights granted by Boeing to LAN for the purchase of additional [***] new CF6-80C2B6F powered Boeing 767-300 passenger aircraft in accordance with the Aircraft Delivery Schedule set forth in Attachment A hereto (the “Purchase Rights Aircraft”).

Spare Engine Purchase Rights

2.1 Airline has purchase rights granted by GE to LAN for the purchase of additional [***] new CF6 80CB6F spare Engines in accordance with the Spare Engines Delivery Schedule set forth in Attachment A hereto (the “Purchase Rights Spare Engine”), subject to any agreed adjustments to such delivery schedule. LAN and GE agree that if LAN exercises more [***] of the above Purchase Rights Aircraft LAN is obligated to purchase the Purchase Right Spare Engine.

It is acknowledged and agreed that such Aircraft Delivery Schedule is and shall remain pursuant with the aircraft Purchase Agreement between Boeing and Airline as supplemented from time to time.

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

In consideration of the above, GE agrees to provide Airline the following:

A. SPECIAL ALLOWANCES

GE agrees to provide the following allowances to Airline subject to the conditions set forth in Attachment B hereto:

1. Aircraft Allowance

GE will provide Airline the following per aircraft allowance. The allowance is applicable towards the Firm Order Aircraft the Purchase Rights Aircraft (together or individually the “Aircraft”) to be purchased by Airline directly from the aircraft manufacturer, or purchased by a lessor for lease to Airline pursuant to a sale-leaseback or other financing arrangement that initiates a firm, new Aircraft purchase as part of this Agreement [***] in accordance with the Aircraft Delivery Schedule.

[***] per each Aircraft

The above allowance amount is presented in [***] shall be subject to escalation from [***] to the month of each applicable Aircraft delivery, in accordance with the escalation formula set forth in Attachment D hereto.

The allowance will be fully earned by Airline on a pro-rata basis, upon delivery of each shipset of Engines (consistent with the Aircraft Delivery Schedule) to Boeing for installation on the Aircraft. The allowance shall be made available to Airline within five (5) business days following receipt of written notice from Airline that it has taken delivery of each applicable Aircraft in accordance with its purchase agreement with Boeing and may be taken as a credit against future purchases from GE or taken as cash to be applied toward a reduction in the Aircraft purchase price.

2. TBC Coated HPT Stage 1 Blades

[***]

3. Special Equipment Credit Allowance

Contingent upon (i) Airline purchasing and taking delivery of the Firm Order Aircraft in accordance with the Aircraft Delivery Schedule, and (ii) Airline taking delivery of the Firm Order Spare Engines purchased by Airline directly from GE (or by a third party through a sale lease back or other financing arrangement that initiates a Firm Order Spare Engines as part of this Agreement) in accordance with the Spare Engine Delivery Schedule at the pricing and payment terms set forth in Attachment C hereto, GE agrees to provide Airline a special equipment credit allowance for each such Aircraft in the amount set forth below:

[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

This special equipment credit allowance will be made available to Airline and earned by Airline upon delivery of each of the [***] Order Aircraft for Airline’s use towards its purchase of goods and services direct from GE and GE subsidiaries.

In the event Airline purchases any Purchase Right Aircraft and the Purchase Rights Spare Engine, the aforementioned Special Equipment Credit Allowance will also apply to all such Purchase Rights Aircraft.

The above special equipment credit allowance amount is presented in [***], and shall be subject to escalation [***] accordance with the Attachment D hereto, and then fixed at time of delivery of the Aircraft as a credit to be applied towards Airline’s purchases of goods and services from GE and GE subsidiaries. Additionally, this allowance shall be subject to the Basis and Conditions for Special Allowances set forth in Attachment B hereto.

B. Price Protection

Base prices for CF6-80C2B6F Spare Engines delivered through [***] in support of the Aircraft, shall be as set forth in Attachment C hereto, and shall be subject to adjustment for escalation in accordance with the escalation formula set forth in Attachment D hereto.

C. SPECIAL GUARANTEES

[***]

1. [***]

2. [***]

3. [***]

4. [***]

The obligations set forth in this Letter Agreement No. 12 are in addition to the obligations set forth in the GTA. In the event of conflict between the terms of this Letter Agreement and the terms of the GTA, the terms of this Letter Agreement shall take precedence. Terms which are capitalized but not otherwise defined herein shall have the meaning given to them in the GTA.

This Letter Agreement No. 12 may be executed by the Parties in two or more separate counterparts, each of which shall be deemed to be an original but all of which when taken together shall constitute one and the same document. Delivery of an executed counterpart of a signature page to this Letter Agreement No. 12 by fax shall be effective as delivery of a manually executed counterpart.

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

Confidentiality of Information. This Letter Agreement contains information specifically for Airline and GE, and nothing herein contained shall be divulged by Airline or GE to any third person, firm or corporation, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld; except (i) that Airline’s consent shall not be required for disclosure by GE of this Letter Agreements, to an Engine program participant, joint venture participant, engineering service provider or consultant to GE so as to enable GE to perform its obligations under this Letter Agreement or to provide informational data; (ii) to the extent required by Government agencies, by law, or to enforce this Letter Agreement; and (iii) to the extent necessary for disclosure to the Parties’ respective insurers, accountants or other professional advisors who must likewise agree to be bound by the provisions of this paragraph. In the event (i) or (iii) occur, suitable restrictive legends limiting further disclosure shall be applied. In the event this Letter Agreement, or other GE information or data is required to be disclosed or filed by government agencies by law, or by court order, Airline shall notify GE at least thirty (30) days in advance of such disclosure or filing and shall cooperate fully with GE in seeking confidential treatment of sensitive terms of this Letter Agreement.

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

Please indicate your agreement with the foregoing by signing in the space provided below, whereupon this Letter Agreement No. 12 shall become effective as of the date of execution by the Parties or if the Parties do not sign concurrently, the latter of the two signature dates.

LAN AIRLINES S.A.	GENERAL ELECTRIC COMPANY
By:	By:
Name:	Name:
Title:	Title:
Date:	Date:
By:
Name:
Title:
Date:

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT A

767-300 Aircraft Delivery Schedule

A/C Qty.	Engine Type	Delivery Date
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

CF6-80C2 Spare Engine Delivery Schedule

Spare Engine Qty.	Engine Type	Delivery Date
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT B

CONDITIONS FOR SPECIAL ALLOWANCES/DELAY/CANCELLATION

[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT C

BASE PRICES FOR SPARE ENGINES

Prices Applicable to Deliveries through [***]

	[***]	[***]
1.	[***]	[***]
	[***]	[***]
	[***]	[***]

A. Base prices are effective for basic Spare Engines delivered to Airline by GE on or [***]. The base prices are for delivery Ex Works, Evendale, Ohio, or point of manufacture, subject to adjustment for escalation, and Airline shall be responsible, upon delivery, for the payment of all taxes, duties, fees or other similar charges, subject to Article VI of the GTA.

B. The selling price of CF6-80C2B6F basic Spare Engines delivered [***] (unless the sole reason for the delivery after such date is a delay within the reasonable control of GE) shall be the base price then in effect, which base price shall be subject to adjustment for escalation in accordance with GE’s then-current escalation provisions.

C. For any additional spare engines that Airline may choose to purchase from GE and that are delivered to Airline by [***], the base price set out above shall apply.

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT D

CF6-80C2 ESCALATION FORMULA

[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT E

BASIS AND CONDITIONS FOR SPECIAL GUARANTEES

[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

LAN Airlines

Letter Agreement No. 12 GTA No. 6-9576

ATTACHMENT F

DELAY AND CANCELLATION DEFINITIONS FOR GUARANTEE

[***]

GE PROPRIETARY INFORMATION

Subject to restrictions on the first page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

EX-4.16

Exhibit 4.16

USED PW6122A FIVE ENGINE PURCHASE AGREEMENT

BY AND BETWEEN

PRATT & WHITNEY ENGINE LEASING, LLC

AND

LAN AIRLINES S.A.

DATED JULY 28, 2011

This document contains proprietary information of Pratt & Whitney Engine Leasing LLC (“PWEL”). PWEL offers the information contained in this document on the express condition that you shall not disclose or reproduce the information in whole or in part without PWEL’s express written consent. Neither receipt nor possession of this document alone, from any source, constitutes PWEL’s permission. Possessing, using, copying or disclosing this document by anyone without PWEL’s express prior written consent may result in criminal and/or civil liability.

Used PW6122A Five Engine Purchase Agreement

Page 2

July 28, 2011

USED PW6122A FIVE ENGINE PURCHASE AGREEMENT

This Used PW6122A five (5) Engine Purchase Agreement (hereinafter referred to as this “Agreement”) is entered into as of July 27 2011, by and between Pratt & Whitney Engine Leasing, LLC, a limited liability company organized and existing under the laws of the State of Delaware having a place of business at 400 Main Street, East Hartford, Connecticut 06108 USA (hereinafter referred to as “Buyer” or “PWEL”) and Lan Airlines S.A. a corporation organized and existing under the laws of Chile and having a place of business at Avenida Presidente Riesco 5711, 20^th Floor. Las Condes, Santiago, Chile (hereinafter referred to as “Seller”). Buyer and Seller shall herein be referred to collectively as the “Parties” and individually as a “Party.”

WITNESSETH:

WHEREAS, on the Closing Date of each Engine Seller will be the owner of one of the five (5) used PW6122A engines bearing manufacturer’s serial numbers 318104, 318111, 318118, 318119 and 318120 with engine stands, engine mounts, as specified in the original EASA Form 1 and Technical Parts List, as set forth in Exhibit A hereto;

WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller the engines; and

NOW, THEREFORE, Seller and Buyer agree as follows:

SECTION 1. DEFINITIONS

In addition to any other terms defined herein, the following capitalized words have the following meanings for all purposes of this Agreement. The definitions are equally applicable to the singular and plural forms of the words.

A. General Definitions

“Agreement” means this Used PW6122A Engine Purchase Agreement together with all exhibits hereto.

“Bill of Sale” means the warranty bill of sale for each Engine in the form of Exhibit B hereto.

“Closing” means, with respect to each Engine the closing of the purchase and sale of the Engine, as evidenced by the delivery of the Bill of Sale to Buyer.

“Closing Date” means, with respect to each Engine the date on which the Closing occurs. There may be more than one Closing Date.

“Dollars” and “$” means the lawful currency of the United States of America.

“Engines” means the five (5) used Pratt & Whitney model PW6122A engines bearing manufacturer’s serial numbers 318104, 318111, 318118, 318119 and 318120, each with an engine stand and all Parts installed in or on said engine on the date of original delivery of such engine to Seller as specified in the original EASA Form 1 and the Technical Parts List, As-Built report and/or LAN’s Engine As Incoming Inventory, as set forth in Exhibit A hereto.

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 3

July 28, 2011

“Expenses” shall have the meaning assigned to in Section 7.1 hereof.

“Government Entity” means any (i) national, state or local government and (ii) board, commission, department, division, instrumentality, court, agency or political subdivision thereof.

“Law” means any (i) statute, decree, constitution, regulation, order or any directive of any Government Entity, (ii) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (iii) judicial or administrative interpretation or application.

“Part” means any part, component, appliance, accessory, instrument, communications equipment, furnishing, module, or other item of equipment installed in or attached to the Engines to which Seller has title.

“Person” means any individual, firm, partnership, joint venture, trust, corporation, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not.

“Security Interest” means any encumbrance or security interest whatsoever, however and wherever created or arising including any right or ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention.

“Seller Indemnitee” shall have the meaning assigned to it in Section 7.1 hereof.

“Taxes” shall have the meaning assigned to it in Section 6.1 hereof.

“Total Loss” means with respect to any Engine:

a. Destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason;

b. Actual, constructive, compromised, arranged or agreed total loss;

c. Requisition of title, confiscation, forfeiture or any compulsory acquisition or other similar event;

d. Sequestration, detention, seizure or any similar event for more than ninety (90) consecutive days

SECTION 2. SALE OF ENGINES; PURCHASE PRICE

2.1 Sale of Engines. Subject to the terms, covenants and conditions of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Engines.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 4

July 28, 2011

2.2 Purchase Price. The purchase price for each of the five (5) Engines shall be [***].

2.3 Payment of Purchase Price. The Purchase Price for each Engine shall be paid as set forth in Section 2.4 hereof by Buyer to Seller on the Closing Date.

2.4 Seller’s Bank Account. The Purchase Price will be paid by wire transfer of immediately available U.S. Dollar funds to Seller’s bank account at:

Bank:	[***]
ABA No.:	[***]
Acct. No.:	[***]
Acct. Name:	[***]
Ref:	[***]

or to such other bank account as Seller may from time to time reasonably designate by written notice (“Seller’s Bank”).

SECTION 3. DELIVERY AND CLOSING

3.1 Place of Delivery and Closing. Seller will deliver the Engines to Buyer at Seller’s facilities in Santiago, Chile, or such other location as may be mutually agreed in writing (the “Delivery Location”), in accordance with the schedule contained in Exhibit A.

3.2 Scheduled Closing Date. The Closing Date for each Engine is scheduled to occur in accordance with the schedule in Exhibit A or such later date as may be mutually agreed in writing.

3.3 Closing. At Closing for each of the Engines, the following shall take place:

(a) Buyer shall pay to Seller the Purchase Price as set forth in Section 2.2 hereof for the applicable Engines.

(b) Seller shall execute and deliver to Buyer the applicable Bill of Sale.

3.4 Total Loss of the Engines. In the event a Total Loss of an Engine or Engines occurs prior to the Closing Date for that Engine or those Engines, the parties shall be released from their remaining obligations hereunder with respect to that Engine or those Engines.

3.5 Transfer of Title. At Closing for each Engine, title to each of the Engines shall be conveyed at the delivery location specified in Section 3.1 upon delivery of the Bill of Sale to Buyer.

3.6 Risk of Loss. On the Closing for each Engine and upon payment of the Purchase Price, all risk of loss or damage to that Engine shall pass from Seller to Buyer.

SECTION 4. CONDITION OF ENGINES AT SALE

4.1 Condition at Sale. On the Closing Date for each Engine and prior to each Closing, Buyer shall be entitled to satisfy itself, pursuant to Section 4.2 that the respective Engine:

(a) [***];

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 5

July 28, 2011

(b) [***];

(c) [***];

(d) [***];

(e) [***]

(f) [***].

Once the Buyer has inspected an Engine pursuant to Section 4.2 and confirmed compliance of that Engine with the requirements described in this Section 4.1, the Closing shall occur with respect to that Engine and the Buyer shall deliver to Seller the Delivery Receipt. The Delivery Receipt shall be conclusive proof that the Buyer has determined that the Engine complies with the requirements of this Section 4.1.

4.2 Ground Inspection. Prior to the Closing Date for each Engine, Buyer, or its agent, will have an opportunity to inspect the Engine at its sole expense and risk. Buyer acknowledges that it is relying on its or its agent’s own inspection and knowledge of the Engine and not on any inspection or representation of Seller, other than the representations and warranties set out in Section 9.

4.3 Disclaimer.

(a) THE ENGINE AND EACH PART THEREOF IS BEING SOLD IN ITS THEN “AS IS, WHERE IS” CONDITION, WITHOUT ANY REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND BEING MADE OR GIVEN BY SELLER, ITS SERVANTS OR AGENTS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE.

SELLER SPECIFICALLY DISCLAIMS (A) ANY EXPRESS OR IMPLIED WARRANTY AS TO THE AIRWORTHINESS, VALUE, DESIGN, QUALITY, MANUFACTURE, OPERATION, OR CONDITION OF THE ENGINE; (B) ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR PURPOSE; AND (C) ANY IMPLIED REPRESENTATION OR WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

SECTION 5. CLOSING CONDITIONS

5.1 Conditions to Buyer’s Obligation with Respect to the Engines. Buyer’s obligation to pay the Purchase Price with respect to each Engine is subject to the satisfaction (or waiver by Buyer) of the following conditions in relation to such Engine:

(a) Seller will have tendered to Buyer all records, documents, data, and manuals relating to the maintenance and operation of each Engine listed in Exhibit A.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 6

July 28, 2011

(b) The Buyer shall have completed its inspection of the Engine pursuant to Section 4.2 hereof and is satisfied in its sole discretion (acting reasonably) that the Engine is in the condition set out in Section 4.1 hereof. The Engine shall not be on watch or subject to repetitive inspection unless it applies to all PW6000 engines in service and no terminating action is available. In the event that terminating action is available, Seller shall only be required to undertake such terminating action if: (i) it can be undertaken on-wing; or (ii) it could reasonably be expected that not performing such terminating action will cause the Engine to be removed within the next 2500 cycles after the Closing Date.

(c) Seller must provide time and cycles for the components listed in the table in Exhibit D.

(d) The Engine shall have no more total cycles since new than that indicated in Exhibit A.

5.2 Conditions to Seller’s Obligation with Respect to the Engines. Seller’s obligations hereunder are subject to and contingent on the satisfaction or waiver of the following conditions in relation to the applicable Engine:

(a) Buyer will have tendered to Seller the Purchase Price for the applicable Engine.

(b) Buyer will have executed and tendered to Seller the Engine Delivery Receipt for the applicable Engine.

(c) [***].

SECTION 6. TAXES

6.1 Indemnity. Buyer will pay promptly when due, and will indemnify and hold harmless Seller on a full indemnity basis from and against, all taxes, duties and fees (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, stamp or other tax), and any assessments, penalties, fines, additions to tax or interest thereon which may be levied by any taxing authority or other Government Entity regardless of where located in connection with the sale, purchase, and delivery of the Engine (excluding any income or capital gains tax imposed on Seller) (collectively; “Taxes”). Buyer’s indemnity obligations will exist regardless of the manner in which such charges are imposed (whether imposed upon Seller, Buyer, all or part of the Engine or otherwise).

6.2 After-Tax Basis. The amount which Buyer is required to pay with respect to any Taxes indemnified against hereunder is an amount sufficient to restore Seller to the same position Seller would have been had such Taxes not been incurred.

6.3 Timing of Payment. Any amount payable pursuant to this Section 6 will be paid within ten (10) days after receipt of a written demand therefor from Seller accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable; provided, however, that such amount need not be paid by Buyer prior to the earlier of (i) the date any Tax is payable to the appropriate Government Entity or taxing authority or (ii) in the case of amounts which are being contested by Buyer in good faith or by Seller, the date such contest is finally resolved.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 7

July 28, 2011

6.4 Refunds. Upon receipt by Seller of a refund of all or any part of any Taxes which Buyer has paid, Seller will pay to Buyer the amount of such Taxes refunded less any expenses incurred by Seller in connection with such refund.

SECTION 7. INDEMNITIES

7.1 [***].

7.2 [Reserved.]

7.3 After-Tax Basis. The amount which an indemnitor will be required to pay with respect to any Expense indemnified against hereunder will be an amount sufficient to restore the Seller Indemnitee, on an after-tax basis, to the same position such Indemnitees would have been had such an expense not been incurred.

7.4 Timing of Payment. It is the intent of the parties that the Seller Indemnitee will have the right to indemnification for Expenses as soon as a claim is made, whether or not meritorious and whether or not liability is established, but subject to refund in accordance with Section 7.7.

7.5 Subrogation. Upon payment in full of any indemnity by an indemnitor, such indemnitor will be subrogated to any right of the Seller Indemnitee in respect of the matter against which such indemnity has been made.

7.6 Notice. The Seller Indemnitee will give prompt written notice of any liability for which an indemnitor is, or may be, liable under this Section 7; provided, however, that failure to give such notice will not terminate any of the rights of the Seller Indemnitee under this Section 7 except to the extent that an indemnitor has been materially prejudiced by the failure to provide such notice.

7.7 Refunds. If the Seller Indemnitee obtain a refund of all or any part of any amount, which an indemnitor has paid to the Seller Indemnitee, the Seller Indemnitee will pay to such indemnitor the amount of such refund less any expenses incurred by the Seller Indemnitee in connection with such refund.

7.8 Defense of Claims. Unless a default hereunder has occurred and is continuing, an indemnitor and its insurers will have the right (in each such case at such indemnitor’s sole expense) to investigate or, provided that such indemnitor or its insurers has not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to this Section 7 and the Seller Indemnitee will cooperate with such indemnitor and its insurers with respect thereto.

7.9 Other Indemnification. The indemnification under this Section 7 shall be effective even though the Seller Indemnitee may have received an agreement to indemnify and hold harmless with respect to the same matters by another Person, provided that the total indemnification from all sources shall not exceed the Expenses.

SECTION 8. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer the following as of the date hereof and as of the Closing Date:

8.1 Corporate Status. Seller is duly incorporated under the Laws in the Republic of Chile and is qualified to do business as now being conducted. Seller has the right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement and the Bills of Sale.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 8

July 28, 2011

8.2 Binding. This Agreement has been duly authorized, executed and delivered by Seller and is a valid, enforceable and binding obligation of Seller except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors’ rights.

8.3 No Breach. The execution and delivery of this Agreement, the consummation by Seller of the transactions contemplated herein and compliance by Seller with the terms and provisions hereof do not and will not contravene any Law applicable to Seller, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of Seller, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which Seller is a party or by which Seller or its properties or assets may be bound or affected.

8.4 Title to Engine. On the Closing Date for each Engine, Seller will have good, valid and clear title to the Engine free and clear of all Security Interests.

SECTION 9. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller the following as of the date hereof and as of the Closing Date:

9.1 Corporate Status. Buyer is a limited liability company duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. It has the corporate power and authority to carry on its business as presently conducted, to enter into this Agreement and perform its obligations hereunder.

9.2 Binding. This Agreement has been duly authorized, executed and delivered by Buyer and is a valid, enforceable and binding obligation of Buyer except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors’ rights.

9.3 No Breach. The execution and delivery of this Agreement, the consummation by Buyer of the transactions contemplated herein and compliance by Buyer with the terms and provisions hereof do not and will not contravene any Law applicable to Buyer, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which Buyer is a party or by which Buyer or its properties or assets may be bound or affected.

SECTION 10. NOTICES

10.1 Manner of Sending Notices. Any notice required or permissible under this Agreement will be in writing. Notices will be delivered in person (or air courier) or sent by fax, or a letter (mailed airmail or first class, certified and return receipt requested), addressed to the parties as set forth below. In the case of delivery in person or by air courier or by fax, notice will be deemed received upon actual receipt. In the case of a mailed letter, notice will be deemed received on the tenth (10th) day after mailing.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 9

July 28, 2011

10.2 Notice Information. Notices will be sent:

If to Buyer:	Pratt & Whitney Engine Leasing, LLC
	400 Main Street M/S 131-43
	East Hartford, CT 06108
	Attention:	[***]
	Telefax:	[***]
	Telephone:	[***]
	Email: [***]
If to Seller:	LAN Airlines S.A.
	Avenida Presidente Riesco 5711, 20th Floor
	Las Condes, Santiago, Chile
	Attention: [***]
	Telephone No.: [***]
	Fax No.: [***]
	Email: [***]

SECTION 11. GOVERNING LAW AND JURISDICTION

11.1 New York Law. This Agreement will in all respects be governed by and construed in accordance with the Laws of the State of New York (notwithstanding the conflict Laws of the State of New York).

11.2 Non-Exclusive Jurisdiction in New York. The parties hereby consent to the non-exclusive jurisdiction of the Federal District Court for the Southern District of New York. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. EACH PARTY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT.

11.3 Service of Process. The parties hereby agree that service of process may be made upon Seller and Buyer in accordance with any applicable provision of New York Law.

11.4 Prevailing Party in Dispute. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Agreement, the prevailing party will be entitled to recover reasonable attorney’s fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment interest.

SECTION 12. MISCELLANEOUS

12.1 No Brokers. The Engine is being sold and purchased without a broker. If any person asserts any claim against Seller or Buyer for fees or commissions by reason of any alleged agreement to act as a broker for either Seller or Buyer in this transaction, the party for which said person claims to have acted will on demand defend, indemnify and hold harmless the other party from and against all claims, demand, liabilities, damages, losses, judgments and expenses of every kind (including legal fees, costs and related expenses) arising out of such claim.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 10

July 28, 2011

12.2 Confidentiality. This Agreement is a confidential document between Buyer and Seller and will not be disclosed by a party to any third parties (other than to such party’s auditors, legal and technical advisors or as required by any court or applicable Law) without the prior written consent of the other party.

12.3 Rights of Parties. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right; any defective or partial exercise or any such rights will not preclude any other or further exercise of that or any other such right; and no act or course of conduct or negotiation on a party’s part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right.

12.4 Further Assurances. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law or reasonably requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Agreement.

12.5 Headings. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Agreement. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Agreement.

12.6 Invalidity. If any of the provisions of this Agreement become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired.

12.7 Entire Agreement. This Agreement constitutes the entire agreement between the parties in relation to the sale of the Engine by Seller to Buyer and supersedes all previous proposals, agreements and other written and oral communications in relation hereto.

12.8 Counterparts. This Agreement may be signed by the parties in separate counterparts, each of which when so signed and delivered shall be an original, but all of which shall together constitute but one and the same instrument.

12.9 Assignment of Warranties. Seller hereby assigns to the Buyer any and all assignable warranties of manufacturers, maintenance facilities and overhaul agencies, of and for each Engine, effective concurrently with the delivery of each Engine. Upon request of Buyer, Seller shall give Buyer aid and assistance at no cost to Seller in enforcing the rights of Buyer arising under such warranties. Upon request of Buyer, Seller shall give notice to any such manufacturers, maintenance facilities and overhaul agencies of the assignment of such warranties to Buyer.

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 11

July 28, 2011

THE NEXT PAGE IS THE SIGNATURE PAGE

Pratt & Whitney Proprietary – Subject to the Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 12

July 28, 2011

IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be executed by their respective officers as of the date first set forth above.

	Lan Airlines S.A.	Pratt & Whitney Engine Leasing, LLC
Signature
Printed Name
Title
Date
	Lan Airlines S.A.
Signature
Printed Name
Title
Date

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 13

July 28, 2011

EXHIBIT A

ENGINE DESCRIPTIONS AND CONDITIONS

Engine Serial Number	Engine Purchase Date	Not to Exceed Average Cycles at LAN	Not to Exceed Maximum Cycles at LAN	Not to Exceed Maximum Hours at LAN
[***]	Within five (5) business days after signature of this Purchase Agreement	[***]	[***]	[***]
TBD*	By delivery of the 6th Aircraft	[***]	[***]	[***]
TBD*	By delivery of the 11th Aircraft	[***]	[***]	[***]
TBD*	By delivery of the 14th Aircraft	[***]	[***]	[***]
TBD*	By delivery of the final Aircraft	[***]	[***]	[***]

* The purchase date order of engine serial numbers 318104, 318111, 318119 and 318120 has yet to be determined.

** For each additional cycle above [***] and any additional hours above [***] that are accumulated on an Engine, Seller will be invoiced Buyer’s then-current hourly rate in effect on the date of Engine purchase discounted by [***] the Buyer’s then-current cyclic rate in effect at the time the Engine is purchased. The applicable Buyer hourly and cyclic rates in effect for any additional cycles and hours accumulated on the first Engine to be purchased in accordance with Exhibit A are [***] Engine flight cycle and [***] per Engine flight hour for flight hour-per-flight-cycle ratios between [***].

ENGINE TECHNICAL RECORDS

1. To the extent that such have been created and exist and are made available for inspection, the results of the most recent borescope inspections (video or otherwise) and test cell runs, current trend monitoring data and all other historical technical records including;

(i) original delivery records from the manufacturers of the Engine;

(ii) operational history since used;

(iii) all previous shop visit certification and documentation;

(iv) back to birth traceability on all LLP’s and

(v) non-incident and accident statements from previous operators if any

2. Operational history of the Engine.

3. All utilization reports for the Engine.

4. Airworthiness Directive and Service Bulletin Status Reports

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 14

July 28, 2011

5. Serviceability Tag FAA 8130-3 or EASA 1

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 15

July 28, 2011

EXHIBIT B

ENGINE WARRANTY BILL OF SALE

                                                                                   (“Seller”), was the owner of the full legal and beneficial title to the following equipment (collectively, the “Engine”):

1. One (1) used                      PW6122A engine bearing manufacturer’s serial number *######*, with BFE and QEC,

2. All appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment or property installed in or attached to the Engine, to which Seller holds title.

3. All records and manuals applicable to such Engine.

4. One engine transportation stand (SN        , Base SN             )

For valuable consideration, receipt of which is hereby acknowledged, Seller did sell, grant, transfer, sell, deliver and set over, on                     , 20    , at                                         , to Pratt & Whitney Engine Leasing, LLC (“Buyer”) and its successors and assignees forever all of Seller’s right, title and interest in and to the Engine, to have and to hold the Engine for its and their use forever.

Seller hereby warrants to Buyer and its successors and assigns that there is hereby conveyed to Buyer on the date hereof title to the Engine free and clear of all liens, claims, charges and encumbrances whatsoever. Seller will warrant and defend such title forever against all claims and demands.

This Engine Warranty Bill of Sale shall be governed by and construed in accordance with the laws of the State of New York.

IN TESTIMONY WHEREOF we have set our hand on                     , 20    .

By:

Its:

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 16

July 28, 2011

EXHIBIT C

ENGINE DELIVERY RECEIPT

Pratt & Whitney Engine Leasing, LLC (“Buyer”) hereby accepts and acknowledges receipt from                                         , not in its individual capacity but solely as owner trustee (“Seller”) in accordance with the terms and conditions of the ENGINE PURCHASE AGREEMENT dated                          , 20     between the parties hereof, of One (1) used                                  model PW6122A engine bearing manufacturer’s serial number *######*, in                      configuration with BFE and QEC, on                     , 20     at                                                              . This Engine Delivery Receipt shall be governed by and construed in accordance with the laws of the State of New York.

                                                                                              ,

By:

Title:

Date:

PRATT & WHITNEY ENGINE LEASING, LLC

By:

Title:

Date:

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Used PW6122A Five Engine Purchase Agreement

Page 17

July 28, 2011

EXHIBIT D

	PART NAME	Reference Part Number	Reference CMM/ATA Number	Time Tracked
x	OIL QUANTITY TRANSMITTER	5407114	79-22-11	YES
x	START VALVE	5407217, 1000851-3	80-13-52	YES
	ANTI-ICE VALVE	5408246	30-21-56	YES
	MAIN GEARBOX ASSY	5407242	72-61-01	YES
	STATOR ALTERNATOR (PMA)	5401589	73-21-15	YES
x	N° 4 BEARING SCAVENGE VALVE	5400912	79-22-17	YES
x	OIL PUMP (LUBE & SCAVENGE)	5407189	79-21-12	YES
x	TCA SHUTOFF VALVE CONTROLLER (LOW)	5405022	75-32-15	YES
x	HPC BLEED VALVE CONTROLLER (UP)	5405022	75-32-15	YES
x	TCC AIR VALVE	5401506	75-24-16	YES
x	TCA SHUTOFF VALVE	5408561	75-23-17	YES
	AIR OIL COOLER	5405158	79-21-51	YES
x	FUEL OIL COOLER ( FOC IDG )	5404881	79-21-18	YES
x	IDG OIL (FOC) BYPASS VALVE	5405342	24-21-53	YES
x	FUEL FLOW TRANSMITTER	5401591	73-31-24	YES
x	FUEL METERING UNIT (FMU)	5408183	73-22-20	YES
x	MAIN FUEL PUMP	5405441	73-11-14	YES
x	LPC (2,5) BLEED VALVE ACTUATOR	5401531	75-32-11	YES
x	HPC BLEED VALVE (Start Bleed LH)	5401498	75-32-13	YES
x	STATOR VANE ACTUATOR	5405269	75-31-15	YES
x	FUEL DISTRIBUTION VALVE	5407969	73-11-13	YES
x	N° 4 BEARING BUFFER AIR COOLER	5407713	75-22-14	YES
x	STARTER ASSY (Hamilton)	5407974, 1007714-1	80-13-42	YES

Pratt & Whitney Proprietary – Subject to Restrictions on the Front Page

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EX-4.17

EXECUTION VERSION Exhibit 4.17

PURCHASE PROMISE

This Purchase Promise (hereinafter this “Promise”) is made January 24, 2011 by and between:

(1) LAN Cargo S.A., a stock corporation incorporated and existing according to the laws of the Republic of Chile, domiciled, for these purposes, at Avenida Presidente Riesco 571, 19th floor, Las Condes, Santiago, Chile (hereinafter also “LAN Cargo”);

(2) Inversiones LAN S.A., a stock corporation incorporated and existing according to the laws of the Republic of Chile, domiciled, for these purposes, at Avenida Presidente Riesco 5711, 19th floor, Las Condes, Santiago, Chile (hereinafter also “Inverlan” and, together with LAN Cargo, the “Promising Sellers”); and

(3) Bethia S.A., a stock corporation incorporated and existing according to the laws of the Republic of Chile, domiciled, for these purposes, at Avenida Kennedy 5454, Suite 902, Vitacura, Santiago, Republic of Chile (hereinafter also “Bethia”).

WHEREAS

A. Blue Express Intl. S.A. (hereinafter “Blue Express Intl.”) is a stock corporation incorporated and existing according to the laws of the Republic of Chile. Blue Express Intl. (originally called Lan Courier S.A.) was incorporated by public deed dated April 12, 1996, executed in the Santiago Notarial Office of Mr. Gonzalo de la Cuadra Fabres. An abstract of that deed was registered on page 11,305, number 9,179, of the 1996 Santiago Commercial Registry and was published in Official Gazette #35459 on May 6, 1996. Its capital is divided into 8,838,645 common shares with no par value that are fully subscribed and paid in. LAN Cargo owns 8,837,860 shares, representing approximately 99.9911% of the capital, while Inverlan owns 785 shares, representing approximately 0.0089% of the capital (all such shares hereinafter called the “Blue Express Intl. Shares”).

B. Blue Express S.A. is a stock corporation incorporated and existing according to the laws of the Republic of Chile (hereinafter also “Blue Express”). Blue Express (originally called Lan Courier Staff S.A.) was incorporated by public deed dated October 31, 2000, executed in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract of that deed was registered on page 29,855, number 23,760, of the 2000 Santiago Commercial Registry and was published in Official Gazette #36814 on November 16, 2000. Its capital is divided into 100 common shares with no par value that are fully subscribed and paid in. Blue Express Intl. owns 99 shares in Blue Express, representing 99% of the capital, while Lan Cargo owns the remaining share representing 1% of the capital (all such shares hereinafter called the “Blue Express Shares” and together with the Blue Express Intl. Shares, the “Shares”).

EXECUTION VERSION

C. The Promising Sellers intend to transfer the Shares and Bethia intends to acquire the Shares.

THEREFORE, the Promising Sellers and Bethia (hereinafter collectively called the “Parties”) agree to the following:

ARTICLE ONE

PROMISED PURCHASE AND SALE

1.1 Subject to the terms and conditions of this Promise, Lan Cargo promises to sell, assign and transfer full ownership to Bethia of 8,837,860 Blue Express Intl. Shares, representing approximately 99.9911% of the capital, and 1 Blue Express Share, representing 1% of the capital, free of any lien, restriction, limitation, debt, claim or third-party right. Bethia promises to buy, acquire and accept such Shares from Lan Cargo. Subject to the terms and conditions of this Promise, Inverlan promises to sell, assign and transfer full ownership to Bethia of 785 Blue Express Intl. Shares, representing approximately 0.0089% of the capital, free of any lien, restriction, limitation, debt, claim or third-party right. Bethia promises to buy, acquire and accept such Shares from Inverlan. So, the Promising Sellers will sell and transfer 100% of the share capital in Blue Express Intl. and Blue Express to Bethia provided the conditions set down in this Promise are fulfilled. The promised purchase agreement will be signed in terms substantially similar to the content of Schedule 1.1 (hereinafter also the “Purchase”). The Parties stipulate that Bethia may execute the promised Purchase pro se or through one or more companies belonging to its same business group (as this term is defined in Article 100 of Securities Market Law 18,045). All obligations under the Promise, in particular, but not limited to, the obligation to execute the Purchase and the Promising Buyer’s Representations and Warranties, as this term is defined below, shall apply to such companies in the business group that ultimately execute the Purchase.

1.2 The Purchase price for all of the Shares shall be, subject to the following adjustments, the amount equal in Chilean pesos to the total resulting from the following equation (the “Price”):

(a) US$54,000,000 (fifty-four million dollars of the United States of America, hereinafter also “Dollars”), less

(b) 12,000 Unidades de Fomento, less

(c) The price assigned to the trademarks and other assets identified in Schedule 4.3(f), which will be sold separately as indicated in Section 4.3(f) of the Promise. The Purchase Agreement will indicate the amount within the price corresponding to the Blue Express Intl. Shares and the Blue Express Share. The observed dollar exchange rate for the business day immediately prior to payment shall be used to calculate payment of the price. The rate for the Unidad de Fomento will be the rate on the day of the Purchase, for purposes of calculating the payment of the Price.

EXECUTION VERSION

1.3 The Price will be subject to an adjustment withholding (hereinafter also the “Withholdings”) of the sums estimated to represent the deeds or circumstances having an adverse effect on (i) the December 2010 closing balance sheet of Blue Express Intl. and/or Blue Express (hereinafter collectively the “Blue Express Group”) contained in Schedule 1.3; (ii) the EBITDA of the Blue Express Group, amounting on this date to CH$3,739,597,000; or (iii) the equity of the Blue Express Group, amounting on this date to approximately US$7,400,000 Dollars, for the portion that, when combined, exceeds US$1,000,000 (one million Dollars) that:

(a) are found during the Due Diligence (as this term is defined below);

(b) are not identified in (b.i) the representations and warranties of the promising sellers contained in Schedule 2.1 or (b.ii) the closing management report on Blue Express Intl. and Blue Express through December 2010, contained in Schedule 1.3 (b.ii); and

(c) are proven by Bethia to the Promising Sellers by the signed opinion of accounting or tax advisors, which the Promising Sellers have the right to review and, if relevant, contest for good reason in the period of three bank business days after delivery to the Promising Sellers. Should the discrepancy between Bethia and the Promising Sellers continue, it will be resolved by Ernst & Young or, alternatively, by Deloitte, in no more than five bank business days, to which the parties hereby agree. All costs arising from the solution of the discrepancies indicated above by Ernst &Young or Deloitte, as the case may be, shall be paid in equal proportions by the Parties.

Save as stipulated in Sections 1.3 and 5.2(c), the Price will not be subject to other deductions or withholdings for taxes, expenses or otherwise, provided, however, that the Promising Sellers shall make payment of any tax, charge or assessment for which they are liable that is imposed on the transfer and/or capital gain resulting from the Purchase or that is otherwise determined on the basis of taxable income in their respective jurisdiction.

1.4 As of signature of this Promise through March 11, 2011, Bethia will be empowered to conduct, at its cost, a broad operating, financial, commercial, regulatory, accounting, tax, labor and legal audit (hereinafter also the “Due Diligence”) of the Blue Express Group through its executives and outside advisors. All information provided to conduct the due diligence will be subject to the non-disclosure obligation set out in the non-disclosure agreement signed on January 18, 2011, which the Parties declare to know and accept. The Promising Sellers undertake to facilitate all information included on the list provided in Schedule 1.4 (hereinafter also the “Due Diligence List”). The Promising Sellers shall also facilitate, on a timely basis, further information that Bethia reasonably requires solely to complement the audit that it will make using the information furnished according to the Due Diligence List, provided it remains within the scope of the items requested in the Due Diligence List and the information deals with to the Blue Express Group.

EXECUTION VERSION

1.5 Bethia shall, in the period of three bank business days following completion of the Due Diligence, give written notice to the Promising Sellers of the eventual Withholdings that must be made on the Price as a result of the Due Diligence, the reason and support for them, which will be treated pursuant to Section 5.2(c). If Bethia does not give notice of such Withholdings in that period, payment of the Price will not be subject to Withholdings.

ARTICLE TWO

REPRESENTATIONS AND WARRANTIES

2.1 The Promising Sellers represent and warrant to Bethia, which has been determining to Bethia signing this Promise, that each and every one of the assertions contained in Schedule 2.1 are on this date true and correct (hereinafter also the “Promising Sellers’ Representations and Warranties”).

2.2 As stated in the Purchase:

(a) All of the Promising Sellers’ Representations and Warranties shall be repeated on the date of the Purchase and shall remain in effect for 6 months following that date, except for the Promising Sellers’ Representations and Warranties contained in Section 12 of Schedule 2.1 (“Tax Affairs”), which shall remain in force for 12 months following the date of the Purchase.

(b) The Promising Sellers shall indemnify and hold Bethia, Blue Express Intl. and Blue Express harmless (hereinafter also the “Indemnitees”) for, and it shall pay the Indemnitees any sum derived from, any loss, liability, claim, injury, expense (including reasonable attorneys’ fees) or decrease in value, whether or not a third-party claim is involved (hereinafter also the “Damages”) that arise from or in relation to:

(i) A material mendacity or inaccuracy of any of the Promising Sellers’ Representations and Warranties; or

(ii) Any material default by the Promising Sellers on any agreement or obligation under the Purchase; and

(c) The Promising Sellers shall not be liable in relation to the matters described in paragraph (i) of Section 2.2(b) (for indemnification or otherwise) for any sum exceeding the Price.

2.3 Bethia represents and warrants to the Promising Sellers, which has been determining to the Promising Sellers signing this Promise, that each and every one of the assertions contained in Schedule 2.3 are on this date true and correct (hereinafter also the “Bethia’s Representations and Warranties”).

EXECUTION VERSION

2.4 As stated in the Purchase:

(a) All Bethia’s Representations and Warranties shall be repeated on the date of this Purchase and through 6 months following that date.

(b) Bethia shall indemnify and hold the Promising Sellers harmless from, and shall pay it, Damages that arise from or in relation to:

(i) A material mendacity or inaccuracy of any of Bethia’s Representations and Warranties; or

(ii) Any material default by Bethia on any agreement or obligation under the Purchase; and

(c) Bethia shall not be liable in relation to the matters described in paragraph (i) of Section 2.4(b) (for indemnification or otherwise) for any sum exceeding the Price.

ARTICLE THREE

MANAGEMENT

3.1 As of this date through the Closing or Termination (as each of these terms is defined below), the Promising Sellers assume the following obligations (from which they may be released only under written consent of Bethia, which may not be unreasonably denied):

(a) No entity in the Blue Express Group may perform any transaction outside of the ordinary course of its business, understood to be, among other matters, (i) the distribution of dividends, (ii) the assumption of any debt other than supplier accounts payable, (iii) an amendment and/or early termination of material contracts and/or contracts strategic to the company’s operations; or changes in the actual staff of senior executives of the company, except because of resignation or justified severance according to the rules in the Labor Code;

(b) Furthermore, without affecting the ampleness of the restriction indicated in letter (a) above:

(i) no entity in the Blue Express Group will agree to the payment of compensation to the Board and/or an amendment to its by-laws, either at a Shareholders Meeting or at a Board Meeting;

(ii) no entity in the Blue Express Group will transfer or encumber any real or personal asset for a commercial or market value greater than or equal to US$100,000 or that is relevant or material to the operational or commercial processes of the Blue Express Group (including the Blue Express trademark, if it is in the equity of the Blue Express Group) or promise the transfer thereof or perform any act or contract that may be considered the commencement of such a transfer or process; and

EXECUTION VERSION

(iii) no entity in the Blue Express Group will enter into or amend, either individually or collectively, contracts or agreements that modify or alter (A) wages and salaries, (B) working conditions, (C) benefits, allowances and payments in general, and (D) the working hours and work week of executives and employees of the Blue Express Group in general, whether internal or outsourced;

(c) No entity in the Blue Express Group may make or promise to make investments for an aggregate above US$200,000; and

(d) Each entity in the Blue Express Group will comply with all permits, authorizations, contracts, agreements and commitments that are in effect.

ARTICLE FOUR

TERMS; CONDITIONS PRECEDENT

4.1 The purchase will be executed 15 business days after expiration of the period indicated in Section 1.5 (hereinafter also the “Closing Date”) or on such other date as agreed by the Parties in writing, provided that the Parties will make their best efforts for that period not to go beyond April 15, 2011. To the extent necessary by law, the Parties declare that this period is not extinctive and that any of the Parties may demand specific performance of this Promise, without prejudice to any other right granted thereto by the law or this Promise.

4.2 The obligation of the Promising Sellers to execute the Purchase is subject to fulfillment of the following conditions precedent concurrently by the Closing Date:

(a) The Withholdings resulting from the due diligence that Bethia must make according to Section 1.5 are less than or equal to US$1,000,000 (one million Dollars);

(b) Bethia’s Representations and Warranties will be entirely true and accurate;

(c) Bethia will be in full compliance with its obligations under this Promise;

(d) The execution of the Purchase will have been approved by the Board of Directors of Lan Cargo and Inverlan in the terms indicated in Article 149 of the Companies Law 18,046; and

EXECUTION VERSION

(e) There will be stipulations in the Purchase or in a Schedule thereto that Blue Express S.A. promises to pay Lan Airlines S.A. the debt of US$4,519,000 appearing in the balance sheet contained in Schedule 1.3 in no more than 90 days after the date of execution of the Purchase. Documenting that obligation may not mean for Blue Express S.A. any tax burden for such debt under the Stamp Tax Law; and

(f) Bethia causes, through itself or through Blue Express S.A. or a third party, payment to Inmobiliaria Aeronáutica S.A. of 12,000 Unidades de Fomento, taken at the rate on the day of the Purchase, for the advance payment of rent under the lease identified in Section 1 of Schedule 2.1.18. Said payment will be made at the time that the representatives of Inmobiliaria Aeronáutica S.A. and Blue Express S.A. sign the amendment of the respective lease on the date of the Purchase, in the form included in Schedule 4.1(f).

These conditions precedent are established to the exclusive benefit of the Promising Sellers and may be waived at their discretion in the period indicated in Section 4.1

4.3 Bethia’s obligation to execute the Purchase is subject to fulfillment of the following conditions precedent concurrently by the Closing Date:

(a) The Promising Sellers’ Representations and Warranties must be entirely true and accurate;

(b) The Promising Sellers are in full compliance with their obligations under this Promise;

(c) (i) no petition or declaration has been made for the bankruptcy of any entity in the Blue Express Group nor has any business reorganization process begun;

(d) All permits, notifications and authorizations requirable according to governing law for Bethia to acquire the Shares and exercise effective control over Blue Express Intl. and Blue Express have been granted and are in effect (the cost will be assumed by Bethia); and

(e) Inmobiliaria Aeronáutica S.A. and LAN Airlines S.A. agree that the contracts identified in Sections 1 and 2 (this latter only in relation to information technology services) in Schedule 2.1.18 remain in effect for a period of at least 2 years, in the case of the contract in Section 1, and 12 months, in the case of the contract in Section 2, and under the other conditions established in the forms that are provided in Schedules 4.2(f) and 4.2 (e) of the Promise; and

(f) The Promising Sellers cause the transfer, on or before the Purchase, of the Blue Express trademark and the assets identified in Schedule 4.3(f) to Blue Express Intl., Blue Express, Bethia or the companies in the Bethia business group indicated in Section 1.1. The Purchase Price must be adjusted downwards by the equivalent to the price at which that trademark and assets identified in Schedule 4.3 (f) are transferred, pursuant to Section 1.2(c) of the Promise.

EXECUTION VERSION

These conditions precedent are established to the exclusive benefit of Bethia and may be waived at its discretion in the period indicated in Section 4.1.

4.4 Notwithstanding the provisions in Section 4.2(a), the Parties agree that if the Withholdings resulting from the Due Diligence that Bethia has had to make according to Section 1.5 exceed, as a whole, US$1,000,000 (one million Dollars), Bethia may, by written notice to the Promising Sellers delivered in the period indicated in Section 4.1, limit the Withholdings to US$1,000,000 (one million Dollars) and, in this case, the Promising Sellers shall consider the condition established in Section 4.2 to have been fulfilled.

4.5 If any of the conditions precedent in favor of one Party has not been fulfilled by the Closing Date and such condition has not been waived by the Party in whose benefit it was established, said Party will be released from the obligation to execute the Purchase (hereinafter also the “Termination”).

4.6 Notwithstanding the stipulations in Section 4.2, the Parties represent that the Promise will not take effect in regard to the Promising Sellers until the Boards of Directors of LAN Cargo and Inverlan (i) grant the authorization indicated in Section 4.2(d) and (ii) grant or ratify the powers of attorney to execute the Promise and the Purchase, all before January 31, 2011.

ARTICLE FIVE

CLOSING

5.1 The transaction closing (hereinafter also the “Closing”) will be held in the offices of LAN Airlines S.A. located at Avenida President Riesco 5711, 19^th floor, Las Condes, Santiago, Chile, or in such other location that is agreed upon by the parties.

5.2 The following actions shall be taken and deliveries made at the Closing:

(a) The Promising Sellers and Bethia will sign the Purchase;

(b) The Promising Sellers will deliver the certificates of Shares to Bethia;

(c) Once the Withholdings have been deducted, which, if applicable, will constitute a downward price adjustment (which will occur simultaneously on the Closing Date), Bethia will pay each Seller on the same date the portion of the price of the Shares corresponding thereto. Payment will be made by bank check or by bank transfer to the account indicated by each Seller.

(d) The Promising Sellers will deliver the minutes books of Board and Shareholders Meetings (and committee meetings, if any) for Blue Express Intl. and Blue Express to Bethia, together with the respective share registries and also certify the transfer of the Shares to the transferee;

EXECUTION VERSION

(e) The board of directors of Blue Express Intl. and Blue Express will be replaced by individuals appointed by Bethia. All present directors must resign or the corresponding shareholders meetings must be convened at least the minimum time in advance required by law and the respective resolution must be adopted to remove all directors and appoint entirely new board members as previously informed by Bethia; and

(f) The other acts and contracts that are necessary to comply in full with the terms and conditions of this Promise shall be executed, including revocation of the powers of attorney indicated by Bethia, effective immediately upon the Closing.

ARTICLE SIX

JOINT AND SEVERAL LIABILITY; PROHIBITION

6.1 The Promising Sellers assume the obligations contracted by each under this Promise as their own, jointly and severally, pro se, together with such other obligations that must be fulfilled by any of the entities in the Blue Express Group under this Promise. The foregoing also encompasses the obligations that they will contract under the Purchase, including, but not limited to, the obligation to an indemnity for a material mendacity or inaccuracy of the Representations and Warranties.

6.2 The Promising Sellers promise to Bethia that they will not encumber, transfer or perform any act or contract with the Shares until the Closing or Termination has taken place (hereinafter the “No-Change Period”). Furthermore, the Promising Sellers promise pro se and on behalf of their shareholders, executives, directors, employees, subsidiaries, attorneys, advisors, accountants and agents (hereinafter also the “Representatives”) not to take actions during the No-Change Period intended to generate any expression of interest, request, proposal or offer from any person or entity (save Bethia) in relation to:

(i) The sale, licensing, transfer or acquisition of all or a material part of the business or assets of the Blue Express Group or any subsidiary or company resulting from the division of the Blue Express Group;

(ii) The issuance, delivery, transfer or acquisition of (A) shares or securities representing equity of the Blue Express Group; or (B) any security, instrument or obligation that might be converted into or exchanged for shares or securities representing equity in the Blue Express Group; or

EXECUTION VERSION

(iii) Any merger, consolidation, business agreement, exchange of shares, reorganization or similar transaction involving the Blue Express Group (any of the actions described in numerals (i), (ii) and (iii) hereinafter also a “Forbidden Action”).

ARTICLE SEVEN

DEFAULT CLAUSE

7.1 A default by the Promising Sellers on the obligation to execute the Purchase shall entitle Bethia to collect a fine or penalty of US$3,000,000 (three million Dollars) by way of liquidated damages.

7.2 A default by Bethia on the obligation to execute the Purchase shall entitle the Promising Sellers to collect a fine or penalty of US$6,000,000 (six million Dollars) by way of liquidated damages.

ARTICLE EIGHT

GOVERNING LAW; JURISDICTION

8.1 This Promise is governed by the law of the Republic of Chile.

8.2 All disagreements arising from, or that bear a relationship to, this Promise shall be resolved by the Ordinary Courts of Justice sitting in the city of Santiago, Chile.

ARTICLE NINE

GENERAL PROVISIONS

9.1 Each of the Schedules forms a part of this Promise for all pertinent purposes. The Schedules are as follows:

Section	Heading
Schedule 1.1	Purchase
Schedule 1.3	Balance Sheet
Schedule 1.3(b.ii)	Management Report
Schedule 2.1	Promising Sellers’ Representations and Warranties
Schedule 1.4	Due Diligence List
Schedule 2.1.18	Certain leases and services agreements
Schedule 2.3	Bethia’s Representations and Warranties
Schedule 4.2(f)	Form of amendment to lease
Schedule 4.3(e)	Form of amendment to services agreement
Schedule 4.3(f)	Trademarks and certain assets

EXECUTION VERSION

9.2 Save specific provision otherwise in this Promise, no change, amendment, alteration, supplement or termination of this Promise or of any of the parts thereof shall be valid unless set down in writing and signed by all the Parties.

9.3 Any and all of the notices, notifications or other correspondence or deliveries that must or may be made according to the provisions of this Promise shall be deemed made, for all pertinent purposes, upon forwarding by certified mail, postage prepaid and return receipt requested, or delivered by messenger or sent by fax or e-mail in the following manner:

If to the Promising Sellers, at:

to the attention of:     Alejandro de la Fuente

Address:	Avda. Presidente Riesco 5711, 20th floor, Las Condes, Santiago
Fax:	56-2-5658764
e-mail:	alejandro.delafuente@lan.com

If to Bethia, at:

to the attention of:     Jaime Cuevas Rodríguez

Address:	Avda. Kennedy 5454, Suite 902, Vitacura, Santiago
Fax:	56 -43- 401071
e-mail:	jcuevas@bethia.cl

or to such other address specified by any of the Parties by notice to the other according to this paragraph. The notices, notifications and correspondence shall be deemed delivered to any of the Parties on the same date when delivered by messenger, if delivered in that way; on the date five days after forwarding by post, in the case of certified mail; or the business day next succeeding the date when transmitted by fax, if sent in that manner. Notices sent by e-mail shall always be followed by forwarding by messenger, certified mail or fax so that they are deemed validly received, unless the sender receives a read receipt from the recipient.

9.4 No waiver of the provisions in this Promise shall be valid unless it is made in writing and signed by the Party making the waiver. No waiver shall be deemed to be a continuing waiver over time or a waiver of a subsequent default or breach, whether or not similar in nature, unless so specifically stipulated in writing.

9.5 If any section of this Promise or its enforcement against any person or any circumstance were declared void or illegal for any reason, all other sections of this Promise that might take effect without such void or illegal section and the enforcement of those same sections against persons or circumstances other than those regarding which they were deemed void or illegal shall continue in full force, always provided that the invalidity of any one of the sections of this Promise regarding any person or circumstance does not materially affect or change the meaning of this Promise. To the extent legally possible, the section declared void or illegal or unenforceable against any person or circumstance shall be interpreted, in each case, to be able to produce legal effect.

EXECUTION VERSION

9.6 The provisions in this Promise will be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns; provided that no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Promise without the consent of the other Party, provided, moreover, that Bethia may fulfill the obligations assumed under this Promise either directly or through one or more subsidiaries and/or third parties that will allow it to comply at all times with governing laws, which must be previously disclosed in writing to the Promising Sellers.

9.7 The titles and headings contained in this Promise have been placed for reasons of convenience and reference only and do not in any way modify or interpret the intention of the Parties or affect the content of the stipulations in this Promise.

9.8 The bearer of an original copy of this Promise is authorized to request the corresponding registrations in the shareholders registry of each of the entities in the Blue Express Group.

9.9 The expenses incurred by each Party in negotiating and executing this Promise, including the fees of legal, accounting and financial advisors, shall be paid by the Party incurring them.

9.10 Each Party declares that it has the authority and legal, corporate and other authorizations needed to execute, deliver and perform this Promise.

9.11 Save provision otherwise in this Promise, all periods established herein are in consecutive (calendar) days.

for LAN Cargo S.A.

for Inversiones LAN S.A.

For Bethia S.A.

EX-4.18

Exhibit 4.18

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

JOURNAL NO.

ASSIGNMENT OF INTERESTS

AND

MODIFICATION OF

“BLUE EXPRESS INTL. SERVICIOS DE TRANSPORTE

LIMITADA”

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

In Santiago, Chile, on April 6, 2011, before me, PATRICIO RABY BENAVENTE, Attorney, Regular Notary Public of the Fifth Notarial Office of Santiago, domiciled at Gertrudis Echenique 30, Suite 44, Las Condes, THERE APPEARED: /One/ Mr. ALEJANDRO DE LA FUENTE GOIC, Chilean, married, engineer, national identity card number 6.947.715-1, on behalf of, as shall be evidenced, LAN CARGO S.A., a closed corporation incorporated and existing in accordance with the laws of the Republic of Chile, taxpayer identification number 93.380.000-4, a cargo airline, both domiciled at Presidente Riesco 5711, 20th floor, borough of Las Condes, Santiago, hereinafter indistinctively called “Lan Cargo”; /Two/ Mr. ALEJANDRO DE LA FUENTE GOIC, identified above, on behalf of, as shall be evidenced, INVERSIONES LAN S.A., a closed corporation incorporated and existing in accordance with the laws of the Republic of Chile, taxpayer identification number 96.575.810-0, an investment company, both domiciled at Presidente Riesco 5711, 20th floor, borough of an investment company, both domiciled at Presidente Riesco 5711, 20th floor, borough of

1

Las Condes, Santiago, hereinafter indistinctively called “Inversiones Lan,” and together with Lan Cargo, the “Assignors”; /Three/ Mr. CARLOS ALBERTO HELLER SOLARI, Chilean, married, entrepreneur, national identity card number 8.717.000-4, on behalf of, as shall be evidenced, SERVICIOS DE TRANSPORTES LIMITADA, a limited liability company incorporated and existing in accordance with the laws of the Republic of Chile, taxpayer identification number 76.139.888-1, a transportation company, both domiciled at Avenida Isidora Goyenechea 2800, 50th floor, Las Condes, Santiago; and /Four/ Mr. CARLOS ALBERTO HELLER SOLARI, identified above, on behalf of, as shall be evidenced, INVERSIONES BETMIN SpA, a joint stock company incorporated and existing in accordance with the laws of the Republic of Chile, taxpayer identification number 76.132.459-1, an investment company, both domiciled at Avenida Isidora Goyenechea 2800, 50^th floor, Las Condes, Santiago, hereinafter together with Servicios de Transportes Limitada, the “Assignees,” and the Assignees and Assignors are collectively called the “Parties.” All parties are of age, have evidenced their identities by the aforesaid identity cards and state that under due authority, they hereby enter into the following agreement (hereinafter also the “Assignment”). FIRST: RECITALS. BLUE EXPRESS INTL. SERVICIOS DE TRANSPORTE LIMITADA. 1.1

2

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

Incorporation and Modifications. /a/ Incorporation. Blue Express Intl. Servicios de Transporte Limitada, hereinafter indistinctively called the “Company,” was incorporated as a closed corporation under the corporate name of “Lan Courier S.A.” by public deed dated April 12, 1996, executed in the Santiago Notarial Office of Mr. Gonzalo de la Cuadra Fabres. An abstract of this public deed was registered on page 11305, number 9179, of the 1996 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on May 6^th of the same year. /b/ Modifications. Prior to its transformation into a limited liability company discussed in Section 1.2 below, the bylaws of the company underwent the following amendments: /i/ The capital of the Company was increased by public deed dated January 25, 2000, executed in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta, to the amount of 2,511,323,865 pesos, divided into 8,838,645 common registered shares in one single series with no par value. An abstract of that public deed was registered on page 7,415, number 3,440, of the 2000 Commercial Registry of the Santiago Regal Estate Registrar and was published in the Official Gazette on February 21^st of the same year. /ii/ The business of the Company was modified by public deed dated May 15, 2000, executed in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract

3

of that public deed was registered on page 11,861, number 9,561, of the 2000 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on May 23^rd of the same year. /iii/ The business of the Company was modified by public deed dated August 17, 2000, executed in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract of that public deed was registered on page 22,281, number 17,763, of the 2000 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on August 30^th of the same year. /iv/ The corporate name of the Company was changed from “Lan Courier S.A.” to “Blue Express Intl. S.A.” by public deed dated May 23, 2008, executed in the Santiago Notarial Office of Mr. Patricio Zaldívar Mackenna. An abstract of that public deed was registered on page 24,120, number 16,506, of the 2008 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on June 10th of the same year. /v/ The resolution on the change in the company’s name, adopted at the Special Shareholders Meeting held May 7, 2008, the minutes of which were executed to public deed on May 23, 2008 in the Santiago Notarial Office of Mr. Patricio Zaldívar Mackenna, was voided and the corporate name of the company was changed from “Lan Courier S.A.” to “Blue Express Intl. S.A.” by a public deed

4

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

dated July 8, 2008, executed in the Santiago Notarial Office of Mr. Patricio Zaldivar Mackenna. An abstract of that public deed was registered on page 35,323, number 24,264, of the 2008 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on August 9, 2008. 1.2. Transformation. The Company was transformed from a stock corporation into a commercial limited liability company by public deed dated March 3, 2011, executed in the Santiago Notarial Office of Mr. Eduardo Avello Concha. The corporate name was changed to “Blue Express Intl. Servicios de Transporte Limitada” and its actual bylaws were approved. An abstract of that public deed was registered on page 12,837, number 9,668, of the 2011 Commercial Registry of the Santiago Real Estate Registrar and was published in the Official Gazette on March 10^th of the same year. 1.3. Partners. As set out in the bylaws of “Blue Express Intl. Servicios de Transporte Limitada” to which Section 1.2 above refers, the sole partners in the company are currently those indicated below, each holding the interests indicated: /a/ Lan Cargo, owning 99.9911% of the capital; and /b/ Inversiones Lan, owning 0.0089% of the capital. SECOND: ASSIGNMENTS. 2.1. Lan Cargo. /a/ LAN CARGO S.A., duly represented and under the consent of INVERSIONES LAN S.A., hereby sells, assigns and transfers all of the interests

5

it owns in Blue Express Intl. Servicios de Transporte Limitada to Servicios de Transportes Limitada, for whom the representative thereof indicated in the preamble purchases, accepts and acquires such interests. /b/ The price of the assignment made by Lan Cargo to Servicios de Transportes Limitada herein is the sum of 22,454,140,584 pesos, the legal tender of Chile (such currency hereinafter called “Pesos”), which Servicios de Transportes Limitada pays to Lan Cargo in this act, at once and in cash. Lan Cargo, through its representatives appearing herein, declares receipt thereof to its full and total satisfaction and it grants a release in regard thereto. /c/ Furthermore, Lan Cargo and Servicios de Transportes Limitada waive the resolutory actions that may arise from this agreement. 2.2. Inversiones Lan. /a/ INVERSIONES LAN S.A., duly represented and under the consent of LAN CARGO S.A., hereby sells, assigns and transfers all of the interests that it owns in Blue Express Intl. Servicios de Transporte Limitada to Inversiones Betmin SpA, on behalf of whom the representative indicated in the preamble purchases, accepts and acquires such interests; /b/ The price of the assignment made by Inversiones Lan to Inversiones Betmin SpA is the sum of 1,994,431 pesos, which Inversiones Betmin SpA pays to Inversiones Lan at once and in cash in this act. Invesiones Lan declares, through

6

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

its appearing representative, receipt thereof to its full and total satisfaction and it grants a release in regard thereto. /c/ Furthermore, Inversiones Lan and Inversiones Betmin SpA waive the resolutory actions that may arise from this agreement. 2.3 Transfer of Title. Scope. /a/ The transfer of title to the interests that are the subject of the assignments stipulated in Sections 2.1 and 2.2 above takes place in this act because each Assignee has the power and intent to transfer such interests and each Transferee has the capacity and intent to acquire them. /b/ The assignments of interests stipulated in Sections 2.1 and 2.2 above encompass not only the rights or shares of the Assignors in the capital, but also the proportions of rights corresponding thereto in the company’s assets, including reserves, revaluation funds and undistributed profits. THIRD: REPRESENTATIONS. 3.1. The Assignors, duly represented, expressly represent that the interests in this assignment are assigned and transferred free of price balances, resolutory actions, pledges, liens, attachments, litigation or prohibitions, and the Assignors are liable for the clearing of title pursuant to law. The Assignors further represent and warrant that there are no balances owed by or to the partners in their personal accounts on this date. 3.2. The Parties represent that this Assignment is made in compliance with the purchase promise dated

7

January 24, 2011, signed by LAN Cargo and Inverlan, as promising sellers, and Bethia S.A., as promising buyer, amended on even date herewith (hereinafter also the “Promise”). FOURTH: REPRESENTATIONS AND WARRANTIES. 4.1. The Assignors represent and warrant to the Assignees, such representations and warranties being determining to the Assignees executing this assignment, that each and every one of the assertions contained in Schedule 2.1 of the Promise are, on this date, true and correct (hereinafter also the “Promising Sellers’ Representations and Warranties”). Such schedule is filed together this deed upon signature by the parties. 4.2. All of the Promising Sellers’ Representations and Warranties shall remain in effect through six months from the date of this Assignment, except for the Promising Sellers’ Representations and Warranties contained in Section 12 of Schedule 2.1 of the Promise (“Tax Affairs”), which shall remain in effect through 12 months following the date of this Assignment. 4.3. The Assignees represent and warrant to the Assignors, such representations and warranties being determining to the Assignors executing this Assignment, that each and every one of the assertions contained in Schedule 2.3 of the Promise are true and correct on this date (hereinafter also the “Promising Buyers’ Representations and Warranties”). Said Schedule

8

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

is filed together with this deed upon signature by the parties. All the Promising Buyers’ representations and warranties shall remain in effect through six months following the date of this Assignment. FIFTH: WITHDRAWAL AND INCORPORATION OF PARTNERS. 5.1. Withdrawal. LAN CARGO S.A. and INVERSIONES LAN S.A. withdraw from the Company because of the assignment of interests set out in the third clause above. They declare that the Company owes nothing to them for any reason or concept and, accordingly, they grant the Company the most ample and complete release without any reserve of any type or nature. 5.2. Incorporation. The partners in the Company, the Transferees, Servicios de Transportes Limitada and Inversiones Betmin SpA, become the only partners in the Company because of the assignments of interests set out in the third clause above. SIXTH: AMENDMENT OF BYLAWS. SURVIVAL. 6.1. Amendment of Bylaws. Because of the assignments of interests stipulated in the Third Clause above, Servicios de Transportes Limitada and Inversiones Betmin SpA, as the sole current partners in “Blue Express Intl. Servicios de Transporte Limitada,” hereby agree to make the following amendments to the Company’s bylaws: /a/ Capital. Article Six on capital in the Bylaws is replaced in its entirety by the following: “Article Sixth: The capital of the Company is the sum of 3,291,842,000 pesos, which is fully

9

paid and contributed in the following way, as stated in the public deed of transformation of the Company specified above: /a/ Servicios de Transportes Limitada, the sum of 3,291,549,000 pesos; and /b/ Inversiones Betmin SpA, the sum of 293,000 pesos.” /b/ Management and Use of the Corporate Name. Article Eight on administration and use of the corporate name in the Bylaws is substituted in its entirety by the following: “Article Eighth: The Company shall be represented and managed and its corporate name shall be used by Servicios de Transportes Limitada, who shall do so through one or more agents appointed by public deed, which shall be noted at the margin of the registration of the abstract of the deed containing the Company’s bylaws. It is stipulated that the appointment shall be essentially revocable under the same formalities stipulated and shall not form part of the Company’s bylaws. The managing partner, acting in the aforesaid manner, shall represent the Company judicially and extrajudicially in Chile and abroad in all affairs, businesses, transactions, proceedings, actions, lawsuits, acts and contracts relating to the business purpose or that are necessary or conducive thereto, with the powers in Articles Seven and Eight of the Code of Civil Procedure. To such end, without the following list implying any limitation of authority, the managing partner,

10

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

acting in the aforesaid manner, may: 1) Open and close bank current accounts for deposit, credit or savings in local or foreign currency; draw and overdraw on checking accounts and issue orders for debits in current accounts by electronic, data processing and/or fax procedures; draw, deposit, endorse, collect, revalidate, cancel, give stop payment orders and have protested checks and other demand documents and proof of deposit, whether time, on demand or to the bearer or to the order; withdraw checkbooks or continuous check forms and give notice of theft, robbery or misplacement; request, acknowledge and reject balances; open and close demand or time savings accounts and make deposits and withdrawals or draw on the same. Make time deposits, invest in mutual funds or other financial instruments in financial or investment institutions, redeem all or part thereof and withdraw the checks or cashier’s checks issued because of redemptions or deposits. Without signifying any limitation of the preceding powers, pay and draw checks in payment of suppliers, make transfers of funds between bank current accounts of the Company and electronically authorize payrolls. 2) Draw, accept, reaccept, subscribe, endorse in ownership, in guarantee or in collection commission, collect, have protested, discount, cancel bills of exchange, promissory notes and

11

any type of negotiable instrument or commercial paper. 3) Contract any type of transaction, specially with banks and financial institutions, the Central Bank, Banco del Estado de Chile, Production Development Corporation or other credit or financial institutions, whether national or foreign, in any way and in particular those indicated in Law 18,010, i.e. loans in the form of credit facilities, loans or mutuatus, loans with drafts or advances against acceptance or against securities, discounting, credits or advances in current accounts and promissory notes. These credits may be granted or conceded with or without a guarantee, in local or foreign currency, and may or may not be adjustable. Open simple and documentary credits in banks, for its own account or another’s, that are revocable and irrevocable, divisible and indivisible, confirmed or unconfirmed. Authorize debits in the current account, make any type of bank, simple or current account deposit for bank guarantee bonds or for any other purpose. Do business amply on the capital and investment markets; acquire rights to mutual funds of any type. Contract, obtain and renew bank guarantee bonds and sign promissory notes or other financial instruments for that purpose. 4) Collect and receive judicially and extrajudicially everything owed to the Company and issue receipts, releases and cancellations. 5) Deliver, receive and withdraw goods and

12

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

documents in open or closed custody or collection. Rent safe-deposit boxes, open them and withdraw whatever is inside them and terminate the rental thereof. 6) Perform any type of foreign trade transaction, exports and imports of any type of goods, open and amend import records or licenses and attachments thereto, with the authority to sign all necessary documents. Withdraw merchandise from customs houses. Represent the Company to the Central Bank of Chile and national or foreign commercial banks in everything regarding foreign trade. 7) Sign, deliver, negotiate, withdraw and endorse bills of lading, waybills or consignment notes regarding ground, air or maritime transportation. 8) Perform any type of foreign exchange transaction, with the authority in particular to buy and sell and generally convey foreign currency on a spot or forward basis coming from visible or invisible foreign trade, make conversions and agree to arbitrage. 9) Buy, sell, exchange, contribute and generally convey any type of corporeal or incorporeal chattel, stipulating prices, conditions, periods and other clauses, stipulations and modalities, with or without a repurchase agreement; and give chattel in payment of the Company’s obligations, with the authority to appraise them, value them, set the value thereof and transfer them. These actions may be intended to gain ownership and personal rights

13

regarding the same or a part or share therein. Enter into any type of preparatory agreement, including a purchase promise and transaction closing regarding any type of chattel. Acting in this manner and in this matter, it may enter into, modify, void, annul, rescind, extend, terminate, dissolve, renew, and put an end to any type of contract or legal act. 10) Buy, sell, exchange, contribute and generally convey any type of corporeal or incorporeal real estate, bearer securities and shares of stock, stipulating prices, conditions, periods and other clauses, stipulations and modalities, with or without a repurchase agreement. These acts may be intended to gain ownership, usufruct, personal rights in regard thereto or regarding a part or share therein. Enter into any type of preparatory agreement, including a purchase promise and option and lease-purchase regarding all types of real estate, bearer securities and shares of stock. 11) Give and receive any type of chattel or real estate in lease or sublease, with or without a purchase option, set rent, periods and whatever is deemed convenient, extend, terminate and renew them. Enter into any type of service contract, in particular for distribution and/or logistics, set the price and all kinds of conditions and modalities, terminate, extend, rescind or revoke them. Participate in bidding of any type or nature, make bids and offer

14

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

contractual conditions of all kinds relative to the service being tendered, all within the company’s business, and accept the awards of contracts in that bidding. 12) Deposit and withdraw merchandise or goods in general warehouses and customs warehouses as well as in any other type of warehouse, leave merchandise on consignment, grant powers of attorney for that purpose, endorse deposit and pledge vouchers. 13) Give and receive chattel or real estate in bailment, loans, deposit and antichresis, agree to interest, default clauses and fines, including lease-purchase agreements. 14) Contract and modify insurance protecting against any type of risk, collect, endorse and cancel policies, claim losses, collect the pertinent indemnity and sign releases and receipts. 15) Perform any type of exchange and brokering transactions. 16) Enter into any type of joint venture or joint account agreement. 17) Buy and sell bonds, shares of stock and bearer securities in general with or without a guarantee, with or without a resale or repurchase agreement; subscribe bonds and shares, accept bills of credit. 18) Enter into, amend and terminate any type of employment and service contract, whether or not for professional services. Enter into and amend collective agreements. 19) Sign certificates of settlement and grant releases in labor matters. 20) Make and agree to the extinguishment of any type of

15

obligation by payment, novation, set-off or otherwise. Agree to a novation and assume the status of debtor. 21) Request and issue statements of account. 22) Agree to, accept and stipulate estimations of damages, default clauses and fines. 23) Enter into any type of transportation contract, charter party, distribution and logistics contract, including warehousing and/or archiving of documents and goods in general, either as ship operator, charterer or beneficiary. Contract third parties for transportation and/or distribution services. Enter into any type of service contract, in particular, without limitation, for distribution, logistics and warehousing, storage and archiving of documents and goods in general. Authorize the departure of any type of vehicle in transit, including the respective equipment thereof, for reasons of international transportation, distribution and/or logistical services. 24) Form part of communities, stipulate indivision, appoint a trustee pro indiviso. 25) Represent the Company with the right to speak and vote in the companies of which it forms a part, including at shareholders meetings or assemblies of open or closed stock corporations; join companies already incorporated, incorporate companies or corporations of any type, in the country and abroad, whether partnerships or capital-based corporations, whether or not part of the capital

16

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

comes from abroad, cooperatives, trade associations or joint accounts, closed or open stock corporations, modify, dissolve, liquidate, divide, merge and transform them from one type to another, stipulate contributions, forms of payment, conditions, periods and other clauses, stipulations and modalities, including representing the Company at shareholders meetings, partners meetings, board of directors meetings or meetings of any other organ of administration, with the right to be a director therein, appoint and elect directors. They may also enter into shareholders agreements of any nature and in the manner they deem most convenient, buy shares and interests in companies to join the same, set prices, forms of payment and make payment in whatever modality or condition they deem pertinent, issue cancellations and receipts, receive and accept cancellations and releases; waive legal and judicial actions. 26) Assign any type of credit in any way, whether registered, to the order or to the bearer, and accept assignments, set prices, forms of payment, make payment and determine the other conditions that are deemed convenient. 27) Give and receive goods in mortgage, postpone, release, cancel mortgages, including with a general guarantee clause. Give and receive chattel, bearer securities, rights, actions and other corporeal or incorporeal things

17

in pledge, be it a civil or commercial pledge of any type or special pledges and cancel them. Mortgages and pledges may secure the company’s own obligations. 28) Make the Company a surety and joint and several co-debtor, grant and accept simple and joint and several sureties, co-sign bills of exchange, promissory notes and any type of negotiable instrument, whether to secure the company’s own or others’ obligations. 29) Accept, postpone and cancel any type of guarantee. 30) Grant reductions in amount or extensions of time, appoint agents, representatives, commission agents, distributors and dealers. 31) Enter into brokerage or mediation, distribution and commission contracts for purchase and sale. 32) Establish and accept usufructs, trusts, easements and annuities. Request and accept awards of any type of goods. 33) Pay in cash, by payment in kind, by consignment, by subrogation, by the assignment of assets, everything owed by the principal and, in general, extinguish obligations, including any form of novation and agree to novation in which the status of debtor or creditor is assumed. 34) Assume third-party debt. 35) Establish and agree to special domiciles. 36) Request commercial ownership of trademarks, industrial models, invention patents, renew them and lodge oppositions against third-party registrations. 37) Transfer, acquire and enter into royalty or license agreements

18

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

regarding any type of intellectual properties or industrial procedures. 38) Request administrative concessions of any nature or purpose, whether inland or maritime, including establishing water rights and/or the regularization of water rights, and act with ample attributions before the General Water Office, Ministry of Public Works, Irrigation Office, National Irrigation Commission, Hydraulic Office and any other service, entity or institution relating to this matter. 39) Represent the Company before any type of natural or juristic person, whether public or private, including Ministries of the administration and governance of the State in general, Ministry of Education, Ministry of Health, National Health Service, Regional and Provincial Health Offices, Community Health Services, the Institute of Public Health, Municipalities, Sanitary Services Commission, National Environmental Commission and Regional Environmental Commission, Agriculture and Livestock Service, Institute of Agricultural and Animal Husbandry Development, General Water Office, Irrigation Offices and other services or authorities in this area, Canal Owner Associations or Irrigator Communities, Social Security and Equalization Funds, Mutual Safety Associations, Training and Employment Service, Social Security Normalization Institute (INP), Internal Revenue Service, Customs Service,

19

Customs Bureau, Chilean Detective Force, Chilean Police Force, the Armed Forces in general, Treasury General of the Republic and Regional and Provincial Treasury Offices, Pension Fund Managers (AFP), Ministry of Labor and Social Security, Labor Bureau, Regional Labor Offices and their Provincial and Municipal Inspection Departments, Ministry of Public Works, Transportation and Telecommunications and the Divisions or Offices or Departments thereof, the Roadworks Office, commercial banks, and, in particular, Banco del Estado de Chile and Production Development Corporation (CORFO) and the National Mining Company. 40) Send, receive, and withdraw any type of correspondence, whether or not certified, money orders and packages. 41) Enter into any type of lump sum or construction administration construction contract and subcontract. 42) Present any type of bid and apply for registration in contractors registries and sign the documents required for this purpose. 43) Make mining claims, request surveys, oppose claims or surveys, transfer rights to mining property, buy, sell and convey shares in mining companies, modify them, appoint managers of such companies, enter into leases, exploitation and operating credit agreements regarding mines and minerals. 44) Represent the Company to the Office of the Public Prosecutor and Local, Provincial and Regional Prosecutor Offices and in all

20

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

lawsuits and judicial acts, whether or not contentious, before any type of ordinary or special court, with the most ample powers, including the powers to discontinue actions filed, answer and accept counterclaims, accept the delegation thereof, reply to interrogatories, waive remedies and legal terms, settle, submit to arbitration, grant arbitrators their powers of conciliators, approve compositions, receive, petition for declarations of bankruptcy, attend creditors meetings with the right to speak and vote, join creditor groups and make agreements and arrangements of any type, grant reductions in amount and extensions of time, grant venue, appoint receivers, experts, depositaries, appraisers, liquidators and other officers that are necessary, represent the Company in mediation and arbitration, claim impediments, request probate, sign inventories, cause divisory lawsuits, petition for, accept and consent to awards, appoint dividers, agree to indivision, all with the most ample attributions, open and track administrative case files of any nature, be notified of the resolutions issued and appeal adverse resolutions to the corresponding person using all powers inherent to the cases being heard, represent the Company in everything relating to tax matters before the Internal Revenue Service and Treasury Service, relating to requests, responses to summons, reconsiderations,

21

appeals and pertinent presentations and, in general, execute and enter into all acts and contracts of any nature whatsoever, and in the exercise of this power of attorney, delegate all or part of it, even authorizing the delegate to delegate in turn. The power to settle also includes an extrajudicial settlement and settlement agreements may be made and the content thereof determined. 45) Delegate part of its powers and grant special powers of attorney to one or more persons, whether representatives and/or third parties, revoke powers and delegations and reassume; 46) They may stipulate in the contracts and legal acts that they enter into and execute on behalf of the company any type of condition, period and modality, agree to or amend any type of covenant or stipulation, whether essential, natural or merely incidental, principal or accessory; receive or deliver, demand statements of account, enforce all rights and actions that are available to the Company for such affairs, acts and contracts; and sign, subscribe, modify, rectify, clarify, complement and rescind contracts and legal acts, such as public or private deeds or documents in which they are set out that they deem necessary. 6.2. Survival. The bylaws of the Company continue in full force except as amended by this public deed, in particular the stipulation relative to the fact that the liability of the partners is

22

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

limited to the amount of their respective contributions. SEVENTH: APPOINTMENT AND REVOCATION OF AGENTS. 7.1. Appointment. Without forming part of the bylaws of “Blue Express Intl. Servicios de Transporte Limitada,” in relation to the stipulations in Article 8 of the Bylaws, as managing partner of the Company, it hereby appoints Mr. Carlos Alberto Heller Solari, Mr. Jaime Eduardo Cuevas Rodríguez, Mrs. Ana Soledad Bull Zúñiga, Mr. Alejandro Gutiérrez Chavez, Mr. Eduardo Ignacio Soler Delano, Mr. Alberto Morgan Lavín and Mr. Rodrigo Hernán Veloso Castiglione as agents to manage the Company and use the corporate name thereof on its behalf who, acting in the manner indicated below, shall have the following powers that are described in Article Eighth provided they place their signature before the corporate name: a) Carlos Alberto Heller Solari will have and individually exercise all the powers without limitation, in particular the powers in numbers 1 to 46, both included; b) Any two of Jaime Eduardo Cuevas Rodríguez, Ana Soledad Bull Zúñiga, Alejandro Gutiérrez Chavez, Eduardo Ignacio Soler Delano, Alberto Morgan Lavín and Rodrigo Hernán Veloso Castiglione, acting together, shall have the powers indicated in Article Eight of the Company’s Bylaws, in particular those from numbers 1 to 46, both included, with the limitation that they may not convey or encumber real estate or assume in any

23

form bank or financial debt or assess chattel by pledge, although they may take out or contract bank guarantee bonds to guarantee compliance with obligations or contracts by the Company and/or apply to bids in which the Company participates as a contractor or service provider, with the authority to sign the promissory notes that are relevant or required to obtain the bank guarantee bonds. Notwithstanding the foregoing, Alberto Morgan Lavín and Rodrigo Hernán Veloso Castiglione will individually hold and exercise the powers specified in numbers 4), 5), 11), 13), 18), 19), 21), 23), 25), 31), 36), 38), 39), 44), 46) and 46). Said representatives may delegate all or part of this power of attorney and confer and revoke special powers of attorney. Servicios de Transportes Limitada and Inversiones Betmin SpA stipulate that the formalities indicated in the bylaws will be completed for the appointment of agents by including their names in an abstract of this public deed, which shall be registered in the corresponding Commercial Registry. Special power of attorney: Notwithstanding the foregoing, without forming part of the bylaws, a special power of attorney is conferred upon Jaime Eduardo Cuevas Rodríguez and Eduardo Ignacio Soler Delano, to represent individually Blue Express Intl. Servicios de Transporte Limitada before Ministries of the Administration and Governance of the State in

24

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

general, Intendancies and Administrations, Ministry of Education, Ministry of Health, National Health Service, Regional and Provincial Health Offices, Community Health Services, Institute of Public Health, Regional Offices of Ministries, Municipalities, Municipal Works Offices, Sanitary Services Commission, National Environmental Commission and Regional Environmental Commission, Agricultural and Livestock Service, Institute for Agricultural and Animal Husbandry Development, General Water Office, Irrigation Offices and other services or authorities in this area, Canal Owner Associations or Irrigator Communities, Social Security and Equalization Funds, Mutual Safety Associations, Training and Employment Service, Institute of Social Security Normalization (INP), Internal Revenue Service, Customs Service, Customs Bureau, Chilean Detective Force, Chilean Police Force, Armed Forces in general, Treasury General of the Republic and Regional and Provincial Treasuries, Pension Fund Managers (AFP), health insurance companies (ISAPRES), Ministry of Labor and Social Security, Labor Bureau, Regional Labor Offices and their Provincial and Municipal Inspection Departments, Ministry of Public Works, Transportation and Telecommunications or the Divisions or Offices or Departments thereof, Roadworks Office and the National Mining Company. Acting in the aforesaid

25

manner, they may confer special powers of attorney in regard to the aforesaid powers. 7.2. Revocation. Servicios de Transportes Limitada, as the managing partner of the Company, hereby revokes, effective this date, the appointments of agents of the Company set down in the public deed dated March 3, 2011, executed before Mr. Eduardo Avello Concha and noted under journal number 4197-2007, which was annotated at the margin of the Company’s registration in the respective Commercial Registry as well as any other full or special power of attorney granted prior to this date, including those that have been granted by Blue Express INTL S.A. EIGHTH: GOVERNING LAW. DISPUTE RESOLUTION. 8.1. This agreement on assignment of interests is governed by the laws of the Republic of Chile. 8.2. /a/ Any difficulty or dispute arising among the Parties (Assignors and Transferees) originating in this Agreement, whether regarding its validity, voidance, unenforceability, interpretation, performance, default, effects, termination or relating hereto in any way, directly or indirectly, will be decided in the Republic of Chile, by arbitration by a mixed arbitrator, who will proceed as a conciliator and rule pursuant to law, appointed by mutual consent of the parties. Failing consent, the appointment shall be made according to the rules of the Arbitration Center of the Santiago Chamber of Commerce set down in the

26

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

public deed dated December 10, 1992, executed in the Santiago Notarial Office of Mr. Sergio Rodríguez Garcés the provisions of which were published in the Official Gazette of Chile on June 22, 1993, including all subsequent amendments, which are deemed known to and accepted by the parties and an integral part of this agreement for all pertinent purposes. The mere fact that any of the parties requests or petitions for the appointment of an arbitrator by such entity shall make it legally presumable that there is no agreement among the parties on the appointment of the arbitrator. /b/ If the appointment of the arbitral tribunal is made by the Santiago Chamber of Commerce, the parties confer a special, irrevocable power of attorney upon the Santiago Chamber of Commerce to appoint the arbitrator ex aequo et bono at the written request of any of the parties from among the names on the arbitrators roster of the Arbitration Center of that Chamber, provided they are attorneys. /c/ All legal remedies shall be available against the arbitrator’s resolution, in particular for clarification, rectification, amendment, reconsideration, appeal, dismissal because of technicalities or substance, and of complaint wherefore the parties do not waive remedies or instances against such ruling. The arbitrator will be expressly empowered to resolve matters relative to his venue and/or his

27

jurisdiction. NINTH: DOMICILE. The parties elect their domicile as the city and borough of Santiago for all purposes hereof and they submit to the arbitral venue stipulated in the Eighth Clause above. TENTH: EXPENSES. All expenses assessed on this deed will be paid in equal parts by the parties. ELEVENTH: SOLIDARITY. The Assignors assume the obligations that each contracts under this assignment of interests as their own, jointly and severally. TWELFTH: SPECIAL AUTHORITY. The bearer of a notarized copy of this deed and of an abstract thereof is authorized to request the pertinent registrations, subregistrations and annotations in the Commercial Registry of the respective Real Estate Registrar, to request publication thereof in the Official Gazette and, in general, to perform all measures that are necessary to legalize this agreement. The parties also confer a power of attorney, as ample as required by law, upon attorneys María del Pilar Duarte Peña and Rodrigo Hernan Veloso Castiglione in order for them, acting jointly on behalf of the Assignors and Assignees, to rectify, complement or clarify whatever they deem convenient regarding this public deed in order to obtain a total and complete legalization and formalization of this Company, with the authority to execute and sign public deeds or private instruments; they are also empowered to execute as many public deeds

28

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

and private instruments as they deem convenient to cure the Company according to the rules of law governing on this date or enacted in the future. TRANSITORY CLAUSE: Without it forming a part of the Company’s Bylaws, the parties agree to the following: INDEMNIFICATION. A 1) The Assignors shall indemnify and hold harmless the Assignees and Blue Express Intl. Ltda. (hereinafter also the “Indemnitees”) from, and shall pay the Indemnitees any sum resulting from, any loss, liability, claim, injury, expense (including reasonable attorneys’ fees) or reduction in value, whether or not it involves a third-party claim (hereinafter also the “Damages”) that arise from or in relation to: (i) A material mendacity or inaccuracy of any representation and warranty of the Assignors; or (ii) Any material default by the Assignors on any covenant or obligation under the Assignment. A 2) The Assignors shall not be liable (for an indemnity or otherwise) in relation to the matters described in Section A 1) above for an amount exceeding the price indicated in the Second Clause of this deed. B 1) The Assignees shall indemnify and hold harmless the Assignors from, and shall pay the damages arising from or in relation to: (i) A material mendacity or inaccuracy of any representation and warranty of the Assignees; or (ii) any material default by the Assignees on any covenant or obligation under the Assignment. B 2) The Assignees shall have no

29

liability (for an indemnity or otherwise) in relation to the matters described in Section 3.3 for an amount exceeding the price indicated in the second clause of this deed. AUTHORITIES: The authority of the representative of LAN CARGO S.A. is set down in the public deed dated March 10, 2011, executed in the Santiago Notarial Office of Patricio Raby Benavente. The authority of the representative of INVERSIONES LAN S.A. is set down in the public deed dated March 10, 2011, executed in the Santiago Notarial Office of Mr. Patricio Raby Benavente. The authority of the representative of SERVICIOS DE TRANSPORTES LIMITADA is set down in the public deed dated March 29, 2011, executed in the Santiago Notarial Office of Francisco Leiva Carvajal. The authority of the representative of INVERSIONES BETMIN SpA is set down in the public deed dated January 24, 2011, executed in the Santiago Notarial Office of Francisco Leiva Carvajal. Such deeds of authority are not inserted at the request of the parties and because they were known to the attesting notary. This text was drafted by Andrés Ignacio Parker Parada, attorney. In witness whereof, the parties sign after reading. I attest.

30

PATRICIO RABY BENAVENTE

          NOTARIO PUBLICO

GERTRUDIS ECHENIQUE 30 OF. 44, LAS CONDES

5992453 - 5992457 - 5992463 - FAX 5992467

    EMAIL: notariaraby@notariaraby.cl

ALEJANDRO DE LA FUENTE GOIC

FOR LAN CARGO S.A.

FOR INVERSIONES LAN S.A.

CARLOS ALBERTO HELLER SOLARI

FOR SERVICIOS DE TRANSPORTES LIMITADA

FOR INVERSIONES BETMIN SpA

NOTARY

THIS PAGE CORRESPONDS TO THE END OF THE DEED OF ASSIGNMENT OF INTERESTS AND MODIFICATION OF “BLUE EXPRESS INTL. SERVICIOS DE TRANSPORTE LIMITADA.”

NOTARY

31

EX-4.19

Exhibit 4.19

PURCHASE AND SALE

This Purchase and Sale (hereinafter the “Purchase”) is made April 6, 2011 by and between:

(1)    LAN Cargo S.A., a stock corporation incorporated and existing according to the laws of the Republic of Chile, domiciled, for these purposes, at Avenida Presidente Riesco 571, 19th floor, Las Condes, Santiago, Chile (hereinafter also “LAN Cargo” or the “Seller”);

(2)    Inversiones Betmin SpA, a joint stock company incorporated and existing according to the laws of the Republic of Chile, domiciled, for these purposes, at Avenida Isidora Goyenechea 2800, 50th floor, Las Condes, Santiago, Republic of Chile (hereinafter also the “Buyer”).

WHEREAS

A.    Blue Express S.A. is a stock corporation incorporated and existing according to the laws of the Republic of Chile (hereinafter also “Blue Express”). Blue Express (originally called Lan Courier Staff S.A.) was incorporated by public deed dated October 31, 2000, executed in the Santiago Notarial Office of Mr. Eduardo Pinto Peralta. An abstract of that deed was registered on page 29,855, number 23,760, of the 2000 Santiago Commercial Registry and was published in Official Gazette #36814 on November 16, 2000. Its capital is divided into 100 common shares with no par value that are fully subscribed and paid in. Blue Express Intl. Servicios de Transporte Limitada owns 99 shares in Blue Express, representing 99% of the capital, while Lan Cargo owns the remaining share representing 1% of the capital (such share hereinafter called the “Share”).

B.    On even date herewith, LAN Cargo and Inversiones Lan S.A. have assigned and transferred all of the capital in Blue Express Intl. Servicios de Transporte Limitada to Servicios de Transportes Limitada and Inversiones Betmin SpA.

C.    The Seller intends to transfer the Share and the Buyer intends to acquire the Share.

THEREFORE, Seller and Buyer (hereinafter collectively called the “Parties”) agree to the following:

ARTICLE ONE

PURCHASE AND SALE

1.1    Subject to the terms and conditions of this Purchase, Lan Cargo sells, assigns and transfers full ownership of one Share in Blue Express to Inversiones Betmin SpA, which this latter buys, acquires and accepts from Lan Cargo. Such Share represents one percent of the capital. Said transfer and acquisition are made free of any lien, restriction, limitation, debt, claim or third-party right.

1.2    The Purchase price is 30,845,750 Chilean pesos for the Share in Blue Express (hereinafter also the “Price”).

1.3    Inversiones Betmin SpA pays the Price to Lan Cargo in this act, at once and in cash. The Seller declares receipt of such sum to its satisfaction, for all pertinent legal purposes, and considers the Price to have been paid to its full conformity.

The Price will not be subject to any deductions or withholdings, either for taxes, expenses or other reason, provided, however, that the Seller shall pay any tax, charge or lien for which it is liable that is assessed on the transfer and/or capital gain resulting from the Purchase or otherwise determined on the basis of the taxable income in its respective jurisdiction.

1.4    The Seller delivers the respective certificate of the Share and the Buyer declares receipt thereof to its full conformity.

1.5    The Parties waive the resolutory action resulting from this Purchase.

ARTICLE TWO

REPRESENTATIONS AND WARRANTIES

2.1    The Seller represents and warrants to the Buyer, which has been determining to the Buyer signing this Purchase, that each and every one of the assertions contained in Schedule 2.1 to the Promise are on this date true and correct in respect of the Seller (hereinafter also the “Seller’s Representations and Warranties”). Said schedule is filed with this document after signature by the parties.

2.2    All of the Seller’s Representations and Warranties shall remain in effect for 6 months following the date of this Purchase, except for the Seller’s Representations and Warranties contained in Section 12 of Schedule 2.1 of the Promise (“Tax Affairs”), which shall remain in force for 12 months following the date of this Purchase.

2.3    The Buyer represents and warrants to the Seller, which has been determining to the Seller signing this Purchase, that each and every one of the assertions contained in Schedule 2.3 to the Promise are on this date true and correct in respect of the Buyer (hereinafter also the “Buyer’s Representations and Warranties”). Said schedule is filed with this document after signature by the parties.

All the Buyer’s Representations and Warranties shall continue in force through 6 months following the date of this Purchase.

ARTICLE THREE

INDEMNIFICATION

3.1    The Seller shall indemnify and hold the Buyer and Blue Express harmless (hereinafter also the “Indemnitees”) for, and it shall pay the Indemnitees any sum derived from, any loss, liability, claim, injury, expense (including reasonable attorneys’ fees) or decrease in value, whether or not a third-party claim is involved (hereinafter also the “Damages”) that arise from or in relation to:

(i)    A material mendacity or inaccuracy of any of the Seller’s Representations and Warranties; or

(ii)    Any material default by the Seller on any agreement or obligation under the Purchase.

3.2    The Seller shall not be liable in relation to the matters described in Section 3.1 (for indemnification or otherwise) for any sum exceeding the Price.

3.3    The Buyer shall indemnify and hold the Seller harmless from, and shall pay it, Damages that arise from or in relation to:

(i)    A material mendacity or inaccuracy of any of the Buyer’s Representations and Warranties; or

(ii)    Any material default by the Buyer on any agreement or obligation under the Purchase.

3.4    The Buyer shall not be liable in relation to the matters described in Section 3.3 (for indemnification or otherwise) for any sum exceeding the Price.

ARTICLE FOUR

GOVERNING LAW; JURISDICTION

4.1    This Purchase is governed by the law of the Republic of Chile.

4.2    All disagreements arising from, or that bear a relationship to, this Purchase shall be resolved by the Ordinary Courts of Justice sitting in the city of Santiago, Chile.

ARTICLE FIVE

GENERAL PROVISIONS

5.1    Each of the Schedules forms a part of this Purchase for all pertinent purposes.

5.2    Save specific provision otherwise in this Purchase, no change, amendment, alteration, supplement or termination of this Purchase or of any of the parts thereof shall be valid unless set down in writing and signed by all the Parties.

5.3    Any and all of the notices, notifications or other correspondence or deliveries that must or may be made according to the provisions of this Purchase shall be deemed made, for all pertinent purposes, upon forwarding by certified mail, postage prepaid and return receipt requested, or delivered by messenger or sent by fax in the following manner:

If to the Seller, at:

to the attention of:     Alejandro de la Fuente

Address:     Avda. Presidente Riesco 5711, 20th floor, Las Condes, Santiago

Fax:            5658764

e-mail:       Alejandro.delafuente@lan.com

If to the Buyer, at:

to the attention of:     Jaime Cuevas Rodríguez

Address:     Avda. Kennedy 5454, Suite 902, Vitacura, Santiago

Fax:             56 -43- 401071

e-mail:         jcuevas@bethia.cl

or to such other address specified by any of the Parties by notice to the other according to this paragraph. The notices, notifications and correspondence shall be deemed delivered to any of the Parties on the same date when delivered by messenger, if delivered in that way; on the date five days after forwarding by post, in the case of certified mail; or the business day next succeeding the date when transmitted by fax, if sent in that manner.

5.4    No waiver of the provisions in this Purchase shall be valid unless it is made in writing and signed by the Party making the waiver. No waiver shall be deemed to be a continuing waiver over time or a waiver of a subsequent default or breach, whether or not similar in nature, unless so specifically stipulated in writing.

5.5    If any section of this Purchase or its enforcement against any person or any circumstance were declared void or illegal for any reason, all other sections of this Purchase that might take effect without such void or illegal section and the enforcement of those same sections against persons or circumstances other than those regarding which they were deemed void or illegal shall continue in full force, always provided that the invalidity of any one of the sections of this Purchase regarding any person or circumstance does not materially affect or change the meaning of this Purchase. To the extent legally possible, the section declared void or illegal or unenforceable against any person or circumstance shall be interpreted, in each case, to be able to produce legal effect.

5.6    The provisions in this Purchase will be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns; provided that no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Purchase without the consent of the other Party.

5.7    The titles and headings contained in this Purchase have been placed for reasons of convenience and reference only and do not in any way modify or interpret the intention of the Parties or affect the content of the stipulations in this Purchase.

5.8    The bearer of an original copy of this Purchase is authorized to request the corresponding registrations in the Blue Express shareholders registry.

5.9    The expenses incurred by each Party in negotiating and executing this Purchase, including the fees of legal, accounting and financial advisors, shall be paid by the Party incurring them.

5.10    Each Party declares that it has the authority and legal, corporate and other authorizations needed to execute, deliver and perform this Purchase.

AUTHORITIES: The authority of the representative of LAN CARGO S.A. is contained in the public deed dated March 10, 2011, executed in the Santiago Notarial Office of Patricio Raby Benavente. The authority of the representative of INVERSIONES BETMIN SpA is contained in the public deed dated January 24, 2011, executed in the Santiago Notarial Office of Patricio Javier Leiva Carvajal.
for LAN Cargo S.A.	pp. Arenas Consulting Inc.
	for Cabaly International S.A.
for Inversiones Betmin SpA	for [LAN Company]

EX-4.20

Execution Version

Exhibit 4.20

A 3 2 0    F A M I L Y

P U R C H A S E    A G R E E M E N T

B E T W E E N

A I R B U S    S.A.S.

as Seller

A N D

L A N    A I R L I N E S,    S. A.

as Buyer

Reference :         CT1101195

06/11 – CT1101195 – LAN – A320NEO-PA

Foreword - Page 1 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

C O N T E N T S

CLAUSES	TITLES
0	DEFINITIONS AND INTERPRETATION
1	SALE AND PURCHASE
2	SPECIFICATION
3	PRICES
4	PRICE REVISION
5	PAYMENTS
6	MANUFACTURE PROCEDURE – INSPECTION
7	CERTIFICATION
8	TECHNICAL ACCEPTANCE
9	DELIVERY
10	EXCUSABLE DELAY
11	NON-EXCUSABLE DELAY
12	WARRANTIES AND SERVICE LIFE POLICY
13	PATENT AND COPYRIGHT INDEMNITY
14	TECHNICAL DATA AND SOFTWARE SERVICES
15	SELLER REPRESENTATIVES SERVICES
16	TRAINING SUPPORT AND SERVICES
17	EQUIPMENT SUPPLIER PRODUCT SUPPORT
18	BUYER FURNISHED EQUIPMENT
19	INDEMNIFICATION AND INSURANCE
20	TERMINATION
21	ASSIGNMENTS AND TRANSFERS
22	MISCELLANEOUS PROVISIONS

06/11 – CT1101195 – LAN – A320NEO-PA

Foreward - Page 2 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

C O N T E N T S

EXHIBITS	TITLES
Exhibit A-1	A319 STANDARD SPECIFICATION
Appendix 1 to Exhibit A-1             A319 AIRCRAFT SPECIFICATION CHANGE NOTICES
Exhibit A-2	A320 STANDARD SPECIFICATION
Appendix 1 to Exhibit A-2             A320 AIRCRAFT SPECIFICATION CHANGE NOTICES
Exhibit A-3	A321 STANDARD SPECIFICATION
Appendix 1 to Exhibit A-3             A321 AIRCRAFT SPECIFICATION CHANGE NOTICES
Exhibit B-1	FORM OF SPECIFICATION CHANGE NOTICE
Exhibit B-2	FORM OF MANUFACTURERERSPECIFICATION CHANGE NOTICE
Exhibit C	PART 1 AIRFRAME PRICE REVISION FORMULA PART 2 PROPULSION SYSTEMS PRICE REVISION FORMULA
Exhibit D	FORM OF CERTIFICATE OF ACCEPTANCE
Exhibit E	FORM OF BILL OF SALE
Exhibit F	SERVICE LIFE POLICY – LIST OF ITEMS
Exhibit G	TECHNICAL DATA INDEX
Exhibit H	MATERIAL SUPPLY AND SERVICES
Exhibit I	LICENSES AND ON LINE SERVICES

06/11 – CT1101195 – LAN – A320NEO-PA

Foreword - Page 3 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

A320 NEO PURCHASE AGREEMENT

This A320 NEO Purchase Agreement (the “Agreement”) is made June 22^nd, 2011

BETWEEN:

AIRBUS S.A.S., a société par actions simplifiée, created and existing under French law having its registered office at 1 Rond-Point Maurice Bellonte, 31707 Blagnac-Cedex, France and registered with the Toulouse Registre du Commerce under number RCS Toulouse 383 474 814 (the “Seller”),

and

LAN AIRLINES S.A., a company having its principal place of business at Edificio Huidobro, Avenida Presidente Riesco 5711, 20^th Floor, Las Condes, Santiago, Chile (the “Buyer”).

WHEREAS subject to the terms and conditions of this Agreement, the Seller desires to sell the Aircraft to the Buyer and the Buyer desires to purchase the Aircraft from the Seller.

1104XX – CT1101195 – A320NEO-PA Foreword – Page 4/219

Execution Version

NOW THEREFORE IT IS AGREED AS FOLLOWS:

0 DEFINITIONS AND INTERPRETATION

0.1 In addition to words and terms elsewhere defined in this Agreement, the initially capitalized words and terms used in this Agreement shall have the meaning set out below.

A319 Aircraft – an A319 aircraft to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the A319 Airframe and all components, equipment, parts and accessories installed in or on such aircraft and the A319 Propulsion System installed thereon upon Delivery.

A319 Airframe – any A319 Aircraft, excluding the A319 Propulsion System therefor.

A319 NEO Aircraft – the A319 Aircraft with Sharklets and the New Engine Option.

A319 Propulsion Systems – as defined in Clause 2.3.

A319 Specification – the A319 Standard Specification as amended by all applicable SCNs.

A319 Standard Specification – the A319 standard specification document number [***], a copy of which is annexed hereto as Exhibit A-1.

A320 Aircraft – an A320 aircraft to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the A320 Airframe and all components, equipment, parts and accessories installed in or on such aircraft and the A320 Propulsion System, as applicable, installed thereon upon Delivery.

A320 Airframe – any A320 Aircraft, excluding the A320 Propulsion System therefor.

A320 NEO Aircraft – the A320 Aircraft with Sharklets and the New Engine Option.

A320 Propulsion Systems – as defined in Clause 2.3.

A320 Specification – the A320 Standard Specification as amended by all applicable SCNs.

A320 Standard Specification – the A320 standard specification document number [***], a copy of which is annexed hereto as Exhibit A-2.

A321 Aircraft – an A321 aircraft to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the A321 Airframe and all components, equipment, parts and accessories installed in or on such aircraft and the A321 Propulsion System installed thereon upon Delivery.

A321 Airframe – any A321 Aircraft, excluding the A321 Propulsion System therefor.

A321 NEO Aircraft – the A321 Aircraft with Sharklets and the New Engine Option.

A321 Propulsion Systems – as defined in Clause 2.3.

A321 Specification – the A321 Standard Specification as amended by all applicable SCNs.

A321 Standard Specification – the A321 standard specification document number [***], a copy of which is annexed hereto as Exhibit A-3.

Affiliate means with respect to any person or entity, any other person or entity directly or indirectly controlling, controlled by or under common control with such person or entity.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 0 - Page 5/212

Execution Version

AirbusWorld corresponds to the Seller’s customer portal as further defined in Part 2 of Exhibit I.

Aircraft – as applicable, (i) any or all of the A319 NEO Aircraft sold or to be sold by the Seller and purchased or to be purchased by the Buyer pursuant to the Agreement and (ii) any or all of the A320 NEO Aircraft sold or to be sold by the Seller and purchased or to be purchased by the Buyer pursuant to the Agreement and (iii) any or all of the A321 NEO Aircraft sold or to be sold by the Seller and purchased or to be purchased by the Buyer pursuant to the Agreement.

Aircraft Training Services means any flight support services provided to the Buyer pursuant to this Agreement including but not limited to any and all training courses, flight training, flight assistance, line training, line assistance, its agents, employees or subcontractors, and maintenance support, maintenance training (including Practical Training), training support of any kind performed on aircraft .

Airframe – as applicable, the A319 Airframe or the A320 Airframe or the A321 Airframe.

Airframe Base Price has the meaning set out in Clause 3.1.

Airframe Price Revision Formula is set out in Part 1 of Exhibit C.

Aviation Authority means when used in respect of any jurisdiction the government entity, which under the laws of such jurisdiction has control over civil aviation or the registration, airworthiness or operation of aircraft in such jurisdiction.

Balance of Final Price has the meaning set out in Clause 5.4.1.

Base Price (or Aircraft Base Price) means the sum of the Airframe Base Price and the Propulsion Systems Base Price.

Bill of Sale has the meaning set out in Clause 9.2.2.

Business Day means a day, other than a Saturday or Sunday, on which business of the kind contemplated by this Agreement is carried on in France, in Germany and in the Buyer’s country or, where used in relation to a payment, which is a day on which banks are open for business in France, in Germany, in the Buyer’s country and in New York, as appropriate.

Buyer Furnished Equipment or BFE has the meaning set out in Clause 18.1.1.

Certificate of Acceptance has the meaning set out in Clause 8.3.

Contractual Definition Freeze or CDF has the meaning set out in Clause 2.4.2.

Customization Milestones Chart has the meaning set out in Clause 2.4.1.

Declaration of Design and Performance or DDP means the documentation provided by an equipment manufacturer guaranteeing that the corresponding equipment meets the requirements of the Specification, the interface documentation as well as all the relevant certification requirements.

Delivery means the transfer of title to the Aircraft from the Seller to the Buyer in accordance with Clause 9.

Delivery Date means the date on which Delivery shall occur.

Delivery Location means the facilities of the Seller at the location of final assembly of the Aircraft.

Excusable Delay has the meaning set out in Clause 10.1.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 0 - Page 6/212

Execution Version

Export Airworthiness Certificate and/or Statement of Conformity means an export certificate of airworthiness and/or (only if the Aircraft is registered in an EASA country) a statement of conformity issued by the Aviation Authority of the Delivery Location, as applicable.

Final Price has the meaning set out in Clause 3.3

First Quarter or 1Q – means the 3-month period of January, February, and March.

Fourth Quarter or 4Q – means the 3-month period of October, November, and December.

General Terms and Conditions or GTC means the General Terms and Conditions of Access to and Use of AirbusWorld set forth in Part 2 to Exhibit I.

Goods and Services means any goods and services that may be purchased by the Buyer from the Seller, excluding Aircraft.

Gross Negligence means any act or omission done with intent to cause damage or recklessly and with knowledge that damage would probably result.

Ground Training Services means all training courses performed in classrooms (classical or Airbus CBT courses), full flight simulator sessions, fixed base simulator sessions, field trips and any other services provided to the Buyer on the ground pursuant to this Agreement and which are not Aircraft Training Services.

Irrevocable SCNs [***] Appendix 1 to Exhibit A-3, respectively.

LIBOR means, for any period, the rate per annum equal to the quotation that appears on the LIBOR01 page of the Reuters screen (or such other page as may replace the LIBOR01 page) or if such service is not available, the British Bankers’ Association LIBOR rates on Bloomberg (or such other service or services as may be nominated by the British Bankers’ Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits) as of 11:00 a.m., London time, [***] prior to the beginning of such period as the rate for [***] to be delivered on [***].

Manufacture Facilities means the various manufacture facilities of the Seller, its Affiliates or any sub-contractor, where the Airframe or its parts are manufactured or assembled.

Manufacturer Specification Change Notice or MSCN has the meaning set out in Clause 2.2.2.1.

Material has the meaning set out in Clause 1.2 of Exhibit H.

NEO Aircraft means the respective Aircraft including the relevant New Engine Option.

New Engine Option or “NEO” has the meaning set forth in Clause 2.1 hereof.

Non-Excusable Delay has the meaning set out in Clause 11.1.

Predelivery Payment means the payment(s) determined in accordance with Clause 5.3.

Propulsion Systems – either or all, as the context requires, of the A319 Propulsion Systems, the A320 Propulsion Systems and the A321 Propulsion Systems.

Propulsion Systems Base Price means the price of a set of Propulsion Systems as set out in Clause 3.2.

Propulsion Systems Reference Price (or Reference Price) means the reference price of a set of Propulsion Systems as set out in Part 2 of Exhibit C and Part 3 of Exhibit C, as applicable.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 0 - Page 7/212

Execution Version

Propulsion System Manufacturer  –  as applicable, the manufacturer of the A319 Propulsion Systems, the manufacturer of the A320 Propulsion Systems or the A321 Propulsion Systems as set forth in Clause 2.3.

Propulsion Systems Price Revision Formula is set out in Part 2 of Exhibit C.

Quarter – means any or, depending on the context, all of the First Quarter, Second Quarter, Third Quarter and Fourth Quarter.

Ready for Delivery means the time when the Technical Acceptance Process has been completed in accordance with Clause 8 and all technical conditions required for the issuance of the Export Airworthiness Certificate and/or the Statement of Conformity (as applicable) have been satisfied.

Scheduled Delivery Month has the meaning set out in Clause 9.1.

Scheduled Delivery Quarter has the meaning set out in Clause 9.1.

Second Quarter or 2Q – means the 3-month period of April, May and June.

Seller Furnished Equipment or SFE corresponds to items of equipment that are identified in the Specification as being furnished by the Seller.

Seller Representatives means the representatives of the Seller referred to in Clause 15.

Seller Representatives Services means the services provided by the Seller to the Buyer and from the Buyer to the Seller pursuant to Clause 15.

Seller Service Life Policy has the meaning set out in Clause 12.2.

Sharklets means a new large wingtip device, currently under development by the Seller, designed to enhance the eco-efficiency and payload range performance of the A320 family aircraft, and which are part of the New Engine Option and corresponding Irrevocable SCNs.

Spare Parts means the items of equipment and material that may be provided pursuant to Exhibit H.

Specification Change Notice or SCN means an agreement in writing between the parties to amend the Specification pursuant to Clause 2.

Specification means either (a) the applicable Standard Specification if no SCNs are applicable or (b) if SCNs are issued, the applicable Standard Specification as amended by all applicable SCNs.

Standard Specification means the A319 Standard Specification, A320 Standard Specification or the A321 Standard Specification, as applicable.

Supplier has the meaning set out in Clause 12.3.1.1.

Supplier Part has the meaning set out in Clause 12.3.1.2.

Supplier Product Support Agreement has the meaning set out in Clause 12.3.1.3.

SPSA Application means the application on AirbusWorld, which provides the Buyer with access to the Supplier Product Support Agreements.

Technical Data has the meaning set out in Clause 14.1.

Third Quarter or 3Q – means the 3-month period of July, August and September

Total Loss has the meaning set out in Clause 10.4.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 0 - Page 8/212

Execution Version

Type Certificate has the meaning set out in Clause 7.1.

Warranted Part has the meaning set out in Clause 12.1.1.

0.2 Clause headings and the Index are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.

0.3 In this Agreement unless the context otherwise requires:

(a) references to Clauses, Appendices and Exhibits are to be construed as references to the Clauses of, and Appendices, and Exhibits to this Agreement and references to this Agreement include its Schedules, Exhibits and Appendices;

(b) words importing the plural shall include the singular and vice versa; and

(c) references to a person shall be construed as including, without limitation, references to an individual, firm, company, corporation, unincorporated body of persons and any state or agency of a state.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 0 - Page 9/212

Execution Version

1 SALE AND PURCHASE

The Seller shall sell and deliver and the Buyer shall buy and take delivery of twenty (20) A320 NEO Aircraft on the Delivery Date at the Delivery Location upon the terms and conditions contained in this Agreement.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 1- Page 10/212

Execution Version

2 SPECIFICATION

2.1 Aircraft Specification

2.1.1 Each Aircraft shall be manufactured in accordance with the relevant Standard Specification, as may already have been modified or varied prior to the date of this Agreement by the Specification Change Notices listed in Appendix 1 to Exhibit A-1, Appendix 1 to Exhibit A-2 or Appendix 1 to Exhibit A-3, as applicable.

2.1.2 New Engine Option

2.1.2.1 The Seller is currently developing a new engine option (the “New Engine Option” or “NEO”), applicable to the Aircraft. The specification of the NEO Aircraft shall be derived from the current Standard Specification and based on the new Propulsion Systems, as set forth in Clause 2.3 below, and Sharklets, combined with the required airframe structural adaptations, as well as Aircraft systems and software adaptations required to operate such NEO Aircraft. The foregoing is currently reflected in the [***] listed in Appendix 1 to Exhibit A-1, Appendix 1 to Exhibit A-2 or Appendix 1 to Exhibit A-3, as applicable, the implementation of which is hereby irrevocably accepted by the Buyer.

2.1.2.2 The New Engine Option shall modify the design weights of the Standard Specification as follows:

	A319 Aircraft	A320 Aircraft	A321 Aircraft
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

It is agreed and understood that the above design weights may be updated upon final NEO specification freeze.

2.2 Specification Amendment

The parties understand and agree that the Specification may be further amended following signature of this Agreement in accordance with the terms of this Clause 2.

2.2.1 Specification Change Notice

The Specification may be amended by written agreement between the parties in a Specification Change Notice (SCN). Each SCN shall be substantially in the form set out in Exhibit B1 and shall set out the SCN’s Aircraft embodiment rank and shall also set forth, in detail, the particular change to be made to the Specification and the effect, if any, of such change on design, performance, weight, Delivery Date of the Aircraft affected thereby and on the text of the Specification. An SCN may result in an adjustment of the Aircraft Base Price, which adjustment, if any, shall be specified in the SCN.

2.2.2 Development Changes

The Specification may also be amended to incorporate changes deemed necessary by the Seller to improve the Aircraft, prevent delay or ensure compliance with this Agreement (“Development Changes”), as set forth in this Clause 2.

2.2.2.1 Manufacturer Specification Changes Notices

2.2.2.1.1 The Specification may be amended by the Seller through a Manufacturer Specification Change Notice (“MSCN”), which shall be substantially in the form set out in Exhibit B2 hereto, or by such other

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 02 - Page 11/212

Execution Version

means as may be deemed appropriate, and shall set out the MSCN’s Aircraft embodiment rank as well as, in detail, the particular change to be made to the Specification and the effect, if any, of such change on performance, weight, [***], Aircraft Base Price, Delivery Date of the Aircraft affected thereby and interchangeability or replaceability requirements under the Specification.

2.2.2.1.2 Any MSCN which is necessitated by an Aviation Authority directive by equipment obsolescence, or is otherwise required to be implemented in accordance with any applicable law or regulation (a “[***] MSCN”) shall be accomplished without requiring the Buyer’s consent . [***], with regard to any MSCN which is not a [***] MSCN and which adversely affects: (i) the performance, weight, Base Price, Delivery Date of an Aircraft or (ii) the interchangeability or replaceability requirements under the Specification (a “[***] MSCN”), the Seller shall notify the Buyer of a reasonable period of time during which the Buyer must accept or reject any such [***] MSCN. If the Buyer notifies the Seller of its rejection of the [***] MSCN within such period, the corresponding modification shall not be accomplished. However, if the Buyer does not notify the Seller of the rejection of the [***] MSCN within such period, the [***] MSCN shall be deemed accepted by the Buyer and the corresponding modification shall be accomplished.

2.2.2.2 In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on any of the elements as set forth in 2.2.2.1 above, such revision shall be performed by the Seller without the Buyer’s consent.

In such cases, the Buyer shall have access to the details of such changes through the relevant application in AirbusWorld.

2.2.2.3 The Seller is considering turning certain items, which are currently BFE in the Specification, into SFE and the parties agree that such BFE items shall be excluded from the provisions of Clauses 2.2.2.1.2 and 2.2.2.2 above and, should they become SFE, shall furthermore be chargeable to the Buyer.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 02 - Page 12/212

Execution Version

2.3 Propulsion Systems

2.3.1 Each Airframe shall be equipped with a set of either two (2) CFM LEAP-X engines or two (2) Pratt & Whitney PW1100G engines, upon selection, each shall be referred to respectively as the “Propulsion Systems”.

	Pratt & Whitney	CFM
A319 Propulsion Systems	PW1124G [***]	LEAP-X 1A24 [***]
A320 Propulsion Systems	PW1127G [***]	LEAP-X 1A26 [***]
A321 Propulsion Systems	PW1133G [***]	LEAP-X 1A32 [***]

* [***]

The CFM LEAP-X Propulsions Systems is [***] (the “[***]” as follows:

	CFM LEAP X Engines
A319 Propulsion System [***]	LEAP-X1A24[***]
A320 Propulsion System [***]	LEAP-X1A26[***]
A321 Propulsion System [***]	LEAP-X1A32[***]

2.3.2 The Buyer shall notify the Seller of its choice of Propulsion Systems for the Aircraft by [***].

2.4 Milestones

2.4.1 Customization Milestones Chart

[***], the Seller shall provide the Buyer with a customization milestones chart (the “Customization Milestone Chart”), setting out how far in advance of the Scheduled Delivery Month of the Aircraft an SCN must be executed in order to integrate into the Specification any items requested by the Buyer from the Seller’s catalogues of Specification change options (the “Option Catalogues”).

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 02 - Page 13/212

Execution Version

2.4.2 Contractual Definition Freeze

The Customization Milestone Chart shall in particular define the date(s) by which the contractual definition of the Aircraft must be finalized and all SCNs need to have been executed by the Buyer and the Seller (the “Contractual Definition Freeze” or “CDF”) in order to enable their incorporation into the manufacturing of the Aircraft and Delivery of the Aircraft in the Scheduled Delivery Month. Each such date shall be referred to as a “CDF Date”. [***].

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 02 - Page 14/212

Execution Version

3 PRICES

3.1 Airframe Base Price

3.1.1 The A319 Airframe Base Price is the sum of:

[***]

3.1.2 The A319 Airframe Base Price has been established in accordance with a [***] – (the “Base Period”).

3.1.3 The A320 Airframe Base Price is the sum of:

(i) the base price of the A320 Airframe as defined in the A320 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:

[***]

3.1.4 The A320 Airframe Base Price has been established in accordance with a theoretical delivery in [***] – (the “Base Period”).

3.1.5 The A321 Airframe Base Price is the sum of:

(i) the base price of the A321 Airframe as defined in the A321 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:

[***]

(iv) the sum of the base prices of all additional SCNs set forth in Appendix 1 to Exhibit A-3, which is:

[***]

3.1.6 The A321 Airframe Base Price has been established in accordance with a [***] (the “Base Period”).

3.2 Propulsion Systems Base Price

3.2.1 The Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A24 engines (the, “LEAP-X1A24[***] Engines”) for the A319 Aircraft is:

[***]

For the CFM Thrust Bump Option, the Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A24 engines (the, “LEAP-X1A24[***] Engines”) for the A319 Aircraft is:

[***]

Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by CFM International and set forth in Part 2 of Exhibit C.

3.2.2 The Propulsion Systems Base Price of a set of two (2) Pratt and Whitney PW1124G engines (the, “PW1124G Engines”) for the A319 Aircraft is:

[***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 03 - Page 15 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by Pratt and Whitney and set forth in Part 3 of Exhibit C.

3.2.3 The Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A26 engines (the “LEAP-X1A26 Engines”) for the A320 Aircraft is:

[***]

For the CFM Thrust Bump Option, the Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A26E1 engines (the “LEAP-X1A26[***] Engines”) for the A320 Aircraft is:

[***]

Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by CFM International and set forth in Part 2 of Exhibit C.

3.2.4 The Propulsion Systems Base Price of a set of two (2) Pratt and Whitney PW1127G engines (the “PW1127G Engines” for the A320 Aircraft is:

[***]

Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by Pratt and Whitney and set forth in Part 3 of Exhibit C.

3.2.5 The Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A32 engines (the, “LEAP-X1A32 Engines”) for the A321 Aircraft is:

[***]

For the CFM [***], the Propulsion Systems Base Price of a set of two (2) CFM International LEAP-X1A32[***] engines (the, “LEAP-X1A32[***] Engines”) for the A321 Aircraft is:

[***]

Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by CFM International and set forth in Part 2 of Exhibit C.

3.2.6 The Propulsion Systems Base Price of a set of two (2) Pratt and Whitney PW1133G engines (the, “PW1133G Engines”) for the A321 Aircraft is:

[***]

(US dollars – seventeen million nine hundred seventy-six thousand). Said Propulsion Systems Base Price has been established in accordance with a [***] and has been calculated from the Reference Price indicated by Pratt and Whitney and set forth in Part 3 of Exhibit C.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 03 - Page 16 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

3.2.7 Notwithstanding the foregoing, the Propulsion Systems Reference Price corresponds to the thrust ratings defined for the respective Propulsion Systems in Clause 2.3 and may be revised to reflect thrust rating adjustments upon final NEO specification freeze.

3.3 Final Price

The Final Price of each Aircraft shall be the sum of:

(i) the Airframe Base Price as revised as of the Delivery Date in accordance with Clause 4.1; plus

(ii) the aggregate of all increases or decreases to the Airframe Base Price as agreed in any Specification Change Notice or part thereof applicable to the Airframe subsequent to the date of this Agreement as revised as of the Delivery Date in accordance with Clause 4.1; plus

(iii) the Propulsion Systems Reference Price as revised as of the Delivery Date in accordance with Clause 4.2; plus

(iv) the aggregate of all increases or decreases to the Propulsion Systems Reference Price as agreed in any Specification Change Notice or part thereof applicable to the Propulsion Systems subsequent to the date of this Agreement as revised as of the Delivery Date in accordance with Clause 4.2; plus

(v) any other amount due by the Buyer to the Seller pursuant to this Agreement and/or any other written agreement between the Buyer and the Seller with respect to the Aircraft.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 03 - Page 17 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

4 PRICE REVISION

4.1 Revision of Airframe Base Price

The Airframe Base Price is subject to revision in accordance with the Airframe Price Revision Formula up to and including the Delivery Date as set forth in Part 1 of Exhibit C.

4.2 Revision of Propulsion Systems Reference Price

4.2.1 The Propulsion Systems Reference Price is subject to revision in accordance with the Propulsion Systems Price Revision Formula up to and including the Delivery Date, as set forth in Part 2 and Part 3 of Exhibit C.

4.2.2 Modification of Propulsion Systems Reference Price and Propulsion Systems Price Revision Formula

The Propulsion Systems Reference Price, the prices of the related equipment and the Propulsion Systems Price Revision Formula are based on information received from the Propulsions Systems Manufacturer and are subject to amendment by the Propulsion Systems Manufacturer at any time prior to the Delivery Date. If the Propulsion Systems Manufacturer makes any such amendment, the amendment shall be automatically incorporated into this Agreement and the Propulsion Systems Reference Price, the prices of the related equipment and the Propulsion Systems Price Revision Formula shall be adjusted accordingly. The Seller agrees to notify the Buyer as soon as it receives notice of any such amendment from the Propulsion Systems Manufacturer.

4.2.3 Nothing in this clause 4.2. shall prevent the Buyer to negotiate directly with the Propulsion Systems Manufacturers different engine escalation conditions than the one quoted in this Agreement.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 04 - Page 18 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

5 PAYMENTS

5.1 Seller’s Account

The Buyer shall pay the Predelivery Payments, the Balance of Final Price and/or any other amount due by the Buyer to the Seller, to the Seller’s account:

[***]

or to such other account as may be designated by the Seller [***].

5.2 [***]

5.3 Predelivery Payments

5.3.1 The Buyer shall pay Predelivery Payments to the Seller calculated on the predelivery payment reference price of each [***]. The predelivery payment reference price is determined by the following formula:

[***]

5.3.2 Such Predelivery Payments shall be made in accordance with the following schedule:

DUE DATE OF PAYMENTS	PERCENTAGE OF PREDELIVERY PAYMENT REFERENCE PRICE
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

In the event of the above schedule resulting in any Predelivery Payment falling due prior to the date of signature of the Agreement, such Predelivery Payments shall be made upon signature of this Agreement.

5.3.3 Any Predelivery Payment received by the Seller shall constitute an instalment in respect of the Final Price of the Aircraft. The Seller shall be entitled to hold and use any Predelivery Payment as absolute owner thereof, subject only to (i) the obligation to deduct any such Predelivery Payment from the Final Price when calculating the Balance of Final Price or (ii) the obligation to pay to the Buyer (or to an assignee or transferee of the Buyer permitted by the terms of this Purchase Agreement) an amount equal to the Predelivery Payments pursuant to any other provision of this Agreement.

5.3.4 [***].

5.3.5 Specification Change Notice Predelivery Payments

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 05 - Page 19 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

The Seller shall be entitled to request a Predelivery Payment for each SCN executed after signature of this Agreement [***]. Such Predelivery Payment [***] prior to the Scheduled Delivery Month and shall constitute an instalment towards the Final Price of the corresponding Aircraft.

5.4 Balance of Final Price

5.4.1 The Balance of Final Price payable by the Buyer to the Seller on the Delivery Date shall be the Final Price less the amount of Predelivery Payments received by the Seller on or before the Delivery Date.

5.4.2 Upon receipt of the Seller’s invoice, and immediately prior to Delivery, the Buyer shall pay to the Seller the Balance of Final Price.

5.5 Other Charges

Unless expressly stipulated otherwise, any other charges due under this Agreement other than those set out in Clauses 5.2, 5.3 and 5.4 shall be paid by the Buyer at the same time as payment of the Balance of Final Price or, if invoiced after the Delivery Date, within [***] days after the invoice date.

5.6 Method of Payment

5.6.1 All payments provided for in this Agreement shall be made in United States Dollars (USD) in immediately available funds.

5.6.2 All payments due to the Seller hereunder shall be made in full, without set-off, counterclaim, deduction or withholding of any kind. Consequently, the Buyer shall procure that the sums received by the Seller under this Agreement shall be equal to the full amounts expressed to be due to the Seller hereunder, without deduction or withholding on account of and free from any and all taxes, levies, imposts, dues or charges of whatever nature [***]. If the Buyer is compelled by law to make any such deduction or withholding the Buyer shall pay such additional amounts as may be necessary in order that the net amount received by the Seller after such deduction or withholding shall be equal to the amounts which would have been received in the absence of such deduction or withholding and pay to the relevant taxation or other authorities within the period for payment permitted by applicable law, the full amount of the deduction or withholding.

[***].

5.7 Overdue Payments

If any payment due to the Seller (or to the Buyer, as the case may be) under this Agreement including but not limited to any Predelivery Payment, [***] for the Aircraft as well as any payment due to the Seller (or to the Buyer, as the case may be) for any spare parts, data, documents, training and services, is not received on the due date, without prejudice to the Seller’s (or the Buyer’s, as the case may be) other rights under this Agreement and at law, the Seller (or the Buyer, as the case may be) shall be entitled to claim from the Buyer (or from the Seller as the case may be), and the Buyer (or the Seller, as the case may be) shall promptly pay to the Seller (or the Buyer, as the case may be) upon receipt of such claim, an agreed fixed amount destined to compensate the Seller (or the Buyer, as the case may be) for the negative consequences, costs, losses and expenses, that the Seller (or the Buyer, as the case may be) may suffer as a result of such late payment. The amount of such compensation shall be calculated at the rate of [***] on the amount of such overdue payment, counting from and including the due date of payment up to and including the date when the payment is received by the Seller (or the Buyer, as the case may be).

5.8 Taxes

5.8.1 [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 05 - Page 20/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

5.8.2 [***].

5.8.3 The Buyer shall bear the costs of and pay any and all taxes, duties or similar charges of any nature whatsoever not assumed by the Seller under Clause 5.8.2 including but not limited to any duties or taxes due upon or in relation to the importation or registration of the Aircraft in the Buyer’s country and/or any withholdings or deductions levied or required in the Buyer’s country in respect of the payment to the Seller of any amount due by the Buyer hereunder.

5.9 Proprietary Interest

Subject to clause 18.4, the Buyer shall not, by virtue of anything contained in this Agreement (including, without limitation, any Predelivery Payments hereunder, or any designation or identification by the Seller of a particular aircraft as an Aircraft to which any of the provisions of this Agreement refers) acquire any proprietary, insurable or other interest whatsoever in any Aircraft before Delivery of and payment for such Aircraft, as provided in this Agreement.

5.10 Set-Off

[***].

5.11 [***]

5.11.1 The Buyer hereby agrees that, notwithstanding any provision to the contrary in this Agreement, in the event that the Buyer should fail to make any material payment owing under this Agreement [***], the Seller may:

[***]

5.11.2 [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 05 - Page 21/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

6 MANUFACTURE PROCEDURE – INSPECTION

6.1 Manufacture Procedure

The Airframe shall be manufactured in accordance with the relevant requirements of the laws of the jurisdiction of incorporation of the Seller or of its relevant Affiliate as enforced by the Aviation Authority of such jurisdiction.

The Propulsion Systems shall be manufactured in accordance with the relevant requirements of the laws of the jurisdiction of incorporation of the Propulsion System Manufacturer or of its relevant Affiliate as enforced by the Aviation Authority of such jurisdiction.

6.2 Inspection

6.2.1 Subject to providing the Seller with certificates evidencing compliance with the insurance requirements set forth in Clause 19, the Buyer or its duly authorised representatives (the “Buyer’s Inspector(s)”) shall be entitled to inspect the manufacture of the Airframe and all materials and parts obtained by the Seller for the manufacture of the Airframe and the assembly of the Aircraft on the following terms and conditions;

(i) [***], it being understood that such procedure is conducted pursuant to the Seller’s own system of inspection as developed under the supervision of the relevant Aviation Authority;

(ii) the Buyer’s Inspector(s) shall have access to such relevant technical data as is reasonably necessary for the purpose of the inspection;

(iii) any inspection and any related discussions with the Seller and other relevant personnel by the Buyer’s Inspector(s) shall be at reasonable times during business hours and shall take place in the presence of relevant inspection department personnel of the Seller;

(iv) the inspections shall be performed in a manner not to unduly delay or hinder the manufacture or assembly of the Aircraft or the performance of this Agreement by the Seller or any other work in progress at the Manufacture Facilities.

6.2.2 Location of Inspections

The Buyer’s Inspector(s) shall be entitled to conduct any such inspection at the relevant Manufacture Facility of the Seller or the Affiliates and where possible at the Manufacture Facilities of the sub-contractors provided that if access to any part of the Manufacture Facilities where the Airframe manufacture is in progress or materials or parts are stored are restricted for security or confidentiality reasons, the Seller shall be allowed reasonable time to make the relevant items available elsewhere.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 06 - Page 22/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

6.3 Seller’s Service for Buyer’s Inspector(s)

For the purpose of the inspections, and commencing with the date of this Agreement until the Delivery Date, the Seller shall furnish without additional charge suitable space and office equipment in or conveniently located with respect to the Delivery Location for the use of a reasonable number of Buyer’s Inspector(s).

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 06 - Page 23 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

7 CERTIFICATION

7.1 Type Certification

The Aircraft has been type certificated under European Aviation Safety Agency (EASA) procedures for certification in the transport category. The Seller has obtained the relevant type certificate (the “Type Certificate”) to allow the issuance of the Export Airworthiness Certificate and/or the Statement of Conformity.

[***].

7.2 Export Airworthiness Certificate and/or Statement of Conformity

7.2.1 The Aircraft shall be delivered to the Buyer with an Export Airworthiness Certificate and/or with a Statement of Conformity.

7.2.2 If, any time before the date on which the Aircraft is Ready for Delivery, any law or regulation is enacted, promulgated, becomes effective and/or an interpretation of any law or regulation is issued which requires any change to the Specification for the purposes of obtaining the Export Airworthiness Certificate and/or the Statement of Conformity, (a “Change in Law”), the Seller shall make the required variation or modification and the parties hereto shall sign a Specification Change Notice which specifies the effects, if any, upon the guaranteed performances, weights, interchangeability, time of Delivery, price of the Aircraft and text of the Specification.

7.2.3 The Seller shall as far as practicable (but at its sole discretion and without prejudice to Clause 7.3.1 (ii) take into account the information available to it concerning any proposed law, regulation or interpretation which could become a Change in Law in order to minimise the costs of changes to the Specification as a result of such proposed law, regulation or interpretation becoming effective prior to the Aircraft being Ready for Delivery.

7.3 Costs of SCNs for Certification

7.3.1 [***].

7.3.2 Notwithstanding the provisions of sub-Clauses 7.3.1, if the Change in Law relates to the Propulsion Systems, the costs shall be borne in accordance with such arrangements as may be made separately between the Buyer and the Propulsion Systems Manufacturer.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 07 - Page 24 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

7.4 Validation of Export Airworthiness Certificate or Statement of Conformity

7.4.1 The Seller shall obtain the validation of the Export Airworthiness Certificate and/or the Statement of Conformity, by the Buyer’s Aviation Authority.

7.4.2 Where the Buyer’s Aviation Authority requires a modification to comply with additional import aviation requirements and/or supply of additional data prior to the issuance of the first Export Airworthiness Certificate and/or the Statement of Conformity, the Seller shall incorporate such modification and/or provide such data at costs to be borne by the Buyer. The parties shall sign a Specification Change Notice which specifies the effects, if any, upon the guaranteed performances, weights, interchangeability, time of Delivery and price of the Aircraft.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 07 - Page 25 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

8 TECHNICAL ACCEPTANCE

8.1 Technical Acceptance Process

8.1.1 Prior to Delivery the Aircraft shall undergo a technical acceptance process, proposed by the Seller (the “Technical Acceptance Process”) [***] demonstrate the satisfactory functioning of the Aircraft and shall be deemed to demonstrate compliance with the Specification. Should it be established that the Aircraft does not comply with the Technical Acceptance Process requirements, the Seller shall without hindrance from the Buyer be entitled to carry out any necessary changes and, as soon as practicable thereafter, resubmit the Aircraft to such further Technical Acceptance Process as is necessary to demonstrate the elimination of the non-compliance.

8.1.2 The Technical Acceptance Process shall:

(i) commence on a date notified by the Seller to the Buyer by no less than [***] notice;

(ii) take place at the Delivery Location;

(iii) be carried out by the personnel of the Seller;

(iv) include a technical acceptance flight which shall not exceed a period of [***].

8.2 Buyer’s Attendance

8.2.1 The Buyer shall be entitled to attend the Technical Acceptance Process and notification of the start of such Technical Acceptance Process shall be done in accordance with Clause 9.1.2.

8.2.2 If the Buyer elects to attend the Technical Acceptance Process, the Buyer:

(i) shall co-operate in complying with the reasonable requirements of the Seller with the intention of completing the Technical Acceptance Process within [***] [***] of the Delivery Location after its commencement;

(ii) may have a maximum of [***] of the Buyer’s representatives (with no more than [***] such representatives having access to the cockpit at any one time) accompany the Seller’s representatives on a technical acceptance flight and during such flight the Buyer’s representatives shall comply with the instructions of the Seller’s representatives.

8.2.3 If the Buyer does not attend or fails to co-operate in the Technical Acceptance Process, the Seller shall be entitled to complete the Technical Acceptance Process and the Buyer shall be deemed to have accepted the Technical Acceptance Process as satisfactory in all respects.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 08 - Page 26/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

8.3 Certificate of Acceptance

Following completion of the Technical Acceptance Process, the Buyer shall sign and deliver to the Seller, in accordance with Clause 9.2.1, a certificate of acceptance in respect of the Aircraft in the form of Exhibit D (the “Certificate of Acceptance”).

8.4 Aircraft Utilisation

The Seller shall, without payment or other liability, be entitled to use the Aircraft prior to Delivery as may be necessary to obtain the certificates required under Clause 7, and such use shall not prejudice the Buyer’s obligation to accept Delivery of the Aircraft hereunder.

However the Seller shall not be authorised to use the Aircraft during more than twenty (20) hours for any other purpose without the specific agreement of the Buyer.

[***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 08 - Page 27/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

9 DELIVERY

9.1 Delivery Schedule

9.1.1 Subject to Clauses 2, 7, 8, 10 and 18, the Seller shall have the Aircraft Ready for Delivery at the Delivery Location within the following months (each a “Scheduled Delivery Month”) or quarters (each a “Scheduled Delivery Quarter”):

Aircraft Rank		Scheduled Delivery		Aircraft Rank		Scheduled Delivery
	NEO Aircraft	Month or Quarter	Year		NEO Aircraft	Month or Quarter	Year
1	A320	[***]	[***]	11	A320	[***]	[***]
2	A320	[***]	[***]	12	A320	[***]	[***]
3	A320	[***]	[***]	13	A320	[***]	[***]
4	A320	[***]	[***]	14	A320	[***]	[***]
5	A320	[***]	[***]	15	A320	[***]	[***]
6	A320	[***]	[***]	16	A320	[***]	[***]
7	A320	[***]	[***]	17	A320	[***]	[***]
8	A320	[***]	[***]	18	A320	[***]	[***]
9	A320	[***]	[***]	19	A320	[***]	[***]
10	A320	[***]	[***]	20	A320	[***]	[***]

[***].

9.1.2 The Seller will give the Buyer the scheduled delivery Month of each Aircraft [***] of the respective Aircraft. Thereafter, the Seller shall give the Buyer [***] the respective Aircraft and [***] on which the Aircraft shall be Ready for Delivery. Thereafter the Seller shall notify the Buyer of any change in such date necessitated by the conditions of manufacture or flight.

9.2 Delivery

9.2.1 The Buyer shall, [***] after the date on which the Aircraft is Ready for Delivery, sign the Certificate of Acceptance, pay the Balance of the Final Price and send its representatives to the Delivery Location to take Delivery of, and collect, the Aircraft.

9.2.2 The Seller shall deliver and transfer title to the Aircraft free and clear of all encumbrances to the Buyer provided that the Balance of the Final Price has been paid by the Buyer pursuant to Clause 5.4 and that the Certificate of Acceptance has been signed and delivered to the Seller pursuant to Clause 8.3. The Seller shall provide the Buyer with a bill of sale in the form of Exhibit E (the “Bill of Sale”) and/or such other documentation confirming transfer of title and receipt of the Final Price as may reasonably be requested by the Buyer. Title to, property in and risk of loss of or damage to the Aircraft shall be transferred to the Buyer on Delivery.

9.2.3.1 Should the Buyer fail, within the period specified in Clause 9.2.1, to:

(i) deliver the signed Certificate of Acceptance to the Seller ; or

(ii) pay the Balance of the Final Price for the Aircraft to the Seller and take Delivery of the Aircraft;

then the Buyer shall be deemed to have rejected delivery of the Aircraft without warrant when duly tendered to it hereunder. Without prejudice to Clause 5.7 and the Seller’s other rights under this Agreement or at law (a) the Seller shall retain title to the Aircraft and (b) the Buyer shall bear all risk of loss of or damage to the Aircraft and shall indemnify and hold the Seller harmless against any and all costs (including but not limited to any parking, storage, and insurance costs [***]) and consequences resulting from such failure, it being understood that the Seller shall be under no duty towards the Buyer to store, park, insure, or otherwise protect the Aircraft.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 09 - Page 28 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

9.2.3.2 Should the Buyer fail to collect the Aircraft as mentioned in Clause 9.2.1 above and without prejudice to the Seller’s other rights under this Agreement or at law, the provisions of Clause 9.2.3.1 (b) shall apply.

9.3 Fly Away

9.3.1 The Buyer and the Seller shall co-operate to obtain any licenses, which may be required by the Aviation Authority of the Delivery Location for the purpose of exporting the Aircraft.

9.3.2 All expenses of, or connected with, flying the Aircraft from the Delivery Location after Delivery shall be borne by the Buyer. The Buyer shall make direct arrangements with the supplying companies for the fuel and oil required for all post-Delivery flights.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 09 - Page 29 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

10 EXCUSABLE DELAY

10.1 The Buyer acknowledges that the Aircraft are to be manufactured by Seller in performance of this Agreement and that the Scheduled Delivery Months are based on the assumption that there shall be no delay due to causes beyond the control of the Seller. Accordingly, Seller shall not be responsible for any delay in the Delivery of the Aircraft or delay or interruption in the performance of the other obligations of the Seller hereunder due to causes beyond its control, and not occasioned by its fault or negligence including (but without limitation) acts of God or the public enemy, war, civil war, warlike operations, terrorism, insurrections or riots, fires, floods, explosions, earthquakes, natural disasters, compliance with any applicable foreign or domestic governmental regulation or order, labour disputes causing cessation, slowdown or interruption of work, inability after due and timely diligence to procure materials, equipment or parts, general hindrance in transportation or failure of a sub-contractor or supplier to furnish materials, equipment or parts. Any delay or interruption resulting from any of the foregoing causes is referred to as an “Excusable Delay”.

10.2 If an Excusable Delay occurs:

(i) the Seller shall notify the Buyer of such Excusable Delay as soon as practicable after becoming aware of the same [***];

(ii) the Seller shall not be responsible for any damages arising from or in connection with such Excusable Delay suffered or incurred by the Buyer;

(iii) the Seller shall not be deemed to be in default in the performance of its obligations hereunder as a result of such Excusable Delay; and

(iv) the Seller shall as soon as practicable after the removal of the cause of the delay resume performance of its obligations under this Agreement and in particular shall notify to the Buyer the revised Scheduled Delivery Month.

(v) [***].

10.3 Anticipated or Actual Delay

10.3.1 [***].

10.3.2 [***].

10.4 Total Loss, Destruction or Damage

If prior to Delivery, the Aircraft is lost, destroyed or damaged beyond repair (“Total Loss”), the Seller shall notify the Buyer to this effect [***] of such occurrence. [***], the Seller shall include in said notification (or as soon after the issue of the notice as such information becomes available to the Seller) the earliest date consistent with the Seller’s other commitments and production capabilities that an aircraft to replace the Aircraft may be delivered to the Buyer and the Scheduled Delivery Month shall be extended as specified in the Seller’s notice to accommodate the delivery of the replacement aircraft: provided, however, that in the event the specified extension of the Delivery Month shall [***] to the extent that it relates to the Aircraft that suffered the Total Loss unless :

(i) the Buyer notifies the Seller [***] of the date of receipt of the Seller’s notice that it desires the Seller to provide a replacement aircraft on the delivery month quoted in the Seller’s notice; and

(ii) the parties execute an amendment to this Agreement recording the variation in the Scheduled Delivery Month;

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 10 - Page 30/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

provided, however, that nothing herein shall require the Seller to manufacture and deliver a replacement aircraft if such manufacture would require the reactivation of its production line for the model or series of aircraft which includes the Aircraft purchased hereunder.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 10 - Page 31 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

10.5 [***].

10.6 Termination Rights Exclusive

In the event that this Agreement shall be terminated as provided for under the terms of Clauses 10.3 or 10.4, such termination shall discharge all obligations and liabilities of the parties hereunder with respect to such affected Aircraft and undelivered material, services, data or other items applicable thereto and to be furnished hereunder [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 10 - Page 32 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

11 NON-EXCUSABLE DELAY

11.1 Liquidated Damages

Should any of the Aircraft not be Ready for Delivery to the Buyer within thirty (30) days after the last day of the Scheduled Delivery Month (as varied by virtue of Clauses 2, 7 and 10) (the “Delivery Period”) and such delay is not as a result of an Excusable Delay or Total Loss (a “Non-Excusable Delay”), then the Buyer shall have the right to claim, and the Seller shall pay by way of liquidated damages to the Buyer [***] for each day of delay in the Delivery commencing on the date falling [***].

The amount of such liquidated damages shall in no event [***] in respect of any one Aircraft.

The Buyer’s right to be paid damages in respect of the Aircraft is conditional upon the Buyer submitting a claim in respect of such liquidated damages in writing to the Seller [***].

11.2 Re-negotiation

If, as a result of Non-Excusable Delay, Delivery does not occur in the period falling [***] after the Delivery Period, the Buyer shall have the right exercisable by written notice to the Seller given [***] after the expiration of the [***] falling after the Delivery Period to require from the Seller a re-negotiation of the Scheduled Delivery Month for the affected Aircraft. Unless otherwise agreed between the Seller and the Buyer during such re-negotiation, the said re-negotiation shall not prejudice the Buyer’s right to receive liquidated damages in accordance with Clause 11.1 during the period of Non-Excusable Delay.

11.3 Termination

If, as a result of Non-Excusable Delay, Delivery does not occur in the period falling [***] after the Delivery Period and the parties have not renegotiated the Delivery Date pursuant to Clause 11.2, either party shall have the right exercisable by written notice to the other party, given [***] after expiration of such [***] to terminate this Agreement in respect of the affected Aircraft and neither party shall have any claim against the other in respect of such non-delivery [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 11 - Page 33 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

11.4 Limitation of Damages

The Buyer and the Seller agree that payment by the Seller of the amounts due pursuant to Clause 11.1 shall be considered to be a liquidated damages provision and has been calculated to compensate the Buyer for its entire damages for all losses of any kind due to Non-Excusable Delay. The Seller shall not in any circumstances have any liability whatsoever for Non-Excusable Delay other than as set forth in this Clause 11.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 11 - Page 34 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12 WARRANTIES AND SERVICE LIFE POLICY

This Clause covers the terms and conditions of the warranty and service life policy.

12.1 Standard Warranty

12.1.1 Nature of Warranty

For the purpose of this Agreement the term “Warranted Part” shall mean any Seller proprietary component, equipment, accessory or part, which is installed on an Aircraft at Delivery thereof and

(a) which is manufactured to the detailed design of the Seller or a subcontractor of the Seller and

(b) which bears a part number of the Seller at the time of such Delivery.

Subject to the conditions and limitations as hereinafter provided for and except as provided for in Clause 12.1.2, the Seller warrants to the Buyer that each Aircraft and each Warranted Part shall at Delivery to the Buyer be free from defects:

(i) in material;

(ii) in workmanship, including without limitation processes of manufacture;

(iii) in design (including without limitation the selection of materials) having regard to the state of the art at the date of such design; and

(iv) arising from failure to conform to the Specification, except to those portions of the Specification relating to performance or where it is expressly stated that they are estimates, approximations or design aims.

12.1.2 Exclusions

The warranties set forth in Clause 12.1.1 shall not apply to Buyer Furnished Equipment, nor to the Propulsion Systems, nor to any component, equipment, accessory or part installed on the Aircraft at Delivery that is not a Warranted Part except that:

(i) any defect in the Seller’s workmanship in respect of the installation of such items in the Aircraft, including any failure by the Seller to conform to the installation instructions of the manufacturers of such items, that invalidates any applicable warranty from such manufacturers, shall constitute a defect in workmanship for the purpose of this Clause 12.1 and be covered by the warranty set forth in Clause 12.1.1 (ii); and

(ii) any defect inherent in the Seller’s design of the installation, in consideration of the state of the art at the date of such design, which impairs the use of such items, shall constitute a defect in design for the purpose of this Clause 12.1 and be covered by the warranty set forth in Clause 12.1.1 (iii).

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 35 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.1.3 Warranty Period

The warranties set forth in Clauses 12.1.1 and 12.1.2 shall be limited to those defects that become apparent within [***] after Delivery of the affected Aircraft (the “Warranty Period”).

[***].

12.1.4 Buyer’s Remedy and Seller’s Obligation

12.1.4.1 The Buyer’s remedy and the Seller’s obligation and liability under Clauses 12.1.1 and 12.1.2 are limited to, at the Seller’s expense and option, the repair, replacement or correction of any Warranted Part which is defective (or to the supply of modification kits rectifying the defect), together with a credit to the Buyer’s account with the Seller of an amount equal to the direct labor costs [***] expended in performing the removal and the reinstallation thereof on the Aircraft at the labor rate defined in Clause 12.1.7.5.

[***].

The Seller may [***] at which the Buyer is entitled to purchase a replacement for the defective Warranted Part.

12.1.4.2 In the event of a defect covered by Clauses 12.1.1 (iii), 12.1.1 (iv) and 12.1.2 (ii) becoming apparent within the Warranty Period, the Seller shall also, if so requested by the Buyer in writing, correct such defect in any Aircraft which has not yet been delivered to the Buyer, provided, however,

(i) that the Seller shall not be responsible, nor deemed to be in default on account of any delay in Delivery of any Aircraft or otherwise in respect of the performance of this Agreement, due to the Seller’s undertaking to make such correction and provided further

(ii) that, rather than accept a delay in the Delivery of any such Aircraft, the Buyer and the Seller may agree to deliver such Aircraft with subsequent correction of the defect by the Buyer at the Seller’s expense, or the Buyer may elect to accept Delivery and thereafter file a Warranty Claim as though the defect had become apparent immediately after Delivery of such Aircraft.

12.1.4.3 Cost of inspection

In addition to the remedies set forth in Clauses 12.1.4.1 and 12.1.4.2, the Seller shall reimburse the direct labor costs incurred by the Buyer in performing inspections of the Aircraft to determine whether or not a defect exists in any Warranted Part within the Warranty Period subject to the following conditions:

(i) such inspections are recommended by a Seller Service Bulletin to be performed within the Warranty Period;

(ii) the reimbursement shall not apply for any inspections performed as an alternative to accomplishing corrective action as recommended by the Seller when such corrective action has been made available to the Buyer [***] and such corrective action could have [***] been accomplished by the Buyer at the time such inspections are performed or earlier,

(iii) the labor rate for the reimbursement shall be the labor rate defined in Clause 12.1.7.5, and

(iv) the manhours used to determine such reimbursement shall not exceed the Seller’s [***] estimate of the manhours required by the Buyer for such inspections.

12.1.5 Warranty Claim Requirements

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 36 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

The Buyer’s remedy and the Seller’s obligation and liability under this Clause 12.1, with respect to any warranty claim submitted by the Buyer (each a “Warranty Claim”) are subject to the following conditions:

(i) the defect having become apparent within the Warranty Period;

(ii) the Buyer having filed a warranty claim [***] of discovering the defect;

(iii) the Buyer having submitted to the Seller evidence reasonably satisfactory to the Seller that the claimed defect is due to a matter embraced within this Clause 12.1 and that such defect has not resulted from any act or omission of the Buyer (or any third party operating and maintaining the Aircraft on behalf of the Buyer), including but not limited to, any failure to operate and maintain the affected Aircraft or part thereof in accordance with the standards set forth in Clause 12.1.10;

(iv) the Seller having received a Warranty Claim complying with the provisions of Clause 12.1.6 below.

12.1.6 Warranty Administration

The warranties set forth in Clause 12.1 shall be administered as hereinafter provided for:

12.1.6.1 Claim Determination

Determination as to whether any claimed defect in any Warranted Part is a valid Warranty Claim shall be [***] made by the Seller and shall be based upon the claim details, reports from the Seller’s Representatives, historical data logs, inspections, tests, findings during repair, defect analysis and other relevant documents.

12.1.6.2 Transportation Costs

The cost of transporting a Warranted Part claimed to be defective to the facilities designated by the Seller shall be borne by the Buyer. If the Warranty Claim is valid, the Seller will bear the cost of the return of the Part, unless the Warranted Part once checked by the Seller is revealed not to be defective or the Warranty Claim is not a valid in which case the transportation costs for the return of such Warranted Part shall be borne by the Buyer.

12.1.6.3 Return of an Aircraft

If the Buyer and the Seller mutually agree, prior to such return, that it is necessary to return an Aircraft to the Seller for consideration of a Warranty Claim, the Seller shall bear the direct costs (including fuel, [***] and landing fees) to and from the Seller’s facilities for such return of the Aircraft. The Buyer shall make its reasonable efforts to minimize the duration of the corresponding flights.

12.1.6.4 On Aircraft Work by the Seller

If the Seller reasonably determines that a defect subject to this Clause 12.1 justifies the dispatch by the Seller of a working team to repair or correct such defect through the embodiment of one or several Seller’s Service Bulletins at the Buyer’s facilities, or if the Seller accepts the return of an Aircraft to perform or have performed such repair or correction, then the labor costs for such on-Aircraft work shall be borne by the Seller.

[***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 37 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

If said condition is fulfilled and if the Seller is requested to perform the work, the Seller shall accommodate the Buyer’s reasonable requirements regarding the work schedule and performance location.

12.1.6.5 Warranty Claim Substantiation

Each Warranty Claim filed by the Buyer under this Clause 12.1 shall contain at least the following data:

(a) description of defect and action taken, if any,

(b) date of incident and/or removal date,

(c) description of Warranted Part claimed to be defective,

(d) part number,

(e) serial number (if applicable),

(f) position on Aircraft,

(g) total flying hours or calendar time, as applicable, at the date of defect appearance,

(h) time since last shop visit at the date of defect appearance,

(i) Manufacturer Serial Number of the Aircraft and/or its registration,

(j) Aircraft total flying hours and/or number of landings at the date of defect appearance,

(k) Warranty Claim number,

(l) date of Warranty Claim,

(m) Delivery Date of Aircraft or Warranted Part to the Buyer,

Warranty Claims are to be addressed as follows:

AIRBUS

CUSTOMER SERVICES DIRECTORATE

WARRANTY ADMINISTRATION

Rond Point Maurice Bellonte

B.P. 33

F 31707 BLAGNAC CEDEX

FRANCE

12.1.6.6 Replacements

Title to and risk of loss of any Aircraft, component, accessory, equipment or part returned by the Buyer to the Seller shall at all times remain with the Buyer, except that:

(i) risk of loss (limited to cost of replacement and excluding in particular loss of use) shall be with the Seller for as long as such Aircraft, component, accessory, equipment or part shall be under the care, custody and control of the Seller and;

(ii) title to and risk of loss of a returned component, accessory, equipment or part shall pass to the Seller upon shipment by the Seller to the Buyer of any item furnished by the Seller to the Buyer as a replacement therefor.

Upon the Seller’s shipment to the Buyer of any replacement component, accessory, equipment or part provided by the Seller pursuant to this Clause 12.1, title to and risk of loss of such replacement component, accessory, equipment or part shall pass to the Buyer.

12.1.6.7 Rejection

The Seller shall provide reasonable written substantiation in case of rejection of a Warranty Claim. In such event the Buyer shall refund to the Seller reasonable inspection and test charges incurred in connection therewith.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 38 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.1.6.8 Inspection

The Seller shall have the right to inspect the affected Aircraft, documents and other records relating thereto in the event of any Warranty Claim under this Clause 12.1.

12.1.7 Inhouse Warranty

12.1.7.1 Seller’s Authorization

The Seller hereby authorizes the Buyer to repair Warranted Parts (“Inhouse Warranty”) subject to the terms of this Clause 12.1.7.

12.1.7.2 Conditions for Seller’s Authorization

The Buyer shall be entitled to repair such Warranted Parts:

- provided the Buyer notifies the Seller Representative of its intention to perform Inhouse Warranty repairs before any such repairs are started where the estimated cost of such repair is in [***]. The Buyer’s notification shall include sufficient detail regarding the defect, estimated labor hours and material to allow the Seller to ascertain the reasonableness of the estimate;

For the sake of clarity notification can be performed either per email or telephone to the Seller Representative.

- provided adequate facilities and qualified personnel are available to the Buyer;

- provided repairs are performed in accordance with the Seller’s Technical Data or written instructions; and

- only to the extent specified by the Seller, or, in the absence of such specification, to the extent reasonably necessary to correct the defect, in accordance with the standards set forth in Clause 12.1.10.

12.1.7.3 Seller’s Rights

The Seller shall have the right to require the return of any Warranted Part, or any part removed therefrom, which is claimed to be defective if, in the judgment of the Seller, the nature of the claimed defect requires technical investigation. Such return shall be subject to the provisions of Clause 12.1.6.2. Furthermore, the Seller shall have the right to have a Seller Representative present during the disassembly, inspection and testing of any Warranted Part claimed to be defective, subject to such presence being practical and not unduly delaying the repair.

12.1.7.4 Inhouse Warranty Claim Substantiation

Claims for Inhouse Warranty credit shall be filed within the time period set forth in 12.1.5 (ii) and shall contain the same information as that required for Warranty Claims under Clause 12.1.6.5 and in addition shall include:

(a) a report of technical findings with respect to the defect,

(b) for parts required to remedy the defect:

- part numbers,

- serial numbers (if applicable),

- parts description,

- quantity of parts,

- unit price of parts,

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 39 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

- related Seller’s or third party’s invoices (if applicable),

- total price of parts,

(c) detailed number of labor hours,

(d) Inhouse Warranty Labor Rate,

(e) total claim value.

12.1.7.5 Credit

[***]:

(a) to determine direct labor costs, [***] thereof on the Aircraft shall be counted. Any manhours required for maintenance work concurrently being carried out on the Aircraft or the Warranted Part shall not be included.

(b) The manhours counted as set forth above shall be [***] (“Inhouse Warranty Labour Rate”), which is deemed to represent the Buyer’s composite labor rate meaning the average hourly rate (excluding all fringe benefits, premium time allowances, social security charges, business taxes and the like) paid to the Buyer’s employees whose jobs are directly related to the performance of the repair.

The Inhouse Warranty Labor Rate is subject to annual adjustment by [***]. For the purposes of this Clause 12.1.7.5 only, [***], defined in the Seller’s Price Revision Formula set forth in Exhibit C to the Agreement, or any other substitute index pursuant to Clause 5.2 in Exhibit C Part 1.

(c) [***], excluding any parts and materials used for overhaul and as may be furnished by the Seller at no charge.

12.1.7.6 Limitation

[***].

12.1.7.7 Scrapped Material

The Buyer shall retain any defective Warranted Part beyond economic repair and any defective part removed from a Warranted Part during repair for a period of either [***] for Inhouse Warranty [***] relating thereto, whichever is longer. Such parts shall be returned to the Seller [***] of receipt of the Seller’s request to that effect.

Notwithstanding the foregoing, the Buyer may scrap any such defective parts, which are beyond economic repair and not required for technical evaluation locally, with the agreement of the Seller Representative(s), such agreement not to be unreasonably withheld.

Scrapped Warranted Parts shall be evidenced by a record of scrapped material certified by an authorized representative of the Buyer and shall be kept in the Buyer’s file for a least the duration of the applicable Warranty Period.

12.1.8 Standard Warranty in case of Pooling or Leasing Arrangements

Without prejudice to Clause 21.1, the warranties provided for in this Clause 12.1 for any Warranted Part shall accrue to the benefit of any airline in revenue service, other than the Buyer, if the Warranted

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 40 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

Part enters into the possession of any such airline as a result of a pooling or leasing agreement between such airline and the Buyer, in accordance with the terms and subject to the limitations and exclusions of the foregoing warranties and to the extent permitted by any applicable law or regulations.

12.1.9 Warranty for Corrected, Replaced or Repaired Warranted Parts

Whenever any Warranted Part which contains a defect for which the Seller is liable under sub-Clause 12.1 has been corrected, replaced or repaired pursuant to the terms of this sub-Clause 12.1, the period of the Seller’s warranty with respect to such corrected, replaced or repaired [***].

If a defect is attributable to a defective repair or replacement by the Buyer ([***]), a Warranty Claim with respect to such defect shall be rejected, notwithstanding any subsequent correction or repair, and shall immediately terminate the remaining warranties under this Clause 12.1 in respect of the affected Warranted Part

12.1.10 Accepted Industry Standard Practices Normal Wear and Tear

The Buyer’s rights under this Clause 12.1 are subject to the Aircraft and each component, equipment, accessory and part thereof being maintained, overhauled, repaired and operated in accordance with accepted industry standard practices, all Technical Data and any other instructions issued by the Seller, the Suppliers and the Propulsion Systems Manufacturer and all applicable rules, regulations and directives of the relevant Aviation Authorities.

The Seller’s liability under this Clause 12.1 shall not extend to normal wear and tear nor to:

(i) any Aircraft or component, equipment, accessory or part thereof, which has been repaired, altered or modified after Delivery, except by the Seller or in a manner approved by the Seller;

(ii) any Aircraft or component, equipment, accessory or part thereof, which has been operated in a damaged state

        ([***]);

(iii) any component, equipment, accessory and part from which the trademark, name, part or serial number or other identification marks have been removed.

[***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 41 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.1.11 Limitation of liability

THE SELLER SHALL NOT BE LIABLE FOR LOSSES DUE TO ANY DEFECT OR NON-CONFORMITY OF ANY KIND, ARISING OUT OF OR IN CONNECTION WITH ANY REPAIR OF ANY WARRANTED PART UNDERTAKEN BY THE BUYER UNDER THIS CLAUSE 12.1 OR ANY OTHER ACTIONS UNDERTAKEN BY THE BUYER UNDER THIS CLAUSE 12, WHETHER SUCH CLAIM IS ASSERTED IN CONTRACT OR IN TORT, OR IS PREMISED ON ALLEGED, ACTUAL, IMPUTED, ORDINARY OR INTENTIONAL ACTS OR OMISSIONS OF THE BUYER [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 42/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.2 Seller Service Life Policy

12.2.1 In addition to the warranties set forth in Clause 12.1, the Seller further agrees that should a Failure occur in any Item (as these terms are defined here below) that has not suffered from an extrinsic force, then, subject to the general conditions and limitations set forth in Clause 12.2.4, the provisions of this Clause 12.2 shall apply.

For the purposes of this Clause 12.2:

(i) “Item” means any item listed in Exhibit “F”;

(ii) “Failure” means [***].

12.2.2 Periods and Seller’s Undertakings

The Seller agrees that if a Failure occurs in an Item before the Aircraft in which such Item was originally installed within [***] after the Delivery of said Aircraft, whichever shall first occur, the Seller shall, at its discretion and as promptly as practicable and with the Seller’s financial participation as hereinafter provided, either :

- design and furnish to the Buyer a correction for such Item with a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts), or

- replace such Item.

12.2.3 Seller’s Participation in the Costs

Subject to the general conditions and limitations set forth in Clause 12.2.4, any part or Item that the Seller is required to furnish to the Buyer under this Service Life Policy in connection with the correction or replacement of an Item shall be furnished to the Buyer at the Seller’s then current sales price therefore, less the Seller’s financial participation determined in accordance with the following formula:

[***]

12.2.4 General Conditions and Limitations

12.2.4.1 The undertakings set forth in this Clause 12.2 shall be valid after the period of the Seller’s warranty applicable to an Item under Clause 12.1.

12.2.4.2 The Buyer’s remedies and the Seller’s obligations and liabilities under this Service Life Policy are subject to the prior compliance by the Buyer with the following conditions:

(i) the Buyer shall maintain log books and other historical records with respect to each Item, adequate to enable the Seller to determine whether the alleged Failure is covered by this Service Life Policy and, if so, to define the portion of the costs to be borne by the Seller in accordance with Clause 12.2.3;

(ii) the Buyer shall keep the Seller informed of any significant incidents relating to an Aircraft, howsoever occurring or recorded;

(iii) the Buyer shall comply with the conditions of Clause 12.1.10;

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 43 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

(iv) the Buyer shall implement specific structural inspection programs for monitoring purposes as may be established from time to time by the Seller. Such programs shall be as compatible as possible with the Buyer’s operational requirements and shall be carried out at the Buyer’s expense. Reports relating thereto shall be regularly furnished to the Seller;

(v) the Buyer shall report any breakage or defect in a Item in writing to the Seller within [***] after such breakage or defect becomes apparent, whether or not said breakage or defect can reasonably be expected to occur in any other aircraft, and the Buyer shall have provided to the Seller sufficient detail on the breakage or defect to enable the Seller to determine whether said breakage or defect is subject to this Service Life Policy.

12.2.4.3 Except as otherwise provided for in this Clause 12.2, any claim under this Service Life Policy shall be administered as provided for in, and shall be subject to the terms and conditions of, Clause 12.1.6.

12.2.4.4 In the event of the Seller having issued a modification applicable to an Aircraft, the purpose of which is to avoid a Failure, the Seller may elect to supply the necessary modification kit [***]. If such a kit is so offered to the Buyer, then, to the extent of such Failure and any Failures that could ensue therefrom, the validity of the Seller’s commitment under this Clause 12.2 shall be subject to the Buyer incorporating such modification in the relevant Aircraft, as promulgated by the Seller and in accordance with the Seller’s instructions, within a reasonable time.

12.2.4.5 This Service Life Policy is neither a warranty, performance guarantee, nor an agreement to modify any Aircraft or Airframe components to conform to new developments occurring in the state of airframe design and manufacturing art.

The Seller’s obligation hereunder is to furnish only those corrections to the Items or provide replacements therefor as provided for in this Clause 12.2.

The Buyer’s sole remedy and relief for the non-performance of any obligation or liability of the Seller arising under or by virtue of this Service Life Policy shall be in the form of a credit, limited to the amount the Buyer reasonably expends in procuring a correction or replacement for any Item that is the subject of a Failure covered by this Service Life Policy and to which such non-performance is related.

The Buyer hereby waives, releases and renounces all claims to any further damages, direct, incidental or consequential, including loss of profits and all other rights, claims and remedies, arising under or by virtue of this Service Life Policy.

12.3 Supplier Warranties and Service Life Policies

Prior to/at Delivery of the first Aircraft, [***] the Buyer, in accordance with the provisions of Clause 17, with the warranties and, where applicable, service life policies that the Seller has obtained for Supplier Parts pursuant to the Supplier Product Support Agreements.

12.3.1 Definitions

12.3.1.1 “Supplier” means any supplier of Supplier Parts.

12.3.1.2 “Supplier Part” means any component, equipment, accessory or part installed in an Aircraft at the time of Delivery thereof and for which there exists a Supplier Product Support Agreement. For the sake of clarity, Propulsion Systems and Buyer Furnished Equipment and other equipment selected by the Buyer to be supplied by suppliers with whom the Seller has no existing enforceable warranty agreements are not Supplier Parts.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 44 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.3.1.3 “Supplier Product Support Agreements” means agreements between the Seller and Suppliers, as described in Clause 17.1.2, containing enforceable and transferable warranties and, in the case of landing gear suppliers, service life policies for selected structural landing gear elements.

12.3.2 Supplier’s Default

12.3.2.1 In the event of any Supplier, under any standard warranty obtained by the Seller pursuant to Clause 12.3.1, defaulting in the performance of any material obligation with respect thereto and the Buyer submitting in reasonable time to the Seller reasonable proof that such default has occurred, then Clause 12.1 shall apply to the extent the same would have been applicable had such Supplier Part been a Warranted Part, except that the Supplier’s warranty period as indicated in the Supplier Product Support Agreement shall apply.

12.3.2.2 In the event of any Supplier, under any Supplier Service Life Policy obtained by the Seller pursuant to Clause 12.3.1, defaulting in the performance of any material obligation with respect thereto and the Buyer submitting in reasonable time to the Seller reasonable proof that such default has occurred, then Clause 12.2 shall apply to the extent the same would have been applicable had such Supplier Item been listed in Exhibit F, Seller Service Life Policy, except that the Supplier’s Service Life Policy period as indicated in the Supplier Product Support Agreement shall apply.

12.3.2.3 At the Seller’s request, the Buyer shall assign to the Seller, and the Seller shall be subrogated to, all of the Buyer’s rights against the relevant Supplier with respect to and arising by reason of such default and shall provide reasonable assistance to enable the Seller to enforce the rights so assigned.

12.4 Interface Commitment

12.4.1 Interface Problem

If the Buyer experiences any technical problem in the operation of an Aircraft or its systems due to a malfunction, the cause of which, after due and reasonable investigation, is not readily identifiable by the Buyer but which the Buyer reasonably believes to be attributable to the design characteristics of one or more components of the Aircraft (“Interface Problem”), the Seller shall, if so requested by the Buyer, and without additional charge to the Buyer except for transportation of the Seller’s personnel to the Buyer’s facilities, promptly conduct or have conducted an investigation and analysis of such problem to determine, if possible, the cause or causes of the problem and to recommend such corrective action as may be feasible. The Buyer shall furnish to the Seller all data and information in the Buyer’s possession relevant to the Interface Problem and shall cooperate with the Seller in the conduct of the Seller’s investigations and such tests as may be required.

At the conclusion of such investigation, the Seller shall promptly advise the Buyer in writing of the Seller’s opinion as to the cause or causes of the Interface Problem and the Seller’s recommendations as to corrective action.

12.4.2 Seller’s Responsibility

If the Seller determines that the Interface Problem is primarily attributable to the design of a Warranted Part, the Seller shall, if so requested by the Buyer and pursuant to the terms and conditions of Clause 12.1, correct the design of such Warranted Part to the extent of the Seller’s obligation as defined in Clause 12.1.

12.4.3 Supplier’s Responsibility

If the Seller determines that the Interface Problem is primarily attributable to the design of any Supplier Part, the Seller shall, if so requested by the Buyer, reasonably assist the Buyer in processing any warranty claim the Buyer may have against the Supplier.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 45 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

12.4.4 Joint Responsibility

If the Seller determines that the Interface Problem is attributable partially to the design of a Warranted Part and partially to the design of any Supplier Part, the Seller shall, if so requested by the Buyer, seek a solution to the Interface Problem through cooperative efforts of the Seller and any Supplier involved.

The Seller shall promptly advise the Buyer of such corrective action as may be proposed by the Seller and any such Supplier. Such proposal shall be consistent with any then existing obligations of the Seller hereunder and of any such Supplier towards the Buyer. Such corrective action, when accepted by the Buyer, shall constitute full satisfaction of any claim the Buyer may have against either the Seller or any such Supplier with respect to such Interface Problem.

12.4.5 General

12.4.5.1 All requests under this Clause 12.4 shall be directed to both the Seller and the Supplier.

12.4.5.2 Except as specifically set forth in this Clause 12.4, this Clause shall not be deemed to impose on the Seller any obligations not expressly set forth elsewhere in this Clause 12.

12.4.5.3 All reports, recommendations, data and other documents furnished by the Seller to the Buyer pursuant to this Clause 12.4 shall be deemed to be delivered under this Agreement and shall be subject to the terms, covenants and conditions set forth in this Clause 12.

12.5 Waiver, Release and Renunciation

THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER (AS DEFINED BELOW FOR THE PURPOSES OF THIS CLAUSE) AND REMEDIES OF THE BUYER SET FORTH IN THIS CLAUSE 12 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS OR IMPLIED, ARISING BY LAW, CONTRACT OR OTHERWISE, WITH RESPECT TO ANY NON CONFORMITY OR DEFECT OF ANY KIND, IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, DELIVERED UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

A. ANY WARRANTY AGAINST HIDDEN DEFECTS;

B. ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

C. ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE;

D. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT, WHETHER OR NOT ARISING FROM THE SELLER’S NEGLIGENCE, ACTUAL OR IMPUTED; AND

E. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA, OR SERVICES DELIVERED UNDER THIS AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,

PROVIDED THAT IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE THE REMAINDER OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 46 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

FOR THE PURPOSES OF THIS CLAUSE 12.5, THE “SELLER” SHALL BE UNDERSTOOD TO INCLUDE THE SELLER, ITS AFFILIATES AND ANY OF ITS SUPPLIERS AND SUBCONTRACTORS [***].

12.6 Duplicate Remedies

The Seller shall not be obliged to provide any remedy that duplicates any other remedy [***] to the Buyer in respect of the same defect under Clauses 12.1 and 12.2 as such Clauses may be amended, complemented or supplemented by other contractual agreements or by other Clauses of this Agreement.

12.7 Negotiated Agreement

The Buyer specifically recognizes that:

(i) the Specification has been agreed upon after careful consideration by the Buyer using its judgment as a professional operator of aircraft;

(ii) this Agreement, and in particular this Clause 12, has been the subject of discussion and negotiation and is fully understood by the Buyer; and

(iii) the price of the Aircraft and the other mutual agreements of the Buyer set forth in this Agreement were arrived at in consideration of, inter alia, the provisions of this Clause 12, specifically including the waiver, release and renunciation by the Buyer set forth in Clause 12.5.

12.8 Disclosure to Third Party Entity

In the event of the Buyer intending to designate a third party entity (a “Third Party Entity”) to administer this Clause 12, the Buyer shall notify the Seller of such intention prior to any disclosure of this Clause to the selected Third Party Entity and shall cause such Third Party Entity to enter into a confidentiality agreement and or any other relevant documentation with the Seller solely for the purpose of administering this Clause 12.

12.9 Transferability

(i) Without prejudice to Clause 21, the Buyer’s rights under this Clause 12 (the “Warranty Rights”) may not be assigned, sold, transferred, novated or otherwise alienated by operation of law or otherwise (whether in whole or in part) without the Seller’s prior written consent, such consent not be unreasonably withheld.

(ii)     With regard to any particular Warranty Rights that the Buyer assigns or otherwise transfers in breach of Clause 12.9(i), the Buyer agrees and acknowledges that the Seller shall be under no obligation to honour any claims with respect to such Warranty Rights (whether brought by the Buyer or assignee or transferee) until such time as: (a) the Seller has provided the Buyer with its written consent to the relevant assignment or transfer; or (b) the Seller receives, in form and substance reasonably satisfactory to it evidence of termination of the assignment or transfer, or a legal, valid and binding re-assignment of the particular Warranty Rights to the Buyer.

(iii)     The Buyer shall indemnify and hold the Seller harmless with regard to any costs, expenses, damages or liabilities of any description which the Seller suffers or otherwise incurs as a result of any assignment or transfer by the Buyer of any of the Warranty Rights in breach of this Clause 12.9.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 12 - Page 47 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

13 PATENT AND COPYRIGHT INDEMNITY

13.1 Indemnity

13.1.1 Subject to the provisions of Clause 13.2.3, the Seller shall indemnify the Buyer from and against any damages, costs or expenses including legal costs (excluding damages, costs, expenses, loss of profits and other liabilities in respect of or resulting from loss of use of the Aircraft) resulting from any infringement or claim of infringement by the Airframe (or any part or software installed therein at Delivery) of:

(i) any British, French, German, Spanish or U.S. patent;

and

(ii) any patent issued under the laws of any other country in which the Buyer may lawfully operate the Aircraft, provided that :

(1) from the time of design of such Airframe, accessory, equipment or part and until infringement claims are resolved, such country and the flag country of the Aircraft are each a party to the Chicago Convention on International Civil Aviation of December 7, 1944, and are each fully entitled to all benefits of Article 27 thereof,

or in the alternative,

(2) from such time of design and until infringement claims are resolved, such country is a party to the International Convention for the Protection of Industrial Property of March 20, 1883 (“Paris Convention”) or have in full force and effect patent laws which recognize and give adequate protection to patents issued under the laws of other countries.;

and

(iii) in respect of computer software installed on the Aircraft, any copyright, provided that the Seller’s obligation to indemnify shall be limited to infringements in countries which, at the time of infringement, are members of The Berne Union and recognise computer software as a “work” under the Berne Convention.

13.1.2 Clause 13.1.1 shall not apply to

(i) Buyer Furnished Equipment or Propulsion Systems; or

(ii) parts not supplied pursuant to a Supplier Product Support Agreement ; or

(iii) software not created by the Seller. All Supplier Software as such term is defined is Exhibit I – Part III shall have transferable and enforceable copyright indemnities.

13.1.3 In the event that the Buyer is prevented from using the Aircraft (whether by a valid judgement of a court of competent jurisdiction or by a settlement arrived at between claimant, Seller and Buyer), the Seller shall promptly at its expense either:

(i) procure for the Buyer the right to use the same [***] to the Buyer; or

(ii) replace the infringing part of the Aircraft as soon as possible with a non-infringing substitute complying in all other respects with the requirements of this Agreement.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 13 - Page 48/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

13.2 Administration of Patent and Copyright Indemnity Claims

13.2.1 If the Buyer receives a written claim or a suit is threatened or commenced against the Buyer for infringement of a patent or copyright referred to in Clause 13.1, the Buyer shall:

(i) forthwith notify the Seller giving particulars thereof;

(ii) furnish to the Seller all data, papers and records within the Buyer’s control or possession relating to such patent or claim;

(iii) refrain from admitting any liability or making any payment or assuming any expenses, damages, costs or royalties or otherwise acting in a manner prejudicial to the defense or denial of such suit or claim provided always that nothing in this sub-Clause (iii) shall prevent the Buyer from paying such sums as may be required in order to obtain the release of the Aircraft, provided such payment is accompanied by a denial of liability and is made without prejudice;

(iv) fully co-operate with, and render all such assistance to, the Seller as may be pertinent to the defense or denial of the suit or claim;

(v) act in such a way as to mitigate damages and / or to reduce the amount of royalties which may be payable [***].

13.2.2 The Seller shall be entitled either in its own name or on behalf of the Buyer to conduct negotiations with the party or parties alleging infringement and may assume and conduct the defense or settlement of any suit or claim in the manner which, in the Seller’s opinion, it deems proper.

13.2.3 The Seller’s liability hereunder shall be conditional upon the strict and timely compliance by the Buyer with the terms of this Clause and is in lieu of any other liability to the Buyer express or implied which the Seller might incur at law as a result of any infringement or claim of infringement of any patent or copyright.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 13 - Page 49 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

14 TECHNICAL DATA AND SOFTWARE SERVICES

14.1 Scope

This Clause 14 covers the terms and conditions for the supply of technical data (hereinafter “Technical Data”) and software services described hereunder (hereinafter “Software Services”) to support the Aircraft operation.

14.1.1 The Technical Data shall be supplied in the English language using the aeronautical terminology in common use.

14.1.2 Range, type, format and delivery schedule of the Technical Data to be provided under this Agreement are outlined in Exhibit G hereto.

14.2 Aircraft Identification for Technical Data

14.2.1 For those Technical Data that are customized to the Aircraft, the Buyer agrees to the allocation of fleet serial numbers (“Fleet Serial Numbers”) in the form of block of numbers selected in the range from 001 to 999.

14.2.2 The sequence shall not be interrupted unless two (2) different Propulsion Systems or two (2) different Aircraft models are selected.

14.2.3 The Buyer shall indicate to the Seller the Fleet Serial Number allocated to each Aircraft corresponding to the delivery schedule set forth in Clause 9.1.1 no later than [***] before the Scheduled Delivery Month of [***] Aircraft. Neither the designation of such Fleet Serial Numbers nor the subsequent allocation of the Fleet Serial Numbers to Manufacturer Serial Numbers for the purpose of producing certain customized Technical Data shall constitute any property, insurable or other interest of the Buyer in any Aircraft prior to the Delivery of such Aircraft as provided for in this Agreement.

The customized Technical Data that are affected thereby are the following:

- Aircraft Maintenance Manual,

- Illustrated Parts Catalog,

- Trouble Shooting Manual,

- Aircraft Wiring Manual,

- Aircraft Schematics Manual,

- Aircraft Wiring Lists.

14.3 Integration of Equipment Data

14.3.1 Supplier Equipment

Information, including revisions, relating to Supplier equipment that is installed on the Aircraft at Delivery or through Airbus Service Bulletins thereafter shall be introduced into the customized Technical Data to the extent necessary for the comprehension of the affected systems, at no additional charge to the Buyer.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 50 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

14.3.2 Buyer Furnished Equipment

14.3.2.1 The Seller shall introduce Buyer Furnished Equipment data for Buyer Furnished Equipment that is installed on the Aircraft by the Seller (hereinafter “BFE Data”) into the customized Technical Data, at no additional charge to the Buyer for the initial issue of the Technical Data provided at or before Delivery of the Aircraft, provided such BFE Data is provided in accordance with the conditions set forth in Clauses 14.3.2.2 through 14.3.2.6.

14.3.2.2 The Buyer shall supply the BFE Data to the Seller at least six (6) months prior to the Scheduled Delivery Month of each Aircraft.

14.3.2.3 The BFE Data shall be supplied in English and shall be established in compliance with the then applicable revision of ATA iSpecification 2200 (iSpec 2200), Information Standards for Aviation Maintenance.

14.3.2.4 [***].

14.3.2.5 The BFE Data shall be delivered by the Buyer to the Seller in digital format (SGML) and/or in Portable Document Format (PDF), as agreed between the Buyer and the Seller.

14.3.2.6 All costs related to the delivery to the Seller of the applicable BFE Data shall be borne by the Buyer.

14.4 Supply

14.4.1 Technical Data shall be supplied on-line and/or off-line, as set forth in Exhibit G hereto.

14.4.2 The Buyer shall not receive any credit or compensation for any unused or only partially used Technical Data supplied pursuant to this Clause 14.

14.4.3 Delivery

14.4.3.1 For Technical Data provided off-line, such Technical Data and corresponding revisions shall be sent to up to two (2) addresses as indicated by the Buyer.

14.4.3.2 Technical Data provided off-line shall be delivered by the Seller at the Buyer’s named place of destination under DAP conditions. The term Delivered At Place (DAP) is defined in the Incoterms 2010 publication issued by the International Chamber of Commerce.

14.4.3.3 The Technical Data shall be delivered according to a mutually agreed schedule to correspond with the Deliveries of Aircraft. The Buyer shall provide [***] notice when requesting a change to such delivery schedule.

14.4.4 It shall be the responsibility of the Buyer to coordinate and satisfy local Aviation Authorities’ requirements with respect to Technical Data. Reasonable quantities of such Technical Data shall be supplied by the Seller at no charge to the Buyer at the Buyer’s named place of destination.

Notwithstanding the foregoing, and in agreement with the relevant Aviation Authorities, preference shall be given to the on-line access to such Buyer’s Technical Data through the Airbus customer portal AirbusWorld.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 51 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

14.5 Revision Service

For each Aircraft covered under this Agreement, revision service for the Technical Data [***] “Revision Service Period”).

Thereafter revision service for the Technical Data ([***]) shall be provided in accordance with the terms and conditions set forth in the Seller’s then current Customer Services Catalog.

14.6 Service Bulletins (SB) Incorporation

During any Revision Service Period and upon the Buyer’s request, , Seller Service Bulletin information shall be incorporated into the Technical Data at [***], provided that the Buyer notifies the Seller through the relevant AirbusWorld on-line Service Bulletin Reporting application that it intends to accomplish such Service Bulletin, after which post Service Bulletin status shall be shown. [***].

14.7 Technical Data Familiarization

Upon request by the Buyer, the Seller shall provide [***] up to [***] of Technical Data familiarization training at the Seller’s or the Buyer’s facilities. The basic familiarization course is tailored for maintenance, engineering [***] personnel.

14.8 Customer Originated Changes (COC)

In the event of the Buyer wishing to introduce Buyer originated data (hereinafter “COC Data”) into any of the customized Technical Data that are identified as eligible for such incorporation in the Seller’s then current Customer Services Catalog, the Buyer shall notify the Seller of such intention.

The incorporation of any COC Data shall be performed under the methods and tools for achieving such introduction and the conditions specified in the Seller’s then current Customer Services Catalog.

14.9 AirN@v Family products

14.9.1 The Technical Data listed here below are provided on DVD and include integrated software (hereinafter together referred to as “AirN@v Family”).

14.9.2 The AirN@v Family covers several Technical Data domains, reflected by the following AirN@v Family products:

- AirN@v / Maintenance,

- AirN@v / Planning,

- AirN@v / Repair,

- AirN@v / Workshop,

- AirN@v / Associated Data,

- AirN@v / Engineering.

14.9.3 The licensing conditions for the use of AirN@v Family integrated software shall be as set forth in Part 1 of Exhibit I to the Agreement, “End-User License Agreement for Airbus Software”.

14.9.4 The revision service and the license to use AirN@v Family products shall be [***] Revision Service Period. At the end of such Revision Service Period, the yearly revision service for AirN@v Family products and the associated license fee shall be provided to the Buyer under the commercial conditions set forth in the Seller’s then current Customer Services Catalog.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 52 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

14.10 On-Line Technical Data

14.10.1 The Technical Data provided on-line shall be made available to the Buyer through the Airbus customer portal AirbusWorld (“AirbusWorld”).

14.10.2 Access to AirbusWorld shall be subject to the “General Terms and Conditions of Access to and Use of AirbusWorld” (hereinafter the “GTC”), as set forth in Part 2 of Exhibit I to this Agreement.

14.10.3 The list of the Technical Data provided on-line may be extended from time to time.

For any Technical Data which is or becomes available on-line, the Seller reserves the right to suppress other formats for the concerned Technical Data.

14.10.4 Access to AirbusWorld shall be granted free of charge for an unlimited number of the Buyer’s users (including [***] Buyer’s Administrators) for the Technical Data related to the Aircraft which shall be operated by the Buyer.

14.10.5 For the sake of clarification, it is hereby specified that Technical Data accessed through AirbusWorld shall remain subject to the conditions of this Clause 14.

In addition, should AirbusWorld provide access to Technical Data in software format, the use of such software shall be further subject to the conditions of Part 1 of Exhibit I to the Agreement.

14.11 Waiver, Release and Renunciation

The Seller warrants that the Technical Data are prepared in accordance with the state of art at the date of their conception. Should any Technical Data prepared by the Seller contain non-conformity or defect, the sole and exclusive liability of the Seller shall be to take all reasonable and proper steps to correct such Technical Data. Notwithstanding the above, no warranties of any kind shall be given for the Customer Originated Changes, as set forth in Clause 14.8.

THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER (AS DEFINED BELOW FOR THE PURPOSES OF THIS CLAUSE) AND REMEDIES OF THE BUYER SET FORTH IN THIS CLAUSE 14 AND AS THE CASE MAY BE UNDER CLAUSE 13.1.1 (iii) AND EXHIBIT I ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS OR IMPLIED, ARISING BY LAW, CONTRACT OR OTHERWISE, WITH RESPECT TO ANY NON-CONFORMITY OR DEFECT OF ANY KIND, IN ANY TECHNICAL DATA OR SERVICES DELIVERED UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

A. ANY WARRANTY AGAINST HIDDEN DEFECTS;

B. ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

C. ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE;

D. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT, WHETHER OR NOT ARISING FROM THE SELLER’S NEGLIGENCE, ACTUAL OR IMPUTED; AND

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 53 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

E. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICES DELIVERED UNDER THIS AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES;

PROVIDED THAT, IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE, THE REMAINDER OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.

FOR THE PURPOSES OF THIS CLAUSE 14, THE “SELLER” SHALL BE UNDERSTOOD TO INCLUDE THE SELLER AND ITS AFFILIATES AND ANY OF ITS SUPPLIERS AND SUBCONTRACTORS [***].

[***].

14.12 Proprietary Rights

14.12.1 All proprietary rights, including but not limited to patent, design and copyrights, relating to Technical Data shall remain with the Seller.

These proprietary rights shall also apply to any translation into a language or languages or media that may have been performed or caused to be performed by the Buyer.

14.12.2 Whenever this Agreement and/or any Technical Data provides for manufacturing by the Buyer, the consent given by the Seller shall not be construed as express or implicit approval howsoever neither of the Buyer nor of the manufactured products. The supply of the Technical Data shall not be construed as any further right for the Buyer to design or manufacture any Aircraft or part thereof or spare part.

14.13 Performance Engineer’s Program

14.13.1 In addition to the Technical Data provided under Clause 14, the Seller shall provide to the Buyer Software Services, which shall consist of the Performance Engineer’s Programs (“PEP”) for the Aircraft type covered under this Agreement. Such PEP is composed of software components and databases and its use is subject to the license conditions set forth in Part 1 of Exhibit I to the Agreement “End-User License Agreement for Airbus Software”.

14.13.2 Use of the PEP shall be limited [***] to be used on the Buyer’s computers for the purpose of computing performance engineering data. The PEP is intended for use on ground only and shall not be embarked on board the Aircraft.

14.13.3 The license to use the PEP and the revision service [***].

14.14 Future Developments

The Seller continuously monitors technological developments and applies them to Technical Data, document and information systems’ functionalities, production and methods of transmission.

The Seller shall implement and the Buyer shall accept such new developments, it being understood that the Buyer shall be informed in due time by the Seller of such new developments and their application and of the date by which the same shall be implemented by the Seller. [***].

14.15 Confidentiality

14.15.1 This Clause, the Technical Data, the Software Services and their content are designated as confidential [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 54 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

14.15.2 In the event of the Seller authorizing the disclosure of this Clause or any Technical Data or Software Services to third parties either under this Agreement or by an express prior written authorization and specifically, in the event of the Buyer intending to designate a maintenance and repair organization or a third party to perform the maintenance of the Aircraft or to perform data processing on its behalf (each a “Third Party”), the Buyer shall notify the Seller of such intention prior to any disclosure of this Clause and/or the Technical Data and/or the Software Services to such Third Party.

The Buyer hereby undertakes to cause such Third Party to agree to be bound by the conditions and restrictions set forth in this Clause 14 with respect to the disclosed Clause, Technical Data or Software Services and shall in particular cause such Third Party to enter into a confidentiality agreement with the Seller and appropriate licensing conditions, and to commit to use the Technical Data solely for the purpose of maintaining the Buyer’s Aircraft and the Software Services exclusively for processing the Buyer’s data.

[***].

14.16 Transferability

(i) Without prejudice to Clause 21.1, the Buyer’s rights under this Clause 14 (the “Technical Data and Software Services Rights”) may not be assigned, sold, transferred, novated or otherwise alienated by operation of law or otherwise (whether in whole or in part), without the Seller’s prior written consent such consent not be unreasonably withheld.

(ii)    [***].

(iii)   [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 14 - Page 55 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

15 SELLER REPRESENTATIVE SERVICES

The Seller shall provide at [***].

15.1 Customer Support Representative(s)

15.1.1 The Seller shall provide [***].

15.1.2 In providing the services as described here above, any Seller Representatives, or any Seller employee(s) providing services to the Buyer hereunder, are deemed to be acting in an advisory capacity only and at no time shall they be deemed to be acting as Buyer’s employees or agents, either directly or indirectly.

[***].

15.1.3 The Seller shall provide to the Buyer an annual written accounting of the consumed man-months and any remaining man-month balance from the allowance defined in Appendix A. Such accounting shall be deemed final and accepted by the Buyer unless the Seller receives written objection from the Buyer within [***] calendar days of receipt of such accounting.

15.1.4 In the event of a need for Aircraft On Ground (“AOG”) technical assistance after the end of the assignment referred to in Appendix A to this Clause 15, the Buyer shall have non-exclusive [***] access to:

(a) AIRTAC (Airbus Technical AOG Center);

(b) The Seller Representative network closest to the Buyer’s main base. A list of contacts of the Seller Representatives closest to the Buyer’s main base shall be provided to the Buyer.

Any services provided pursuant to this access shall be charged in accordance with the Customer Services Catalogue.

[***].

15.1.5 Should the Buyer request Seller Representative services exceeding the allocation specified in Appendix A to this Clause 15, the Seller may provide such additional services subject to terms and conditions to be mutually agreed.

15.1.6 The Seller shall cause similar services to be provided by representatives of the Propulsion Systems Manufacturer and Suppliers, when necessary and applicable.

15.1.7 [***].

15.2 Buyer’s Support

15.2.1 From the date of arrival of the first Seller Representative and for the duration of the assignment, the Buyer shall provide [***] a suitable lockable office, conveniently located with respect to the Buyer’s maintenance facilities, with complete office furniture and equipment including telephone, internet, email and facsimile connections for the sole use of the Seller Representative(s). All related communication costs shall be borne by the Seller upon receipt by the Seller of all relevant justifications, however the Buyer shall not impose on the Seller any charges other than the direct cost of such communications.

15.2.2 [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 15 - Page 56 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

15.2.3 [***].

15.2.4 [***].

15.2.5 [***].

15.2.6 The Buyer shall assist the Seller in obtaining from the civil authorities of the Buyer’s country those documents that are necessary to permit the Seller Representatives to live and work in the Buyer’s country. Failure of the Seller to obtain the necessary documents shall relieve the Seller of any obligation to the Buyer under the provisions of Clause 15.1.

15.2.7 [***].

15.3 Withdrawal of the Seller Representative

The Seller shall have the right to withdraw its assigned Seller Representatives as it sees fit if conditions arise, which are in the Seller’s opinion dangerous to their safety or health or prevent them from fulfilling their contractual tasks.

[***].

15.4 Indemnities

INDEMNIFICATION PROVISIONS APPLICABLE TO THIS CLAUSE 15 ARE SET FORTH IN CLAUSE 19.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 15 - Page 57 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

APPENDIX A TO CLAUSE 15

SELLER REPRESENTATIVE ALLOCATION

The Seller Representative allocation provided to the Buyer pursuant to Clause 15.1 is defined hereunder.

1    The Seller shall provide to the Buyer Seller Representative services at the Buyer’s main base or at other locations to be mutually agreed for a total of [***].

[***].

2    For the sake of clarification, such Seller Representatives’ services shall include initial Aircraft Entry Into Service (EIS) assistance and sustaining support services.

3    The number of the Seller Representatives assigned to the Buyer at any one time [***].

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 15 - Page 58 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

16 TRAINING SUPPORT AND SERVICES

16.1 General

16.1.1 This Clause 16 sets forth the terms and conditions for the supply of training support and services for the Buyer’s personnel to support the Aircraft operation.

16.1.2 The range, quantity and validity of training to be [***] under this Agreement are covered in Appendix A to this Clause 16.

16.1.3 Scheduling of training courses covered in Appendix A shall be mutually agreed during a training conference (the “Training Conference”) that shall be held [***].

16.1.4 [***].

16.2 Training Location

16.2.1 The Seller shall provide training at its training center in Blagnac, France, and/or in Hamburg, Germany, or shall designate an affiliated training center in Miami, U.S.A., or Beijing, China (individually a “Seller’s Training Center” and collectively the “Seller’s Training Centers”).

16.2.2 If the unavailability of facilities or scheduling difficulties make training by the Seller at any Seller’s Training Center impractical, the Seller shall ensure that the Buyer is provided with such training at another location designated by the Seller. [***].

[***].

16.2.3.1 Upon the Buyer’s request, the Seller may also provide certain training at a location other than the Seller’s Training Centers, including one of the Buyer’s bases, if and when practicable for the Seller, under terms and conditions to be mutually agreed upon. In such event, all additional charges listed in Clauses 16.5.2 and 16.5.3 shall be borne by the Buyer.

16.2.3.2 If the Buyer requests training at a location as indicated in Clause 16.2.3.1 and requires such training to be an Airbus approved course, the Buyer undertakes that the training facilities shall be approved prior to the performance of such training. The Buyer shall, as necessary and in due time prior to the performance of such training, provide access to the training facilities set forth in Clause 16.2.3.1 to the Seller’s and the competent Aviation Authority’s representatives for approval of such facilities.

16.3 Training Courses

16.3.1 Training courses shall be as described in the Seller’s customer services catalog (the “Seller’s Customer Services Catalog”). The Seller’s Customer Services Catalog also sets forth the minimum and maximum number of trainees per course.

All training requests or training course changes made outside of the frame of the Training Conference shall be submitted by the Buyer with a [***] prior notice.

16.3.2 The following terms and conditions shall apply to training performed by the Seller:

(i) Training courses shall be the Seller’s standard courses as described in the Seller’s Customer Services Catalog valid at the time of execution of the course. The Seller shall be responsible for all training course syllabi, training aids and training equipment necessary for the organization of the training courses; for the avoidance of doubt, for the purpose of performing training, such training equipment does not include aircraft.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 59/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

(ii) The training equipment and the training curricula used for the training of flight, cabin and maintenance personnel shall not be fully customized but shall be configured in order to obtain the relevant Aviation Authority’s approval. [***].

(iii) Training data and documentation for trainees receiving the training at the Seller’s Training Centers or any other location designated by the Seller as per Clause 16.2.2 and Clause 16.2.3.1 shall be provided free of charge. Training data and documentation shall be marked “FOR TRAINING ONLY” and as such are supplied for the sole and express purpose of training; training data and documentation shall not be revised.

16.3.3 When the Seller’s training courses are provided by the Seller’s instructors (individually an “Instructor” and collectively “Instructors”) the Seller shall deliver a Certificate of Recognition or a Certificate of Course Completion (each a “Certificate”) or an attestation (an “Attestation”), as applicable, at the end of any such training course. Any such Certificate or Attestation shall not represent authority or qualification by any Aviation Authority but may be presented to such Aviation Authority in order to obtain relevant formal qualification.

In the event of training courses being provided by a training provider selected by the Seller as set forth in Clause 16.2.2, the Seller shall cause such training provider to deliver a Certificate or Attestation, which shall not represent authority or qualification by any Aviation Authority, but may be presented to such Aviation Authority in order to obtain relevant formal qualification.

16.3.4.1 The Buyer may exchange, subject to the Seller’s confirmation, the training allowances granted under Appendix A of the present Agreement as follows:

(i) flight operations training courses as listed under Article 1 of Appendix A against any flight operations training courses described in the Seller’s Customer Services Catalog current at the time of the Buyer’s request;

(ii) maintenance training courses as listed under Article 3 of Appendix A against any maintenance training courses described in the Seller’s Customer Services Catalog current at the time of the Buyer’s request;

(iii) should any one of the allowances granted thereunder (flight operations or maintenance) have been fully drawn upon, the Buyer shall be entitled to exchange flight operations or maintenance training courses as needed against the remaining allowances.

The exchange value shall be based on the Seller’s “Training Course Exchange Matrix” applicable at the time of the request for exchange and which shall be provided to the Buyer at such time.

It is understood that the above shall apply to the extent that training allowances granted under Appendix A remain in credit to the full extent necessary to perform the exchange.

All requests to exchange training courses shall be submitted by the Buyer with a [***] prior notice. The requested training shall be subject to the Seller’s then existing planning constraints.

16.3.4.2 Should the Buyer use none or only part of the training to be provided pursuant to this Clause 16, no compensation or credit of any nature shall be provided.

16.3.5.1 Should the Buyer decide to cancel or reschedule, fully or partially, and irrespective of the location of the training, a training course, a minimum advance notification of at least [***] prior to the relevant training course start date is required.

16.3.5.2 If the notification occurs [***] prior to such training, [***] of such training shall be, as applicable, either deducted from the training allowance defined in Appendix A or invoiced at the Seller’s then applicable price.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 60/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

16.3.5.3 If the notification occurs [***] prior to such training, [***] of such training shall be, as applicable, either deducted from the training allowance defined in Appendix A or invoiced at the Seller’s then applicable price. [***], either deducted from the training allowance defined in Appendix A or invoiced at the Seller’s then applicable price.

16.3.5.4 All courses exchanged under Clause 16.3.4.1 shall remain subject to the provisions of this Clause 16.3.5.

16.4 Prerequisites and Conditions

16.4.1 Training shall be conducted in English and all training aids used during such training shall be written in English using common aeronautical terminology.

16.4.2 The Buyer hereby acknowledges that all training courses conducted pursuant to this Clause 16 are “Standard Transition Training Courses” and not “Ab Initio Training Courses”.

16.4.3 Trainees shall have the prerequisite knowledge and experience specified for each course in the Seller’s Customer Services Catalog.

16.4.4.1 The Buyer shall be responsible for the selection of the trainees and for ensuring at its cost the entry knowledge level of the trainees.

16.4.4.2 The Seller reserves the right to verify the trainees’ proficiency and previous professional experience.

16.4.4.3 The Seller shall provide to the Buyer during the Training Conference an “Airbus Pre-Training Survey” for completion by the Buyer for each trainee.

The Buyer shall provide the Seller with an attendance list of the trainees for each course, with the validated qualification of each trainee, at the time of reservation of the training course and in no event any later than [***] before the start of the training course. The Buyer shall return concurrently thereto the completed Airbus Pre-Training Survey, detailing the trainees’ associated background. If the Seller determines through the Airbus Pre-Training Survey that a trainee does not match the prerequisites set forth in the Seller’s Customer Services Catalog, following consultation with the Buyer, such trainee shall be withdrawn from the program or directed through a relevant entry level training (ELT) program, which shall be at the Buyer’s expense.

16.4.4.4 If the Seller determines at any time during the training that a trainee lacks the required level, following consultation with the Buyer, such trainee shall be withdrawn from the program or, upon the Buyer’s request, the Seller may be consulted to direct the above mentioned trainee(s), if possible, through any other required additional training, which shall be at the Buyer’s expense.

16.4.5 The Seller shall in no case warrant or otherwise be held liable for any trainee’s performance as a result of any training provided.

16.5 Logistics

16.5.1 Trainees

16.5.1.1 Living and travel expenses for the Buyer’s trainees shall be borne by the Buyer.

16.5.1.2 It shall be the responsibility of the Buyer to make all necessary arrangements relative to authorizations, permits and/or visas necessary for the Buyer’s trainees to attend the training courses to be provided hereunder. Rescheduling or cancellation of courses due to the Buyer’s failure to obtain any such authorizations, permits and/or visas shall be subject to the provisions of Clauses 16.3.5.1 thru 16.3.5.3.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 61 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

The Seller shall provide [***].

The Seller shall provide [***].

16.5.2 Training at External Location - Seller’s Instructors

16.5.2.1.1 In the event of training being provided at the Seller’s request at any location other than the Seller’s Training Centers, as provided for in Clause 16.2.2, the expenses of the Seller’s Instructors shall be borne directly by the Seller.

16.5.2.1.2 In the event of training being provided by the Seller’s Instructor(s) at any location other than the Seller’s Training Centers at the Buyer’s request, the Buyer shall reimburse the Seller for all reasonable expenses related to the assignment of such Seller Instructors and the performance of their duties as aforesaid.

16.5.2.2 Living Expenses

Except as provided for in Clause 16.5.2.1.1 above, the Buyer shall reimburse the Seller the living expenses for each Seller Instructor and/or other Seller’s personnel providing support under this Clause 16, covering the entire period from his day of departure from his main base to day of return to such base at the perdiem rate set forth in the Seller’s Customer Services Catalog current at the time of the corresponding training or support.

Such perdiem shall include, but shall not be limited to, lodging, food and local transportation to and from the place of lodging and the training course location.

16.5.2.3 Air Travel

Except as provided for in Clause 16.5.2.1.1 above, [***].

[***].

16.5.2.4 Buyer’s Indemnity

Except in case of Gross Negligence or willful misconduct of the Seller, the Seller shall not be held liable to the Buyer for any delay or cancellation in the performance of any training outside of the Seller’s Training Centers associated with any transportation described in this Clause 16.5.2 and the Buyer shall indemnify and hold harmless the Seller from any such delay and/or cancellation and any consequences arising therefrom.

16.5.3 Training Material and Equipment Availability - Training at External Location

Training material and equipment necessary for course performance at any location other than the Seller’s Training Centers or the facilities of a training provider selected by the Seller, if requested by the Buyer shall be provided by the Buyer at its own cost in accordance with the Seller’s specifications.

Notwithstanding the foregoing, should the Buyer request the performance of a course at another location as per Clause 16.2.3.1, the Seller may, upon the Buyer’s request, provide the training material and equipment necessary for such course’s performance. Such provision shall be at the Buyer’s expense.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 62 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

16.6 Flight Operations Training

The Seller shall provide training for the Buyer’s flight operations personnel as further detailed in Appendix A to this Clause 16, including the courses described in this Clause 16.6.

16.6.1 Flight Crew Training Course

The Seller shall perform a flight crew training course program for the Buyer’s flight crews, each of which shall consist of [***] crew members, who shall be either captain(s) or first officer(s).

16.6.2 Base Flight Training

16.6.2.1 The Buyer shall provide at its own cost its delivered Aircraft, or any other aircraft it operates, for any base flight training, which shall consist of [***] per pilot, performed in accordance with the related Airbus training course definition (the “Base Flight Training”).

16.6.2.2 Should it be necessary to ferry the Buyer’s delivered Aircraft to the location where the Base Flight Training shall take place, the additional flight time required for the ferry flight to and/or from the Base Flight Training field shall not be deducted from the Base Flight Training time.

16.6.2.3 If the Base Flight Training is performed outside of the zone where the Seller usually performs such training, the ferry flight to the location where the Base Flight Training shall take place shall be performed by a crew composed of the Seller’s and/or the Buyer’s qualified pilots, in accordance with the relevant Aviation Authority’s regulations related to the place of performance of the Base Flight Training.

[***].

16.6.3 Flight Crew Line Initial Operating Experience

In order to assist the Buyer with initial operating experience after Delivery of the first Aircraft, the Seller shall provide to the Buyer pilot Instructor(s) as set forth in Appendix A to this Clause 16.

Should the Buyer request, subject to the Seller’s consent which shall not be unreasonably withheld, such Seller pilot Instructors to perform any other flight support during the flight crew line initial operating period, such as but not limited to line assistance, demonstration flight(s), ferry flight(s) or any flight(s) required by the Buyer during the period of entry into service of the Aircraft, it is understood that such flight(s) shall be deducted from the flight crew line initial operating experience allowance set forth in Appendix A hereto.

It is hereby understood by the Parties that the Seller’s pilot Instructors shall only perform the above flight support services to the extent they bear the relevant qualifications to do so.

16.6.4 Type Specific Cabin Crew Training Course

The Seller shall provide type specific training for cabin crews, at one of the locations defined in Clause 16.2.1.

If the Buyer’s Aircraft is to incorporate special features (such as partitions, curtains, lighting and door features), the type specific cabin crew training course shall be performed no earlier than [***] before the scheduled Delivery Date of the Buyer’s first Aircraft.

16.6.5 Training on Aircraft

During any and all flights performed in accordance with this Clause 16.6, the Buyer shall bear full responsibility for the aircraft upon which the flight is performed, including but not limited to any required maintenance, all expenses such as fuel, oil or landing fees and the provision of insurance in line with Clause 16.13.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 63 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

The Buyer shall assist the Seller, if necessary, in obtaining the validation of the licenses of the Seller’s pilots performing Base Flight Training or initial operating experience by the Aviation Authority of the place of registration of the Aircraft.

16.7 Performance / Operations Courses

The Seller shall provide performance/operations training for the Buyer’s personnel as defined in Appendix A to this Clause 16.

The available courses shall be listed in the Seller’s Customer Services Catalog current at the time of the course.

16.8 Maintenance Training

16.8.1 The Seller shall provide maintenance training for the Buyer’s ground personnel as further set forth in Appendix A to this Clause 16.

The available courses shall be as listed in the Seller’s Customer Services Catalog current at the time of the course.

The practical training provided in the frame of maintenance training shall be performed on the training devices in use in the Seller’s Training Centers.

16.8.2 Practical Training on Aircraft

Notwithstanding Clause 16.8.1 above, upon the Buyer’s request, the Seller may provide Instructors for the performance of practical training on aircraft (“Practical Training”).

Irrespective of the location at which the training takes place, the Buyer shall provide at its own cost an aircraft for the performance of the Practical Training.

Should the Buyer require the Seller’s Instructors to provide Practical Training at facilities selected by the Buyer, such training shall be subject to prior approval of the facilities by the Seller. All costs related to such Practical Training, including but not limited to the Seller’s approval of the facilities, shall be borne by the Buyer.

The provision of a Seller Instructor for the Practical Training shall be deducted from the trainee days allowance defined in Appendix A to this Clause 16, subject to the conditions detailed in Paragraph 4.4 thereof.

16.9 Supplier and Propulsion Systems Manufacturer Training

Upon the Buyer’s request, the Seller shall provide to the Buyer the list of the maintenance and overhaul training courses provided by major Suppliers and the applicable Propulsion Systems Manufacturer on their respective products.

16.10 Proprietary Rights

All proprietary rights, including but not limited to patent, design and copyrights, relating to the Seller’s training data and documentation shall remain with the Seller and/or its Affiliates and/or its Suppliers, as the case may be.

These proprietary rights shall also apply to any translation into a language or languages or media that may have been performed or caused to be performed by the Buyer.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 64 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

16.11 Confidentiality

The Seller’s training data and documentation are designated as confidential and as such are [***].

In the event of the Seller having authorized the disclosure of any training data and documentation to third parties either under this Agreement or by an express prior written authorization, the Buyer shall cause such third party to agree to be bound by the same conditions and restrictions as the Buyer with respect to the disclosed training data and documentation and to use such training data and documentation solely for the purpose for which they are provided.

16.12 Transferability

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Clause 16.

16.13 Indemnities and Insurance

INDEMNIFICATION PROVISIONS AND INSURANCE REQUIREMENTS APPLICABLE TO THIS CLAUSE 16 ARE AS SET FORTH IN CLAUSE 19.

THE BUYER SHALL PROVIDE THE SELLER WITH AN ADEQUATE INSURANCE CERTIFICATE PRIOR TO ANY TRAINING ON AIRCRAFT.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 65 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

APPENDIX “A” TO CLAUSE 16

TRAINING ALLOWANCE

For the avoidance of doubt, all quantities indicated below are the total quantities [***], unless otherwise specified.

The contractual training courses defined in this Appendix A shall be provided up to [***] Aircraft delivered under this Agreement.

Notwithstanding the above, flight operations training courses granted per Aircraft in this Appendix A shall be provided by the Seller on the basis [***].

[***].

Any deviation to said training delivery schedule shall be mutually agreed between the Buyer and the Seller.

1 FLIGHT OPERATIONS TRAINING

1.1 Flight Crew Training (standard transition course)

The Seller shall provide flight crew training (standard transition course) [***] of the Buyer’s flight crews per Aircraft.

Optional / Cross crew qualification (CCQ)

The Seller shall provide flight crew training (CCQ) [***] for         [***]             [***] of the Buyer’s flight crews per firmly ordered Aircraft.

1.2 Extended Range For Twin Engine Aircraft Operations (ETOPS) Training

The Seller shall provide [***] ETOPS training for [***] flight crews per ordered Aircraft.

1.3 Low Visibility Operations Training

The Seller shall provide [***] Low Visibility Operations Training for [***].

1.4 Flight Crew Line Initial Operating Experience

The Seller shall provide to the Buyer pilot Instructor(s) [***] for a period of [***].

Unless otherwise agreed during the Training Conference, in order to follow the Aircraft Delivery schedule, the maximum number of pilot Instructors present at any one time shall be limited to [***] pilot Instructors.

1.5 Type Specific Cabin Crew Training Course

The Seller shall provide to the Buyer [***] type specific training for cabin crews for [***] of the Buyer’s cabin crew instructors, pursers or cabin attendants.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 66 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

1.6 Airbus Pilot Instructor Course (APIC)

The Seller shall provide to the Buyer transition Airbus Pilot Instructor Course(s) (APIC), for flight and synthetic instruction, [***] for [***] of the Buyer’s flight instructors. APIC courses shall be performed in groups of [***] trainees.

2 PERFORMANCE / OPERATIONS COURSE(S)

The Seller shall provide to the [***] trainee days of performance / operations training [***] for the Buyer’s personnel.

3 MAINTENANCE TRAINING

3.1 The Seller shall provide to the Buyer one thousand five hundred (1,500) trainee days of maintenance training free of charge for the Buyer’s personnel.

3.2 The Seller shall provide to the Buyer [***] Engine Run-up courses.

4 TRAINEE DAYS ACCOUNTING

Trainee days are counted as follows:

4.1 For instruction at the Seller’s Training Centers: [***] of instruction [***] equals [***]. The number of trainees originally registered at the beginning of the course shall be counted as the number of trainees to have taken the course.

4.2 For instruction outside of the Seller’s Training Centers: [***] of instruction by one (1) Seller Instructor equals the [***], except for structure maintenance training course(s).

4.3 For structure maintenance training courses outside the Seller’s Training Center(s), one (1) day of instruction by [***] Seller Instructor [***] as indicated in the Seller’s Customer Services Catalog.

4.4 For practical training, whether on training devices or on aircraft, [***] of instruction by [***] Seller Instructor equals [***]

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 16 - Page 67 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

17 EQUIPMENT SUPPLIER PRODUCT SUPPORT

17.1 Equipment Supplier Product Support Agreements

17.1.1 The Seller has obtained enforceable and transferable product support agreements from Suppliers of Supplier Parts, the benefit of which is hereby accepted by the Buyer. Said agreements become enforceable as soon as and for as long as an operator is identified as an Airbus aircraft operator.

17.1.2 These agreements are based on the “World Airlines Suppliers Guide”, are made available to the Buyer through the SPSA Application, and include Supplier commitments contained in the “Supplier Product Support Agreements”, as defined in Clause 12.3.1.3, which include the following provisions:

17.1.2.1 Technical data and manuals required to operate, maintain, service and overhaul the Supplier Parts. Such technical data and manuals shall be prepared in accordance with the applicable provisions of ATA Specification including revision service and be published in the English language. If software is provided , a user guide shall be supplied in the form of an appendix to the Component Maintenance Manual, such data shall be provided in compliance with the applicable ATA Specification;

17.1.2.2 Warranties and guarantees, including standard warranties. In addition, landing gear Suppliers shall provide service life policies for landing gear structure;

17.1.2.3 Training to ensure efficient operation, maintenance and overhaul of the Supplier Parts for the Buyer’s instructors, shop and line service personnel;

17.1.2.4 Spares data in compliance with ATA iSpecification 2200, initial provisioning recommendations, spare parts and logistics service including routine and expedite deliveries;

17.1.2.5 Technical service to assist the Buyer with maintenance, overhaul, repair, operation and inspection of Supplier Parts as well as required tooling and spares provisioning.

17.2 Supplier Compliance

The Seller shall monitor Suppliers’ compliance with support commitments defined in the Supplier Product Support Agreements and shall, take remedial action together with the Buyer, if necessary.

17.3 Nothing in this Clause 17 shall be construed to prevent or limit the Buyer from entering into direct negotiations with a Supplier with respect to different or additional terms and conditions applicable to Suppliers Parts selected by the Buyer to be installed on the Aircraft.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 17 - Page 68 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

17.4 Familiarization Training

Upon the Buyer’s request, the Seller shall provide the Buyer with [***] Supplier Product Support Agreements familiarization training at the Seller’s facilities in Blagnac, France. An on-line training module shall be further available through AirbusWorld, access to which shall be subject to the “General Terms and Conditions of Access to and Use of AirbusWorld” (hereinafter the “GTC”), as set forth in Part 2 of Exhibit I to this Agreement.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 17 - Page 69 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

18 BUYER FURNISHED EQUIPMENT

18.1 Administration

18.1.1.1 In accordance with the Specification, the Seller shall, [***], install those items of equipment that are identified in the Specification as being furnished by the Buyer (“Buyer Furnished Equipment” or “BFE”), provided that the BFE and the supplier of such BFE (the “BFE Supplier”) are referred to in the Airbus BFE Product Catalog valid at the time the BFE Supplier is selected.

18.1.1.2 Notwithstanding the foregoing and without prejudice to Clause 2.4, if the Buyer wishes to install BFE manufactured by a supplier who is not referred to in the Airbus BFE Product Catalog, the Buyer shall so inform the Seller and the Seller shall conduct a feasibility study of the Buyer’s request, in order to consider approving such supplier, provided that such request is compatible with the Seller’s industrial planning and the associated Scheduled Delivery Month for the Buyer’s Aircraft. In addition, it is a prerequisite to such approval that the considered supplier be qualified by the Seller’s Aviation Authorities to produce equipment for installation on civil aircraft. Any approval of a supplier (not being a BFE Supplier) by the Seller shall, subject to the above proviso and prerequisite being satisfied, not be unreasonably withheld and be performed at the Buyer’s expense. The Buyer shall cause any BFE supplier approved under this Clause 18.1.1.2 (each an “Approved BFE Supplier”) to comply with the conditions set forth in this Clause 18 and specifically Clause 18.2.

Except for the specific purposes of this Clause 18.1.1.2, the term “BFE Supplier” shall be deemed to include Approved BFE Suppliers.

18.1.2.1 The Seller shall advise the Buyer of the dates by which, in the planned release of engineering for the Aircraft, the Seller requires a written detailed engineering definition, encompassing a Declaration of Design and Performance (the “BFE Engineering Definition”). The Seller shall provide to the Buyer and/or the BFE Supplier(s), within an appropriate timeframe, the necessary interface documentation to enable the development of the BFE Engineering Definition.

The BFE Engineering Definition shall include the description of the dimensions and weight of BFE, the information related to its certification and the information necessary for the installation and operation thereof, including when applicable 3D models compatible with the Seller’s systems. The Buyer shall furnish, or cause the BFE Suppliers to furnish, the BFE Engineering Definition by the dates specified.

Thereafter, the BFE Engineering Definition shall not be revised, except through an SCN executed in accordance with Clause 2.

18.1.2.2 The Seller shall also provide in due time to the Buyer a schedule of dates and the shipping addresses for delivery of the BFE and, where requested by the Seller, additional spare BFE to permit installation in the Aircraft and Delivery of the Aircraft in accordance with the Aircraft delivery schedule. The Buyer shall provide, or cause the BFE Suppliers to provide, the BFE by such dates in a serviceable condition, in order to allow performance of any assembly, installation, test or acceptance process in accordance with the Seller’s industrial schedule. In order to facilitate the follow-up of the timely receipt of BFE, the Buyer shall, upon the Seller’s request, provide to the Seller dates and references of all BFE purchase orders placed by the Buyer.

The Buyer shall also provide, when requested by the Seller, at AIRBUS OPERATIONS S.A.S. works in TOULOUSE (FRANCE) and/or at AIRBUS OPERATIONS GmbH Works in HAMBURG (GERMANY) adequate field service including support from BFE Suppliers to act in a technical advisory capacity to the Seller in the installation, calibration and possible repair of any BFE.

18.1.3 Without prejudice to the Buyer’s obligations hereunder, in order to facilitate the development of the BFE Engineering Definition, the Seller shall organize meetings between the Buyer and BFE Suppliers. The Buyer hereby agrees to participate in such meetings and to provide adequate technical and engineering expertise to reach decisions within the defined timeframe.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 18 - Page 70 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

In addition, throughout the development phase and up to Delivery of the Aircraft to the Buyer, the Buyer agrees:

• to monitor the BFE Suppliers and ensure that they shall enable the Buyer to fulfil its obligations, including but not limited to those set forth in the Customization Milestone Chart;

• that, should a timeframe, quality or other type of risk be identified at a given BFE Supplier, the Buyer shall provide sufficient support to such BFE Supplier so as not to jeopardize the industrial schedule of the Aircraft;

• for major BFE, including, but not being limited to, seats, galleys and IFE (“Major BFE”) to participate on a mandatory basis in the specific meetings that take place between BFE Supplier selection and BFE delivery, namely:

• Preliminary Design Review (“PDR”),

• Critical Design Review (“CDR”);

• to attend the First Article Inspection (“FAI”) for the first shipset of all Major BFE. Should the Buyer not attend such FAI, the Buyer shall delegate the FAI to the BFE Supplier and confirmation thereof shall be supplied to the Seller in writing;

• to attend the Source Inspection (“SI”) that takes place at the BFE Supplier’s premises prior to shipping, for each shipset of all Major BFE. Should the Buyer not attend such SI, the Buyer shall delegate the SI to the BFE Supplier and confirmation thereof shall be supplied to the Seller in writing. Should the Buyer not attend the SI, the Buyer shall be deemed to have accepted the conclusions of the BFE Supplier with respect to such SI.

The Seller shall be entitled to attend the PDR, the CDR and the FAI. In doing so, the Seller’s employees shall be acting in an advisory capacity only and at no time shall they be deemed to be acting as Buyer’s employees or agents, either directly or indirectly.

18.1.4 The BFE shall be imported into FRANCE or into GERMANY by the Buyer under a suspensive customs system (“Régime de l’entrepôt douanier ou régime de perfectionnement actif “ or “Zollverschluss”) without application of any French or German tax or customs duty, and shall be Delivered At Place (DAP) according to the Incoterms, to the following shipping addresses:

AIRBUS OPERATIONS S.A.S.

316 Route de Bayonne

31300 TOULOUSE

FRANCE

or

AIRBUS OPERATIONS GmbH

Kreetslag 10

21129 HAMBURG

GERMANY

or such other location in France or Germany as may be specified by the Seller on giving prior reasonable notice.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 18 - Page 71 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

18.2 Applicable Requirements

The Buyer is responsible for ensuring, at its expense, and warrants that the BFE shall:

• be manufactured by a qualified BFE Supplier, and

• meet the requirements of the applicable Specification of the Aircraft, and

• be delivered with the relevant certification documentation, including but not limited to the DDP, and

• comply with the BFE Engineering Definition, and

• comply with applicable requirements incorporated by reference to the Type Certificate and listed in the Type Certificate Data Sheet, and

• be approved by the Aviation Authority issuing the Export Airworthiness Certificate and by the Buyer’s Aviation Authority for installation and use on the Aircraft at the time of Delivery of the Aircraft, and

The Seller shall be entitled to refuse any item of BFE (i) that it reasonably considers incompatible with the Specification, the BFE Engineering Definition or the certification requirements [***].

18.3 Buyer’s Obligation and Seller’s Remedies

18.3.1 Any delay or failure by the Buyer or the BFE Suppliers in:

• complying with the foregoing warranty or in providing the BFE Engineering Definition or field service mentioned in Clause 18.1.2.2, or

• furnishing the BFE in a serviceable condition at the requested delivery date, or

• obtaining any required approval for such BFE equipment under the above mentioned Aviation Authorities’ regulations,

• providing BFE which does not infringe any patent, copyright or other intellectual property right of the Seller or any third party, and

• providing BFE which is not subject to any legal obligation or other encumbrance that may prevent, hinder or delay the installation of the BFE in the Aircraft and/or the Delivery of the Aircraft

may delay the performance of any act to be performed by the Seller, including Delivery of the Aircraft. The Seller shall not be responsible for such delay which shall cause the Final Price of the Aircraft to be adjusted (by reference to the escalation formula) in accordance with the updated delivery schedule and to include in particular the amount of the Seller’s [***] additional costs directly attributable to such delay or failure by the Buyer or the BFE Suppliers, such as storage, taxes, insurance and costs of out-of-sequence installation. [***].

18.3.2 In addition, in the event of any delay or failure mentioned in 18.3.1 above, the Seller may:

(i) [***], select, purchase and install equipment similar to the BFE at issue, in which event the Final Price of the affected Aircraft shall also be increased by the purchase price of such equipment plus reasonable costs and expenses incurred by the Seller for handling charges, transportation, insurance, packaging and, if so required and not already provided for in the Final Price of the Aircraft, for adjustment and calibration; or

(ii) if the BFE is delayed by more than [***] beyond, or is not approved within [***] of, the dates specified in Clause 18.1.2.2, deliver the Aircraft without the installation of such BFE, notwithstanding applicable terms of Clause 7, if any, and the Seller shall thereupon be relieved of all obligations to install such equipment.

[***].

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 18 - Page 72 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

18.4 Title and Risk of Loss

Title to and risk of loss of any BFE shall at all times remain with the Buyer except that risk of loss (limited to cost of replacement of said BFE) shall be with the Seller for as long as such BFE is under the care, custody and control of the Seller.

18.5 Disposition of BFE Following Termination

18.5.1 If a termination of this Agreement by the Seller pursuant to the provisions of Clause 20 occurs with respect to an Aircraft in which all or any part of the BFE has been installed prior to the date of such termination, the Seller shall be entitled, but not required, to remove all items of BFE that can be removed without damage to the Aircraft and to undertake commercially reasonable efforts to facilitate the sale of such items of BFE to other customers, retaining and applying the proceeds of such sales to reduce the Seller’s damages resulting from the termination.

18.5.2 The Buyer shall cooperate with the Seller in facilitating the sale of BFE pursuant to Clause 18.5.1 and shall be responsible for all costs reasonably incurred by the Seller in removing and facilitating the sale of such BFE. The Buyer shall reimburse the Seller for all such costs within five (5) Business Days of receiving documentation of such costs from the Seller.

18.5.3 The Seller shall notify the Buyer as to those items of BFE not sold by the Seller pursuant to Clause 18.5.1 above and the Buyer shall undertake to remove such items from the Seller’ facility within thirty (30) days of the date of such notice. [***], the Buyer shall have no claim against the Seller for damage, loss or destruction of any item of BFE removed from the Aircraft and not removed from Seller’s facility within such period.

18.5.4 The Buyer shall have no claim against the Seller for damage to or destruction of any item of BFE damaged, lost or destroyed in the process of being removed from the Aircraft, provided that the Seller shall use reasonable care in such removal.

18.5.5 The Buyer shall grant the Seller title to any BFE items that cannot be removed from the Aircraft without causing damage to the Aircraft or rendering any system in the Aircraft unusable. [***].

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 18 - Page 73 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

19 INDEMNIFICATION AND INSURANCE

19.1 Indemnities Relating to Inspection, Technical Acceptance Process and Ground Training

19.1.1 The Seller shall, except in case of Gross Negligence of the Buyer, its directors, officers, agents or employees, be solely liable for and shall indemnify and hold harmless the Buyer, its Affiliates and each of their respective directors, officers, agents, employees from and against all liabilities, claims, damages, costs and expenses (including legal expenses and attorney fees) in respect of:

(i) loss of, or damage to, the Seller’s property;

(ii) injury to, or death of, the directors, officers, agents or employees of the Seller;

(iii) any damage caused by the Seller to third parties; and

arising out of, or in any way connected with, any ground check, check or controls under Clause 6 or Clause 8 of this Agreement and/or Ground Training Services

(iv) any damage caused by the Buyer and/or the Seller to third parties arising out of, or in any way connected with, technical acceptance flights under Clause 8 of this Agreement,

19.1.2 The Buyer shall, except in case of Gross Negligence of the Seller, its directors, officers, agents or employees, be solely liable for and shall indemnify and hold harmless the Seller, its Affiliates and each of their respective directors, officers, agents, employees, from and against all liabilities, claims, damages, costs and expenses (including legal expenses and attorney fees) in respect of:

(i) loss of, or damage to, the Buyer’s property;

(ii) injury to, or death of, the directors, officers, agents or employees of the Buyer; and

(iii) any damage caused by the Buyer to third parties,

arising out of, or in any way connected with, any ground check, check or controls under Clause 6 or Clause 8 of this Agreement and/or Ground Training Services.

19.2 Indemnities Relating to Training on Aircraft after Delivery

19.2.1 The Buyer shall, except in the case of Gross Negligence of the Seller, its directors, officers, agents and employees, be solely liable for and shall indemnify and hold harmless the Seller and its Affiliates and each of their respective directors, officers, agents, employees, from and against all liabilities, claims, damages, costs and expenses (including legal expenses and attorney fees) incident thereto or incident to successfully establishing the right to indemnification in respect of:

(i) injury to, or death of, any person (including any of the Buyer’s directors, officers, agents and employees, but not directors, officers, agents and employees of the Seller); and

(ii) loss of, or damage to, any property and for loss of use thereof (including the aircraft on which the Aircraft Training Services are performed),

arising out of, or in any way connected with, the performance of any Aircraft Training Services.

19.2.2 The foregoing indemnity shall not apply with respect to the Seller’s legal liability towards any person other than the Buyer, its directors, officers, agents or employees arising out of an accident to the extent caused by a product defect in the Aircraft delivered to and accepted by the Buyer hereunder.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 19 - Page 74 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

19.3 Indemnities relating to Seller Representatives Services

19.3.1 The Buyer shall, except in case of Gross Negligence of the Seller, its directors, officers, agents or employees, be solely liable for and shall indemnify and hold harmless the Seller, its Affiliates and each of their respective directors, officers, agents, employees, from and against all liabilities, claims, damages, costs and expenses (including legal expenses and attorney fees) in respect of:

(i) injury to, or death of, any person (except Seller’s Representatives); and

(ii) loss of, or damage to, any property and for loss of use thereof;

arising out of, or in any way connected with the Seller’s Representatives Services.

19.3.2 The Seller shall, except in case of Gross Negligence of the Buyer, its directors, officers, agents or employees, be solely liable for and shall indemnify and hold harmless the Buyer, its Affiliates and each of their respective directors, officers, agents, employees from and against all liabilities, claims, damages, costs and expenses (including legal expenses and attorney fees) in respect of all injuries to, or death of, the Seller’s Representatives arising out of, or in any way connected with the Seller’s Representatives Services.

19.4 Insurances

To the extent of the Buyer’s undertaking set forth in Clause 19.2.1, for all training periods on aircraft, the Buyer shall:

(i) cause the Seller, its directors, officers, agents, employees and Affiliates to be named as additional insureds under the Buyer’s Comprehensive Aviation Legal Liability insurance policies, including War Risks and Allied Perils such insurance shall include the AVN 52E Extended Coverage Endorsement Aviation Liabilities as well as additional coverage in respect of War and Allied Perils Third Parties Legal Liabilities Insurance; and

(ii) with respect to the Buyer’s Hull All Risks and Hull War Risks insurances and Allied Perils, cause the insurers of the Buyer’s hull insurance policies to waive all rights of subrogation against the Seller, its directors, officers, agents, employees, Affiliates and sub-contractors, and their respective insurers.

Any applicable deductible shall be borne by the Buyer.

With respect to the above policies, the Buyer shall furnish to the Seller, not less than seven (7) working days prior to the start of any such training period, certificates of insurance from the Buyer’s insurance broker(s), in English, evidencing the limit of liability cover and period of insurance in a form acceptable to the Seller certifying that such policies have been endorsed as follows:

(i) under the Comprehensive Aviation Legal Liability Insurances, the Buyer’s policies are primary and non-contributory to any insurance maintained by the Seller;

(ii) such insurance can only be cancelled or materially altered by the giving of not less than thirty (30) days (but seven (7) days or such lesser period as may be customarily available in respect of War Risks and Allied Perils) prior written notice thereof to the Seller; and

(iii) under any such cover, all rights of subrogation against the Seller, its directors, officers, agents, employees, Affiliates and sub-contractors, and their respective insurers, have been waived to the extent of the Buyer’s undertaking and specifically referring to Clause 19.2.1 and to this Clause 19.4.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 19 - Page 75 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

19.5 Notice of Claims

If any claim is made or suit is brought against either party (or its respective directors, officers, agents, employees, Affiliates and sub-contractors) (an “indemnitee”) for damages for which liability has been assumed by the other party (the “indemnifier”) in accordance with the provisions of this Agreement, the indemnitee shall promptly give notice to the indemnifier, and the indemnifier shall at its cost and expense assume and conduct the defence thereof, or effect any settlement which it, in its [***].

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 19 - Page 76 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

20 TERMINATION

20.1 Termination for Insolvency

In the event that [***] the Buyer:

(a) makes a general assignment for the benefit of creditors or becomes insolvent;

(b) files a voluntary petition in bankruptcy;

(c) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets;

(d) commences under the laws of any competent jurisdiction any proceeding involving its insolvency, bankruptcy, readjustment of debt, liquidation or any other similar proceeding for the relief of financially distressed debtors;

(e) becomes the object of any proceeding or action of the type described in (c) or (d) above and such proceeding or action remains undismissed or unstayed for [***]; or

(f) is divested of a substantial part of its assets for a period of [***],

then the other party may, to the full extent permitted by law, by written notice, terminate all or part of this Agreement.

20.2 Termination for Non-Payment of Predelivery Payments

If for any Aircraft the Buyer fails to make any Predelivery Payments at the time [***], in the manner and in the amount specified in Clause 5.3 the Seller may, by written notice, terminate all or part of this Agreement with respect to undelivered Aircraft.

20.3 Termination for Failure to Take Delivery

If the Buyer fails to comply with its obligations as set forth under Clause 8 and/or Clause 9, or fails to pay the Final Price of the Aircraft, the Seller shall have the right to put the Buyer on notice to do so [***].

If the Buyer has not cured such default within such period, the Seller may, by written notice, terminate all or part of this Agreement with respect to undelivered Aircraft.

[***].

All costs referred to in Clause 9.2.3 and relating to the period between the notified date of delivery (as referred to in Clause 9.2.1) and the date of termination of all or part of this Agreement shall be borne by the Buyer.

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 20 - Page 77 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

20.4 Intentionally Deleted

20.5 General

20.5.1 To the full extent permitted by law, the termination of all or part of this Agreement pursuant to Clauses 20.1, 20.2, [***] shall become effective immediately upon receipt by the relevant party of the notice of termination sent by the other party without it being necessary for either party to take any further action or to seek any consent from the other party or any court having jurisdiction.

20.5.2 The right for either party under Clause 20.1 and for the Seller under Clauses 20.2, [***], to terminate all or part of this Agreement shall be without prejudice to any other rights and remedies available to such party to seek termination of all or part of this Agreement before any court having jurisdiction pursuant to any failure by the other party to perform its obligations under this Agreement.

20.5.3 If the party taking the initiative of terminating this Agreement decides to terminate part of it only, the notice sent to the other party shall specify those provisions of this Agreement which shall be terminated.

20.5.4 In the event of termination of this Agreement following a default from the Buyer, including but not limited to a default under Clauses 20.1, 20.2 [***], the Seller without prejudice to any other rights and remedies available under this Agreement or by law, [***].

1104XX – CT1101195 – LAN – A320NEO-PA

Clause 20 - Page 78 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

21 – ASSIGNMENT AND TRANSFERS

21.1 The rights and/or obligations of each party herein shall not be assigned, novated, delegated, sold or transferred or otherwise disposed of in any manner, in whole or in part, by either party without the prior written consent of the other party, such consent not to be unreasonably withheld.

21.2 Any assignment made without such consent shall be of no effect whatsoever as between the parties hereto, except as follows:

[***]

21.3 The Buyer shall have the right to assign such of its rights as are set out below with the prior written consent of the Seller, such consent to be in a form and substance reasonably acceptable to the Seller and such consent not to be unreasonably withheld in the following circumstances:

(i) an assignment of its rights to take title and delivery of the Aircraft to any reputable banker(s) or financier(s) or a special purpose vehicle, in respect of any predelivery payment financing for the Aircraft; and

(ii) the creation of step-in rights by way of an assignment of provisions including its rights to clause 12 (warranty and service life policy) and clause 13 (patent indemnity) to any reputable bank(s) or financier(s), or a special purpose vehicle, in respect of any delivery financing for the Aircraft;

(iii) an assignment of the benefit of this Agreement to any Affiliate of the Buyer, provided the obligations of the Buyer under this Agreement continue to be borne by the Buyer;

(iv) an assignment of its rights to take title to the Aircraft and its rights to Clause 12 (Warranty and Service Life Policy) and Clause 13 (Patent indemnity) to any reputable operating Lessor in connection with a sale and leaseback transaction under which the Buyer takes the corresponding Aircraft under lease from such operating Lessor.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 21 - Page 79 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

22 MISCELLANEOUS PROVISIONS

22.1 Data Retrieval

On the Seller’s reasonable request, the Buyer shall provide the Seller with all the necessary data, as customarily compiled by the Buyer and pertaining to the operation of the Aircraft, to assist the Seller in making an efficient and coordinated survey of all reliability, maintenance, operational and cost data with a view to monitoring the efficient and cost effective operations of the Airbus fleet worldwide. [***].

22.2 Notices

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 22.2 shall also be sent by e-mail to the addresses set out below.

Airbus’ address for notices is:

AIRBUS S.A.S.

1 Rond-Point Maurice Bellonte

31707 Blagnac Cedex

France

Attention:                Senior Vice-President Contracts

E-mail:                     christophe.mourey@airbus.com

LAN’s address for notices is:

LAN AIRLINES S.A.

Av. Presidente Riesco 5711, 20^th Floor

Las Condes, Santiago

Chile

Attention:                 Fleet Management Director

E-mail:                     oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

22.3 Waiver

The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any right herein provided, or to require at any time performance by the other party of any of the provisions hereof, shall in no way be construed to be a present or future waiver of such provisions nor in any way to affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision. The express waiver (whether made one (1) or several times) by either party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 80 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

22.4 Law and Jurisdiction

22.4.1 This Agreement shall be governed by and construed in accordance with the laws of England.

22.4.2 Any dispute arising out of or in connection with this Agreement shall be within the exclusive jurisdiction of the Courts of England.

22.4.3 The Buyer appoints the person from time to time appointed by the Buyer for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being, as of the date of this Agreement, Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If for any reason, Mr Gonzalo Garcia (or any replacement of Mr Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Buyer to receive such service of process, the Buyer shall promptly appoint another agent and advise the Seller thereof. The Buyer must maintain a valid agent for receipt of process in the United Kingdom for the duration of this Agreement and may not change the identity of such agent without giving prior notice to the Seller.

22.4.4 The Seller appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement.

22.5 Contracts (Rights of Third Parties) Act 1999

The parties do not intend that any term of this Agreement shall b enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this Agreement.

The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

22.6 International Supply Contract

The Buyer and the Seller recognise that this Agreement is an international supply contract which has been the subject of discussion and negotiation, that all its terms and conditions are fully understood by the parties, and that the Specification and price of the Aircraft and the other mutual agreements of the parties set forth herein were arrived at in consideration of, inter alia, all the provisions hereof specifically including all waivers, releases and renunciations by the Buyer set out herein.

The Buyer and the Seller hereby also agree that the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this transaction.

22.7 Severability

In the event that any provision of this Agreement should for any reason be held ineffective, the remainder of this Agreement shall remain in full force and effect. To the extent permitted by applicable law, each party hereto hereby waives any provision of law, which renders any provision of this Agreement prohibited or unenforceable in any respect.

22.8 Alterations to Contract

This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes any previous understandings, commitments or representations whatsoever oral or written in respect thereto. This Agreement shall not be varied except by an instrument in writing of date even herewith or subsequent hereto executed by both parties or by their duly authorised representatives.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 81 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

22.9 Language

All correspondence, documents and any other written matters in connection with this Agreement shall be in English.

22.10 Counterparts

This Agreement has been executed in two (2) original copies.

Notwithstanding the above, this Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same Agreement.

22.11 Inconsistencies

In the event of any inconsistency between the terms of this Agreement and the terms contained in either (i) the Specification, or (ii) any other Exhibit, in each such case the terms of this Agreement shall prevail over the terms of the Specification or any other Exhibit. For the purpose of this Clause 22.11, the term Agreement shall not include the Specification or any other Exhibit hereto.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 82 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

22.12 Confidentiality

22.12.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

22.12.2 Each party hereto agrees that the provisions of this Agreement and the information therein contained are personal to it and will not without the prior written consent of the other party disclose such provisions and/or information to any other party. However, each party may disclose any such provisions and/or information : (i) to its legal advisers, auditors and insurers (provided that such parties are bound by a professional or legal duty of confidentiality and that any such disclosure is limited to those portions of this Agreement that are required to be seen by any of the foregoing); (ii) as required in connection with any legal proceedings arising from or in connection with this Agreement provided that the Buyer and/or the Seller, as the case may be, shall use their reasonable efforts to obtain assurance that such provisions and/or information will be treated confidentially; (iii) as required by any applicable law or governmental regulations provided that the disclosing party shall use all reasonable endeavours to obtain assurance that such provisions and/or information will be treated confidentially.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 83 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

Execution Version

IN WITNESS WHEREOF this Agreement was entered into the day and year first above written.

For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
Name:	Name:
Title:	Title:
Name:
Title:

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 84 /212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-1

E X H I B I T A-1

S P E C I F I C A T I O N

The A319 Standard Specification is contained in a separate folder.

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 85/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-1

[***]

06/11 – CT1101195 – LAN – A320NEO-PA

Clause 22 - Page 86/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-2

E X H I B I T A-2

S P E C I F I C A T I O N

The A320 Standard Specification is contained in a separate folder.

1104XX – CT1101195 – LAN – A320NEO-EXH A-2

Exhibit A-2 - Page 87/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-2

[***]

1104XX – CT1101195 – LAN – A320NEO-EXH A-2

Exhibit A-2 - Page 88/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-3

E X H I B I T A-3

S P E C I F I C A T I O N

The A321 Standard Specification is contained in a separate folder.

1104XX – CT1101195 – LAN – A320NEO-EXH A-3

Exhibit A-3 - Page 89/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT A-3

[***]

1104XX – CT1101195 – LAN – A320NEO-EXH A-3

Exhibit A-3 - Page 90/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B1

E X H I B I T   B1

F O R M   O F

S P E C I F I C A T I O N   C H A N G E   N O T I C E

1104XX – CT1101195 – LAN – A320NEO-EXH B1

Exhibit B1 - Page 91/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B1

SPECIFICATION CHANGE NOTICE (SCN)	For SCN Number Issue Dated Page
Title : Description : Remarks / References Specification changed by this SCN This SCN requires prior or concurrent acceptance of the following SCN (s):

Price per aircraft

US DOLLARS:

AT DELIVERY CONDITIONS:

This change will be effective on AIRCRAFT N° and subsequent.

Provided approval is received by
Buyer approval	Seller approval
By:	By:
Date :	Date :

1104XX – CT1101195 – LAN – A320NEO-EXH B1

Exhibit B1 - Page 92/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B1

SPECIFICATION CHANGE NOTICE (SCN)	For SCN Number Issue Dated Page
Specification repercussion: After contractual agreement with respect to weight, performance, delivery, etc, the indicated part of the specification wording will read as follows:

1104XX – CT1101195 – LAN – A320NEO-EXH B1

Exhibit B1 - Page 93/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B1

SPECIFICATION CHANGE NOTICE (SCN)	For SCN Number Issue Dated Page
Scope of change (FOR INFORMATION ONLY)

1104XX – CT1101195 – LAN – A320NEO-EXH B1

Exhibit B1 - Page 94/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B2

MANUFACTURER’S SPECIFICATION CHANGE NOTICE (MSCN)	For MSCN Number Issue Dated Page
Title : Description : Effect on weight : •    Manufacturer’s Weight Empty change : •    Operational Weight Empty change : •    Allowable Payload change : Remarks / References Specification changed by this MSCN

Price per aircraft

US DOLLARS:

AT DELIVERY CONDITIONS:

This change will be effective on AIRCRAFT N° and subsequent.

Provided MSCN is not rejected by

Buyer approval	Seller approval
By:	By:
Date :	Date :

1104XX – CT1101195 – LAN – A320NEO-EXH B2

Exhibit B2 - Page 95/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B2

MANUFACTURER’S SPECIFICATION CHANGE NOTICE (MSCN)	For MSCN Number Issue Dated Page
Specification repercussion: After contractual agreement with respect to weight, performance, delivery, etc, the indicated part of the specification wording will read as follows:

1104XX – CT1101195 – LAN – A320NEO-EXH B2

Exhibit B2 - Page 96/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT B2

MANUFACTURER’S SPECIFICATION CHANGE NOTICE (MSCN)	For MSCN Number Issue Dated Page
Scope of change (FOR INFORMATION ONLY)

1104XX – CT1101195 – LAN – A320NEO-EXH B2

Exhibit B2 - Page 97/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 1

PART 1 SELLER PRICE REVISION FORMULA

1 BASE PRICE

The Airframe Base Price quoted in Clause 3.1 of the Agreement and relevant credit memoranda are subject to adjustment for changes in economic conditions as measured by data obtained from the US Department of Labor, Bureau of Labor Statistics, and in accordance with the provisions hereof.

2 BASE PERIOD

The Airframe Base Price has been established in accordance with [***] index values indicated hereafter.

3 INDEXES

Labor Index: “Employment Cost Index for Workers in Aerospace manufacturing” hereinafter referred to as “ECI336411W”, quarterly published by the US Department of Labor, Bureau of Labor Statistics, in “NEWS”, and found in Table 9, “WAGES and SALARIES (not seasonally adjusted): Employment Cost Indexes for Wages and Salaries for private industry workers by industry and occupational group”, or such other name that may be from time to time used for the publication title and/or table, (Aircraft manufacturing, NAICS Code 336411, base month and year December 2005 = 100).

The quarterly value released for a certain month (March, June, September and December) shall be the one deemed to apply for the two preceding months.

Index code for access on the Web site of the US Bureau of Labor Statistics: CIU2023211000000I.

Material Index: “Industrial Commodities” (hereinafter referred to as “IC”) as published in “PPI Detailed Report” (found in Table 6. “Producer price indexes and percent changes for commodity and service groupings and individual items not seasonally adjusted” or such other names that may be from time to time used for the publication title and/or table). (Base Year 1982 = 100).

Index code for access on the Web site of the US Bureau of Labor Statistics: WPU03THRU15.

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt1

Exhibit C Part 1 - Page 98/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 1

4 REVISION FORMULA

[***]

5 GENERAL PROVISIONS

5.1 Roundings

The Labor Index average and the Material Index average shall be computed to the first decimal. If the next succeeding place is five (5) or more, the preceding decimal place shall be raised to the next higher figure.

Each quotient [***] shall be rounded to the nearest ten-thousandth (4 decimals). If the next succeeding place is five (5) or more, the preceding decimal place shall be raised to the next higher figure.

The final factor shall be rounded to the nearest ten-thousandth (4 decimals).

The final price shall be rounded to the nearest whole number (0.5 or more rounded to 1).

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt1

Exhibit C Part 1 - Page 99/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 1

5.2 Substitution of Indexes for Airframe Price Revision Formula

If:

(i) the United States Department of Labor substantially revises the methodology of calculation of the Labor Index or the Material Index as used in the Airframe Price Revision Formula, or

(ii) the United States Department of Labor discontinues, either temporarily or permanently, such Labor Index or such Material Index, or

(iii) the data samples used to calculate such Labor Index or such Material Index are substantially changed;

the Seller shall select a substitute index for inclusion in the Airframe Price Revision Formula (the “Substitute Index”) and will provide the Buyer with the necessary justification with regard to this Substitute Index to allow its approval, such approval not to be unreasonably withheld.

The Substitute Index shall reflect as closely as possible the actual variance of the Labor Costs or of the material costs used in the calculation of the original Labor Index or Material Index as the case may be.

As a result of the selection of the Substitute Index, the Seller shall make an appropriate adjustment to the Airframe Price Revision Formula to combine the successive utilization of the original Labor Index or Material Index (as the case may be) and of the Substitute Index.

5.3 Final Index Values

The Index values as defined in Clause 4 above shall be considered final and no further adjustment to the base prices as revised at Delivery of the Aircraft shall be made after Aircraft Delivery for any subsequent changes in the published Index values.

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt1

Exhibit C Part 1 - Page 100/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 2

PART 2 PROPULSION SYSTEMS PRICE REVISION FORMULA

CFM INTERNATIONAL

1. REFERENCE PRICE OF THE PROPULSION SYSTEMS

The Reference Price of a set of two (2) CFM INTERNATIONAL LEAP-X1A24, LEAP-X1A26, LEAP-X1A32, LEAP-X1A24E1, LEAP-X1A26E1 and LEAP-X1A32B1 Propulsion Systems is as follows:

LEAP-X1A24	[***]
LEAP-X1A26	[***]
LEAP-X1A32	[***]
LEAP-X1A24E1	[***]
LEAP-X1A26E1	[***]
LEAP-X1A32B1	[***]

This Reference Price is subject to adjustment for changes in economic conditions as measured by data obtained from the US Department of Labor, Bureau of Labor Statistics and in accordance with the provisions of Clauses 4 and 5 hereof.

2. REFERENCE PERIOD

The Reference Price has been established in accordance with the [***] as defined by CFM INTERNATIONAL by the Reference [***].

3. INDEXES

Labor Index: “Employment Cost Index for Workers in Aerospace manufacturing” hereinafter referred to as “ECI336411W”, quarterly published by the US Department of Labor, Bureau of Labor Statistics, in “NEWS”, and found in: Table 9, “WAGES and SALARIES (not seasonally adjusted): Employment Cost Indexes for Wages and Salaries for private industry workers by industry and occupational group”, or such other name that may be from time to time used for the publication title and/or table, (Aircraft manufacturing, NAICS Code 336411, base month and year December 2005 = 100,.

The quarterly value released for a certain month ([***]) shall be the one deemed to apply for the two preceding months.

Index code for access on the Web site of the US Bureau of Labor Statistics: CIU2023211000000I

Material Index: “Industrial Commodities” (hereinafter referred to as “IC”) as published in “PPI detailed report” (found in Table 6. “Producer price indexes and percent changes for commodity groupings and individual items not seasonally adjusted” or such other names that may be from time to time used for the publication title and/or table). (Base Year 1982 = 100).

Index code for access on the Web site of the US Bureau of Labor Statistics: WPU03THRU15.

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt2

Exhibit C Part 2 - Page 101/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 2

4. REVISION FORMULA

[***]

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt2

Exhibit C Part 2 - Page 102/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 2

5. GENERAL PROVISIONS

5.1 Roundings

(i) The Material index average ([***]) shall be rounded to the nearest second decimal place and the labor index average ([***]) shall be rounded to the nearest first decimal place.

(ii) [***] shall be rounded to the nearest second decimal place.

(iii) The final factor ([***]) shall be rounded to the nearest third decimal place.

If the next succeeding place is five (5) or more, the preceding decimal place shall be raised to the next higher figure. After final computation Pn shall be rounded to the nearest whole number (0.5 rounds to 1).

5.2 Final Index Values

The revised Reference Price at the date of Aircraft Delivery shall not be subject to any further adjustments in the indexes.

5.3 Interruption of Index Publication

If the US Department of Labor substantially revises the methodology of calculation or discontinues any of these indexes referred to hereabove, the Seller shall reflect the substitute for the revised or discontinued index selected by CFM INTERNATIONAL, such substitute index to lead in application to the same adjustment result, insofar as possible, as would have been achieved by continuing the use of the original index as it may have fluctuated had it not been revised or discontinued.

Appropriate revision of the formula shall be made to accomplish this result.

5.4 Annulment of the Formula

Should the above escalation provisions become null and void by action of the US Government, the Reference Price shall be adjusted due to increases in the costs of labor and materiel which have occurred from the period represented by the applicable Reference [***] of Aircraft Delivery.

5.5 Limitation

[***].

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt2

Exhibit C Part 2 - Page 103/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 3

PART 3 PROPULSION SYSTEMS PRICE REVISION FORMULA

PRATT AND WHITNEY

1. REFERENCE PRICE OF THE PROPULSION SYSTEMS

The Reference Price of a set of two (2) PRATT AND WHITNEY PW1124G, PW1127G and PW1133G Propulsion Systems is:

PW1124G	[***]
PW1127G	[***]
PW1133G	[***]

The Reference Price is subject to adjustment for changes in economic conditions as measured by data obtained from the US Department of Labor, Bureau of Labor Statistics, and in accordance with the provisions hereof.

2. BASE PERIOD

The Reference Price has been established in accordance with the [***].

3. INDEXES

Labor Index: “Employment Cost Index for Workers in Aerospace manufacturing” hereinafter referred to as “ECI336411W”, quarterly published by the US Department of Labor, Bureau of Labor Statistics, in “NEWS”, and found in Table 9, “WAGES and SALARIES (not seasonally adjusted): Employment Cost Indexes for Wages and Salaries for private industry workers by industry and occupational group”, or such other name that may be from time to time used for the publication title and/or table, (Aircraft manufacturing, NAICS Code 336411, base month and year December 2005 = 100).

The quarterly value released for a certain month ([***]) shall be the one deemed to apply for the two preceding months.

Index code for access on the Web site of the US Bureau of Labor Statistics: CIU2023211000000I.

Material Index: “Industrial Commodities” (hereinafter referred to as “IC”) as published in “PPI Detailed Report” (found in Table 6. “Producer Price indexes and percent changes for commodity and service groupings and individual items not seasonally adjusted” or such other names that may be from time to time used for the publication title and/or table). (Base Year 1982 = 100)

Index code for access on the Web site of the US Bureau of Labor Statistics: WPU03THRU15

Metal Index: “Metals and metal products” Code 10” (hereafter referred to as “C10”) as published in “PPI Detailed Report” (found in Table 6. “Producer Price indexes and percent changes for commodity and service groupings and individual items not seasonally adjusted” or such other names that may be from time to time used for the publications title and/or table). (Base 1982 = 100).

Index code for access on the Web site of the US Bureau of Labor Statistics: WPU10

4. REVISION FORMULA

[***]

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt3

Exhibit C Part 3 - Page 104/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT C PART 3

5. GENERAL PROVISIONS

5.1 Roundings

The Labor Index average, the Material Index average and the Metal Index average shall be computed to the first decimal. If the next succeeding place is five (5) or more, the preceding decimal place shall be raised to the next higher figure.

Each quotient ([***]) shall be rounded to the nearest ten-thousandth (4 decimals). If the next succeeding place is five (5) or more, the preceding decimal place shall be raised to the next higher figure.

The final factor shall be rounded to the nearest ten-thousandth (4 decimals).

The final price shall be rounded to the nearest whole number (0.5 or more rounded to 1).

5.2 Substitution of Indexes for Price Revision Formula

If:

(i) the United States Department of Labor substantially revises the methodology of calculation of the Labor Index , the Material Index or the Metal Index, as used in the Price Revision Formula, or

(ii) the United States Department of Labor discontinues, either temporarily or permanently, such Labor Index, such Material Index or such Metal Index, or

(iii) the data samples used to calculate such Labor Index, such Material Index, or such Metal Index are substantially changed;

Pratt and Whitney shall select a substitute index for inclusion in the Price Revision Formula (the “Substitute Index”) and the Seller shall reflect such Substitute Index.

The Substitute Index shall reflect as closely as possible the actual variance of the labor costs, of the material costs or of the metal costs used in the calculation of the original Labor Index, Material Index or Metal Index, as the case may be.

As a result of the selection of the Substitute Index, the consequential adjustment to the Price Revision Formula shall be performed, to combine the successive utilization of the original Labor Index, Material Index or Metal Index (as the case may be) and of the Substitute Index.

5.3 Final Index Values

The Index values as defined in Clause 4 above shall be considered final and no further adjustment to the adjusted Reference Price as revised at Aircraft Delivery (or payment of such revised amounts, as the case may be) shall be respectively made after Aircraft Delivery (or payment of such adjusted amounts, as the case may be) for any subsequent changes in the published Index values.

5.4 Limitation

[***].

1104XX – CT1101195 – LAN – A320NEO-EXH C Pt3

Exhibit C Part 3 - Page 105/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT D

CERTIFICATE OF ACCEPTANCE

In accordance with the terms of [clause [—]] of the purchase agreement dated [day] [month] [year] and made between LAN Airlines S.A. (the “Customer”) and Airbus S.A.S. as amended and supplemented from time to time (the “Purchase Agreement”), the technical acceptance tests relating to one Airbus A3[—]-[—] aircraft, bearing manufacturer’s serial number [—], and registration mark [—](the “Aircraft”) have taken place in [Blagnac/Hamburg].

In view of said tests having been carried out with satisfactory results, the Customer, [as agent of [insert the name of the lessor/SPC] (the “Owner”) pursuant to the [purchase agreement assignment] dated [day] [month] [year], between the Customer and the Owner] hereby approves the Aircraft as being in conformity with the provisions of the Purchase Agreement and accepts the Aircraft for delivery in accordance with the provisions of the Purchase Agreement.

Such acceptance shall not impair the rights that may be derived from the warranties relating to the Aircraft set forth in the Purchase Agreement.

Any right at law or otherwise to revoke this acceptance of the Aircraft is hereby irrevocably waived.

This Certificate of Acceptance shall be governed by and construed in accordance with the laws of [same governing law as the Purchase Agreement]

IN WITNESS WHEREOF, the Customer, [as agent of the Owner] has caused this instrument to be executed by its duly authorised representative this      day of [month], [year] in [Blagnac/Hamburg].

CUSTOMER [as agent of OWNER]

Name:

Title:

Signature:

1104XX – CT1101195 – LAN – A320NEO-EXH D

Exhibit D - Page 106/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT E

BILL OF SALE

Know all men by these presents that Airbus S.A.S., a Société par Actions Simplifiée existing under French law and having its principal office at 1 rond-point Maurice Bellonte, 31707 Blagnac Cedex, FRANCE (the “Seller”), was this [day] [month] [year] the owner of the title to the following airframe (the “Airframe”), the [engines/propulsion systems] as specified (the “[Engines/Propulsion Systems]”) and [all appliances, components, parts, instruments, accessories, furnishings, modules and other equipment of any nature], [excluding buyer furnished equipment (“BFE”),] incorporated therein, installed thereon or attached thereto on the date hereof (the “Parts”):

AIRFRAME:	[ENGINES/PROPULSION SYSTEMS]:
AIRBUS Model A3[—]-[—]	[Insert name of engine or propulsion system manufacturer] Model [—]
MANUFACTURER’S SERIAL NUMBER: [—]	ENGINE SERIAL NUMBERS: LH: [—] RH: [—]
REGISTRATION MARK: [—]

[and [had] such title to the BFE as was acquired by it from [insert name of vendor of the BFE] pursuant to a bill of sale dated      [month] [year] (the “BFE Bill of Sale”)].

The Airframe, [Engines/Propulsion Systems] and Parts are hereafter together referred to as the “Aircraft”.

The Seller did this      day of [month] [year], sell, transfer and deliver all of its above described rights, title and interest in and to the Aircraft [and the BFE] to the following entity and to its successors and assigns forever, said Aircraft [and the BFE] to be the property thereof:

LAN AIRLINES S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711, 20^th Floor

Las Condes

Santiago, Chile

(the “Buyer”)

The Seller hereby warrants to the Buyer, its successors and assigns that it had [(i)] good and lawful right to sell, deliver and transfer title to the Aircraft to the Buyer and that there was conveyed to the Buyer good, legal and valid title to the Aircraft, free and clear of all liens, claims, charges, encumbrances and rights of others and that the Seller will warrant and defend such title forever against all claims and demands whatsoever [and (ii) such title to the BFE as Seller has acquired from [insert name of vendor of the BFE] pursuant to the BFE Bill of Sale].

This Bill of Sale shall be governed by and construed in accordance with the laws of [same governing law as the Purchase Agreement].

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized representative this      day of [month], [year] in [Blagnac/Hamburg].

AIRBUS S.A.S.

Name:

Title:

Signature:

1104XX – CT1101195 – LAN – A320NEO-EXH E

Exhibit E - Page 107/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT F

EXHIBIT   F

S E R V I C E   L I F E   P O L I C Y

L I S T   O F   I T E M S

1104XX – CT1101195 – LAN – A320NEO-EXH F

Exhibit F - Page 108/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT F

SELLER SERVICE LIFE POLICY

[***]

1104XX – CT1101195 – LAN – A320NEO-EXH F

Exhibit F - Page 109/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

EXHIBIT G

TECHNICAL DATA INDEX

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 110/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

TECHNICAL DATA INDEX

Where applicable data will be established in general compliance with ATA 100 Information Standards for Aviation Maintenance, and the applicable provisions for digital standard of ATA Specification 2200 (iSpec2200).

The following index identifies the Technical Data provided in support of the Aircraft.

The explanation of the table is as follows:

NOMENCLATURE                                 Self-explanatory.

ABBREVIATED DESIGNATION (Abbr) Self-explanatory.

AVAILABILITY (Avail)

Technical Data can be made available :

• ON-LINE (ON) through the relevant service on AirbusWorld,

and / or

• OFF-LINE (OFF) through the most suitable means applicable to the size of the concerned document (e.g CD or DVD).

FORMAT (Form)

Following Technical Data formats may be used:

• SGML - Standard Generalized Mark-up Language, which allows further data processing by the Buyer.

• XML – Extensible Mark-up Language, evolution of the SGML text format to cope with WEB technology requirements.

• XML is used for data processing. Processed data shall be consulted through the e-doc Viewer FOCT – Flight Operations Consultation Tool.

• XML data may be customized using Airbus customization tools (Flight Operations Documentation Manager, ADOC) or the Buyer’s own XML based editing tools.

• CGM – Computer Graphics Metafile, format of the interactive graphics associated with the XML and /or SGML text file delivery.

• PDF (PDF) - Portable Document Format allowing data consultation.

• Advanced Consultation Tool - refers to Technical Data consultation application that offers advanced consultation & navigation functionality compared to PDF. Both browser software & Technical Data are packaged together.

• P1 / P2 - refers to manuals printed on one side or both sides of the sheet.

• CD-P - refers to CD-Rom including Portable Document Format (PDF) Data.

• CD-XML – Refers to CD-Rom including XML data

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 111/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

TYPE	C	CUSTOMIZED. Refers to manuals that are applicable to an individual Airbus customer/operator fleet or aircraft.
	G	GENERIC. Refers to manuals that are applicable for all Airbus aircraft types/models/series.
	E	ENVELOPE. Refers to manuals that are applicable to a whole group of Airbus customers for a specific aircraft type/model/series.

QUANTITY (Qty)	Self-explanatory for physical media.
DELIVERY (Deliv)	Delivery refers to scheduled delivery dates and is expressed in either the number of corresponding days prior to first Aircraft delivery, or nil (0) referring to the Delivery Date of corresponding Aircraft.
	The number of days indicated shall be rounded up to the next regular revision release date.

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 112/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

OPERATIONAL MANUALS AND DATA

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Flight Crew Operating Manual	FCOM	ON	XML	C	[***]	[***]
		OFF	CD-XML	C	[***]	[***]
Flight Crew Training Manual	FCTM	ON	XML	C	[***]	[***]	FCTM is a supplement to FCOM, a “Pilot’s guide” for use in training and in operations
		OFF	CD-XML	C	[***]	[***]
Cabin Crew Operating Manual	CCOM	ON	XML	C	[***]	[***]	SA Aircraft: Basic for A318 and for all A319/A320/A321 equipped with new CIDS /FAP
		OFF	CD-XML	C	[***]	[***]	CCOM not available for aircraft with old CIDS re-installed (A319 Mod 34898, A320 Mod 34856, A321 Mod 34997)
Flight Manual	FM	ON	XML	C	[***]	[***]
		OFF	CD-XML	C	[***]	[***]
		OFF	PDF	C	[***]	[***]	*PDF secure format integrated in the FOCT viewer, used for loading on board aircraft EFB, in agreement with Airworthiness Authorities.

SA = Single Aisle: A318/A319/A320/A321

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 113/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

OPERATIONAL MANUALS AND DATA

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Master Minimum Equipment List	MMEL	ON	XML	C	[***]	[***]
		OFF	CD-XML	C	[***]	[***]
Quick Reference Handbook	QRH	ON	XML	C	[***]	[***]
		OFF	CD-XML	C	[***]	[***]
Trim Sheet	TS	OFF	Electronic format	C	[***]	[***]	Transferred to the Buyer by electronic mail (MS Word or PDF or TIFF). Note: additional document provided by the Seller : IATA Airport Handing Manual / AHM sections 515, 516, 560.
Weight and Balance Manual	WBM	ON	XML	C	[***]	[***]
		OFF	CD-XML	C	[***]	[***]
Performance Engineer’s Programs	PEP	ON	Performance Computation Tool	C	[***]	[***]	A collection of aircraft performance software tools in a common interface.
		OFF	Performance Computation Tool on CD	C	[***]	[***]
Performance Programs Manual	PPM	OFF	CD-P	C	[***]	[***]	Explains how to use the PEP & contains specific data for engineers, which are not contained in the FCOM

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 114/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MAINTENANCE AND ASSOCIATED MANUALS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
AirN@v / Maintenance , including : Aircraft Maintenance Manual - AMM Illustrated Parts Catalog (Airframe)- IPC Illustrated Parts Catalog ( Powerplant )- PIPC* Trouble Shooting Manual - TSM Aircraft Schematics Manual - ASM Aircraft Wiring Lists - AWL Aircraft Wiring Manual- AWM Electrical Standard Practices Manual-ESPM	AirN@v / Maintenance	ON	Advanced Consultation Tool	C	[***]	[***]
		OFF	Advanced Consultation Tool on DVD	C	[***]	[***]	Recommended basic delivery quantity *PIPC is integrated in the SA aircraft IPC for IAE V2500 A1/A3 Engines. For other aircraft and engine types, to be supplied by Propulsion Systems Manufacturer concurrently with the Airframe IPC.
AirN@v / Associated Data Consumable Material List – CML Standards Manual - SM Electrical Standard Practices Manual - ESPM Tool and Equipment Manual – TEM (*)	AirN@v / Associated Data	ON	Advanced Consultation Tool	G	[***]	[***]	* including Tool and Equipment Manual / Index & Support Equipment Summary data
		OFF	Advanced Consultation Tool on DVD	G	[***]	[***]
Technical Follow-up	TFU	ON	PDF	E	[***]	[***]	TFU for trouble shooting & maintenance, to be used with AirN@v
Aircraft Maintenance Manual	AMM	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgrade programme
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place at the time of explicit request from the Buyer

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 115/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MAINTENANCE AND ASSOCIATED MANUALS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Aircraft Schematics Manual	ASM	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgrade programme
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place at the time of explicit request from the Buyer
Aircraft Wiring List	AWL	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgradeprogramme.
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place at the time of explicit request from the Buyer
Aircraft Wiring Manual	AWM	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgrade programme
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place at the time of explicit request from the Buyer
Consumable Material List	CML	OFF	SGML	G	[***]	[***]	Effective delivery will only take place at the time of explicit request from the Buyer
Ecam System Logic Data	ESLD	ON	PDF	E	[***]	[***]	Used for in-depth aircraft trouble shooting. Ref to SIL 31-033 for details.
		OFF	CD-P	E	[***]	[***]

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 116/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MAINTENANCE AND ASSOCIATED MANUALS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Electrical Load Analysis	ELA	OFF	PDF/MS Word Excel	C	[***]	[***]	One ELA supplied for each Aircraft, delivered one month after first Aircraft Delivery PDF File + Office automation format RTF & Excel file delivered on one single CD for ELA updating by the Buyer
Electrical Standard Practices Manual	ESPM	OFF	SGML	G	[***]	[***]	*Effective CD delivery will only take place at the time of explicit request from the Buyer
Electrical Standard Practices booklet	ESP	OFF	P2*	G	[***]	[***]	* Pocke size format booklet, which provides maintenance personnel with quick and easy access for the identification of electrical equipment and the required tooling.
Flight Data Recording Parameter Library	FDRPL	OFF	Advanced Consultation Tool on CD	E	[***]	[***]
Illustrated Parts Catalog (Airframe)	IPC	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgrade programme.
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place at the time of explicit request from the Buyer
Illustrated Parts Catalog (Powerplant)	PIPC	ON	PDF	C	[***]	[***]	Integrated in the SA aircraft IPC for IAE V2500 A1/A3 Engines . *For other aircraft and engine types, supplied by Propulsion Systems Manufacturer concurrently with the Airframe IPC.
		OFF	CD-P	C	[***]	[***]
AirN@v / Planning, including Maintenance Planning Document – MPD	AirN@v/Planning	ON	Advanced Consultation Tool	E	[***]	[***]	In addition to MPD in AirN@v consultable format, AirN@v / Planning includes additional MPD files in the following downloadable formats: - PDF format - MS XLS ( Excel) format - TSDF / Text Structured Data File format (specific ASCII for MIS and Database upload ) - SGML format for further processing Life Limited Parts information is included in the Airworthiness Limitation Section (ALS)
		OFF	Advanced Consultation Tool on DVD	E	[***]	[***]

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 117/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MAINTENANCE AND ASSOCIATED MANUALS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Maintenance Review Board Report – MRBR Airworthiness Limitation Section – ALS	MRBR ALS	ON	PDF	E	[***]	[***]	The latest revisions of individual MRB Report and ALS documents are available shortly after approval on AirbusWorld Maintenance & Engineering site, under “Prepare Maintenance Programme”, “Demonstrate compliance with airworthiness limitations” tab, with aircraft operators being informed through a dedicated OIT.
Tool & Equipment Bulletins	TEB	ON	PDF	E	[***]	[***]
Tool and Equipment Drawings	TED	ON	Advanced Consultation Tool	E	[***]	[***]	These drawings include the Seller’s and Suppliers’ equipment drawings, except for the Seller’s and Suppliers’ proprietary items
AirN@v / Engineering, including: Airworthiness Directives - AD European Airworthiness Directives - EUAD ( incl. French DGAC AD’s) All Operator Telex - AOT Operator Information Telex - OIT Flight Operator Telex - FOT Modification - MOD Modification Proposal - MP Service Bulletin - SB Service Information Letter - SIL Technical Follow-Up - TFU Vendor Service Bulletin - VSB	AirN@v/ Engineering	ON	Advanced Consultation Tool	C	[***]	[***]	AirN@v Engineering is an electronic index used for identification of the references and links between the Seller’s and Suppliers’ engineering documents
		OFF	Advanced Consultation Tool on DVD	C	[***]	[***]
Trouble Shooting Manual	TSM	ON	PDF	C	[***]	[***]	* PDF will be discontinued in 2010 after implementation of the AirN@v / Maintenance Technical Data upgrade programme
		OFF	CD-P	C	[***]	[***]
		ON	SGML	C	[***]	[***]	Available from the Technical Data Download Service on AirbusWorld (Graphics in CGM, compliant with iSpec 2200 )
		OFF	SGML	C	[***]	[***]	Effective CD delivery will only take place upon the Buyer’s express request.

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 118/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

STRUCTURAL MANUALS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
AirN@v / Repair, including: Structural Repair Manual (*) - SRM Non Destructive Testing Manual - NTM	AirN@v / Repair	ON	Advanced Consultation Tool	E	[***]	[***]	AirN@v / Repair includes: —     For SA aircraft, one specific SRM for each A319, A320, A321, one SA aircraft common NTM, For all other SA aircraft and engine types, the Nacelle SRM shall be supplied by the relevant Propulsion System Supplier.
		OFF	Advanced Consultation Tool on DVD	E	[***]	[***]
Structural Repair Manual	SRM	ON	SGML	E	[***]	[***]	*Upon request only.
		OFF	SGML	E	[***]	[***]
Non Destructive Testing Manual	NTM	ON	SGML	E	[***]	[***]	*Upon request only.
		OFF	SGML	E	[***]	[***]

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 119/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

OVERHAUL DATA

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
AirN@v / Workshop, including: Component Maintenance Manual Manufacturer - CMMM Duct Fuel Pipe Repair Manual - DFPRM	AirN@v / Workshop	ON	Advanced Consultation Tool	E	[***]	[***]	DFPRM first issue in AirN@v
		OFF	Advanced Consultation Tool on DVD	E	[***]	[***]
Component Maintenance Manual Manufacturer	CMMM	ON	SGML	E	[***]	[***]	*Upon request only. Fallback solution to AirN@v / Workshop
		OFF	SGML	E	[***]	[***]
Component Maintenance Manual Vendor	CMMV	OFF	CD-P	E	[***]	[***]	* Vendor Supply in digital PDF format .
		ON	PDF	E	[***]	[***]	Available from the “Supplier Technical Documentation On-Line Service” in AirbusWorld
Component Documentation Status	CDS	OFF	CD	C	[***]	[***]	Revised until [***]
Component Evolution List	CEL	ON	PDF	G	[***]	[***]
		OFF	CD-P	G	[***]	[***]	Delivered as follow-on to CDS.

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 120/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

ENGINEERING DOCUMENTS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Mechanical Drawings, including the Drawing Picture, Parts List / Parts Usage	MD	ON	Advanced Consultation ool	C	[***]	[***]	Seller Installation, Assembly and Detailed part Drawings for Structure & System installations, fitted on the Buyer’s fleet or Aircraft . They cover the Aircraft “as designed”, ie in its original configuration at first Aircraft Delivery. Repair drawings are supplied upon specific Buyer request. Buyer’s queries shall be issued in connection with an approved document: SB, SRM or RAS (Repair Assessment Sheet) Mechanical Drawings include: 2D Drawing sheets Parts List / Parts Usage (in PDF).
Standards Manual	SM	ON	SGML	G	[***]	[***]	Effective delivery will only take place at the time of explicit request from the Buyer.
		OFF	SGML	G	[***]	[***]
Process and Material Specification	PMS	ON	PDF	G	[***]	[***]
		OFF	CD-P	G	[***]	[***]

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 121/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MISCELLANEOUS PUBLICATIONS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Airplane Characteristics for Airport Planning - AC Maintenance Facility Planning - MFP	AC/MFP	ON	PDF	E	[***]	[***]	Available On-Line in AirbusWorld
		OFF	CD-P	E	[***]	[***]	Grouped on one single CD Fallback solution to the on-line AC / MFP
ATA 100 Index	ATI	ON	PDF	E	[***]	[***]	6 Digits ATA 100 Index
C@DETS /Technical Data Training Courseware and Software	C@DETS	ON	Advanced Consultation Tool on CD	G	[***]	[***]	Technical Data self-tutorial training which provides basic familiarization tailored for Maintenance and Engineering personnel. It is AirN@v Services oriented and available on AirbusWorld for downloading by module as required.
		OFF	Advanced Consultation Tool	G	[***]	[***]
Aircraft Recovery Manual	ARM	ON	PDF	E	[***]	[***]
		OFF	CD-P	E	[***]	[***]
Aircraft Rescue & Firefighting Chart	ARFC	ON	PDF	E	[***]	[***]	Chart can be downloaded from AirbusWorld either in TIFF or PDF format
		OFF	P1	E	[***]	[***]	Full size charts, which are available in poster format (530 x 640 mm)
Cargo Loading System Manual	CLS	ON	PDF	E	[***]	[***]
		OFF	CD-P	E	[***]	[***]	One CLS per delivered Aircraft
List of Effective Technical Data	LETD	ON	PDF	C	[***]	[***]	The LETD provides, for each Technical Data, information about: - Applicable issue and revision date, - Shipping information with search functions by manual or delivery address criteria, -Tracking of shipments through the Carrier Website.
List of Radioactive and Hazardous Elements	LRE	ON	PDF	G	[***]	[***]
		OFF	CD-P	G	[***]	[***]

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 122/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT G

MISCELLANEOUS PUBLICATIONS

NOMENCLATURE	Abbr	Avail	Form	Type	[***]	[***]	Comments
Live Animal Transportation Calculation Tool	LATC	ON	Advanced Calculation Tool	E	[***]	[***]	Electronic format, which includes a software tool to calculate the loads of various live animals which can be transported in cargo compartments under known environmental conditions Remark : LTM (Live Stock Transportation Manual) replaced by LATC, migration for SA aircraft : Oct 09
	LATC	OFF	Advanced Calculation Tool on CD	E	[***]	[***]
Service Bulletins	SB	ON	Advanced Consultation Tool	C	[***]	[***]	Full SB content and SB search functions are available from AirN@v / Engineering on AirbusWorld
		OFF	CD-P	C	[***]	[***]	CD available for simplified SBs only
Supplier Product Support Agreements 2000	SPSA	ON	PDF	G	[***]	[***]	Contains all SSC’s Supplier Support Conditions and current [***] Agreements ratified by Airbus Suppliers . It specifies : - Airbus Support Standards - The individual Suppliers’ contractual Support commitments
Transportability Manual	TM	OFF	CD-P	G	[***]	[***]
Vendor Information Manual + Aircraft On Ground & Repair Guide	VIM + AOG & RG	ON	Advanced Consultation Tool	G	[***]	[***]	Combined Vendor Information Manual and Aircraft On Ground & Repair Guide. It supplies information on Supplier Support locations, Repair Stations, stock locations and distributors around the world for Airbus Customers.

1104XX – CT1101195 – LAN – A320NEO-EXH G

Exhibit G - Page 123/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

[***].

EXHIBIT H

MATERIAL

SUPPLY AND SERVICES

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 124/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

1. GENERAL

1.1 Scope

1.1.1 This Exhibit “H” defines the terms and conditions for the support and services that may be offered by the Seller to the Buyer in the area of Material, as such term in defined in Article 1.2.1 hereafter.

1.1.2 References made to Articles shall refer to articles of this Exhibit “H” unless otherwise specified.

1.1.3 Notwithstanding the definition set forth in Clause 12.3.1 of the Agreement and for the exclusive purpose of this Exhibit “H”, the term “Supplier” shall mean any supplier providing any of the Material listed in Article 1.2.1 hereunder (each a “Supplier Part”).

1.1.4 The term “SPEC 2000” as used throughout this Exhibit “H” means the “E-Business Specification for Materiels Management” document published by the Air Transport Association of America.

1.2 Material Categories

1.2.1 Material covered by this Exhibit “H” is classified according to the following categories (hereinafter individually and collectively referred to as “Material”):

(i) “Seller Parts” (corresponding to Seller’s proprietary Material bearing a part number of the Seller or Material for which the Seller has the exclusive sales rights);

(ii) Supplier Parts classified as Repairable Line Maintenance Parts (as defined in SPEC 2000);

(iii) Supplier Parts classified as Expendable Line Maintenance Parts (as defined in SPEC 2000);

(iv) Seller and/or Supplier ground support equipment and specific-to-type tools.

1.2.2 Propulsion Systems, engine exchange kits, their accessories and parts, including associated parts, are not covered under this Exhibit “H” and shall be subject to direct agreements between the Buyer and the relevant Propulsion System Manufacturer.

1.3 Term

[***].

1.4 Airbus Material Center

1.4.1 The Seller has established its material headquarters in Hamburg, Germany (the “Airbus Material Center”) and shall, during the Term, maintain, or have maintained on its behalf, a central store of Seller Parts.

1.4.2 The Airbus Material Center is operated twenty-four (24) hours per day, seven (7) days per week.

1.4.3 For efficient and prompt deliveries, the Seller and its Affiliates operate a global network of regional satellite stores (“Regional Satellite Stores”).

The Seller reserves the right to effect deliveries from the Airbus Material Center, from any of the Regional Satellite Stores or from any other production or Supplier’s facilities.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 125/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

1.4.4 The Buyer may also purchase, subject to the signature of specific terms and conditions, spare parts from the Seller’s designee, Airbus Americas Customer Services, in Ashburn, United States of America.

1.5 Customer Order Desk

The Seller operates a “Customer Order Desk”, the main functions of which are:

(i) Management of order entries for all priorities, including Aircraft On Ground (“AOG”);

(ii) Management of order changes and cancellations;

(iii) Administration of Buyer’s routing instructions;

(iv) Management of Material returns;

(v) Clarification of delivery discrepancies;

(vi) Issuance of credit and debit notes.

The Buyer hereby agrees to communicate its orders for Material to the Customer Order Desk either in electronic format (SPEC 2000) or via the Internet.

1.6 Material and Logistics Support Representative

The Seller shall assign [***] material and logistics support representative based at the Airbus Material Center to assist with, and coordinate, material support matters between the Seller and the Buyer during the Term.

1.7 Agreements of the Buyer

1.7.1 During the Term, the Buyer agrees to purchase from the Seller or its licensee(s) the Seller Parts required for the Buyer’s own needs.

1.7.2 Notwithstanding the foregoing, the Buyer may resort to the stocks of Seller Parts of other operators of the same aircraft type or model or purchase Seller Parts from said operators or from distributors, provided said Seller Parts were originally designed by the Seller and manufactured by the Seller or its licensees.

1.7.3 Without prejudice to Articles 1.7.1 and 1.7.2, the Buyer may (subject to the express further agreement of the Seller in relation to Article 1.7.3 (ii) below) manufacture, exclusively for its own use and without paying any license fee to the Seller, parts equivalent to Seller Parts subject to the existence of one of the following circumstances:

(i) after expiration of the Term, the concerned Seller Parts are out of stock;

(ii) Seller Parts are needed to perform confirmed AOG repairs upon any Aircraft delivered under the Agreement and are not available from the Seller, its licensees or other approved sources within a lead time shorter than or equal to the time in which the Buyer can manufacture such parts;

(iii) when a Seller Part is identified as “Local Manufacture” in the Illustrated Parts Catalog (IPC).

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 126/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

1.7.4.1 The rights granted to the Buyer in Article 1.7.3 shall not in any way be construed as a license, nor shall they in any way obligate the Buyer to pay any license fee or royalty, nor shall they in any way be construed to affect the rights of third parties.

1.7.4.2 Furthermore, in the event of the Buyer manufacturing any parts, subject to and in accordance with the provisions of Article 1.7.3, such manufacturing and any use made of the manufactured parts shall be under the sole liability of the Buyer and the right given by the Seller under such Article 1.7.3 shall not be construed as express or implicit approval howsoever either of the Buyer in its capacity of manufacturer of such parts or of the manufactured parts.

It shall further be the Buyer’s sole responsibility to ensure that such manufacturing is performed in accordance with the relevant procedures and Aviation Authority requirements.

THE SELLER SHALL NOT BE LIABLE FOR, AND THE BUYER SHALL INDEMNIFY THE SELLER AGAINST, ANY CLAIMS FROM ANY THIRD PARTIES FOR LOSSES DUE TO ANY DEFECT OR NON-CONFORMITY OF ANY KIND, ARISING OUT OF OR IN CONNECTION WITH ANY MANUFACTURING OF ANY PART UNDERTAKEN BY THE BUYER UNDER ARTICLE 1.7.3 OR ANY OTHER ACTIONS UNDERTAKEN BY THE BUYER UNDER THIS EXHIBIT “H”, WHETHER SUCH CLAIM IS ASSERTED IN CONTRACT OR IN TORT, OR IS PREMISED ON ALLEGED, ACTUAL, IMPUTED, ORDINARY OR INTENTIONAL ACTS OR OMISSIONS OF THE BUYER.

1.7.4.3 The Buyer shall allocate its own part number to any part manufactured in accordance with Article 1.7.3 above. The Buyer shall under no circumstances be allowed to use, the Airbus part number of the Seller Part to which such manufactured part is equivalent.

1.7.4.4 Notwithstanding any right provided to the Buyer under Article 1.7.3, the Buyer shall not be entitled to sell or loan any part manufactured under the provisions of Article1.7.3 to any third party.

2. INITIAL PROVISIONING

2.1 Period

The initial provisioning period commences with the Pre-Provisioning Meeting, as defined in Article 2.2.1 below, and expires [***] under the Agreement (“Initial Provisioning Period”).

2.2 Pre-Provisioning Meeting

2.2.1 The Seller shall organize a pre-provisioning meeting (the “Pre-Provisioning Meeting”) at the Airbus Material Center, or any other location as may be mutually agreed upon, for the purpose of defining an acceptable schedule and working procedure for the preparation of the initial issue of the Provisioning Data and the Initial Provisioning Conference referred to in Articles 2.3 and 2.4 below.

During the Pre-Provisioning Meeting, the Seller shall familiarize the Buyer with the provisioning processes, methods and formulae of calculation and documentation.

2.2.2 The Pre-Provisioning Meeting shall take place [***]. The date of the meeting shall be mutually agreed upon, allowing a minimum preparation time of [***] for the Initial Provisioning Conference.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 127/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

2.3 Initial Provisioning Conference

The Seller shall organize an initial provisioning conference at the Airbus Material Center (the “Initial Provisioning Conference”), the purpose of which shall be to define the agreed material scope and working procedures to accomplish the initial provisioning of Material (hereinafter “Initial Provisioning”).

Such Initial Provisioning Conference shall take place at the [***] after Aircraft Manufacturer Serial Number allocation or Contractual Definition Freeze, whichever occurs last and latest [***].

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 128/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

2.4 Provisioning Data

2.4.1 Provisioning data generally in accordance with SPEC 2000, Chapter 1, for Material defined in Articles 1.2.1 (i) through 1.2.1 (iii) (“Provisioning Data”) shall be supplied by the Seller to the Buyer in English language, in a format and timeframe to be mutually agreed upon during the Pre-Provisioning Meeting.

2.4.1.1 Unless a longer revision cycle has been mutually agreed upon, the Provisioning Data shall be revised [***] up to the end of the Initial Provisioning Period.

2.4.1.2 The Seller shall ensure that Provisioning Data is provided to the Buyer in due time to give the Buyer sufficient time to perform any necessary evaluation and allow the on-time delivery of any ordered Material.

2.4.1.3 Provisioning Data generated by the Seller and supplied to the Buyer shall comply with the configuration of the Aircraft as documented [***] before the date of issue.

This provision shall not cover:

(i) Buyer modifications not known to the Seller,

(ii) other modifications not approved by the Seller’s Aviation Authorities.

2.4.2 Supplier-Supplied Data

Provisioning Data corresponding to Supplier Parts (both initial issue and revisions) shall be transmitted to the Buyer either through the Seller and/or the corresponding Supplier; it is however agreed and understood by the Buyer that the Seller shall not be responsible for the substance, accuracy and/or quality of such data. Such Provisioning Data shall be provided in either SPEC 2000 format or any other mutually agreed format. The Buyer shall specify in writing to the Seller the requested Provisioning Data format at the time of the Initial Provisioning Conference.

2.4.3 Supplementary Data

The Seller shall provide the Buyer with data supplementary to the Provisioning Data. This shall include local manufacture tables, ground support equipment, specific-to-type tools and a pool item candidate list.

2.5 Commercial Offer

Upon the Buyer’s request, the Seller shall submit a commercial offer for Material mutually agreed as being Initial Provisioning Material.

2.6 Delivery of Initial Provisioning Material

2.6.1 During the Initial Provisioning Period, Initial Provisioning Material shall conform to the latest known configuration standard of the Aircraft for which such Material is intended and to the Provisioning Data transmitted by the Seller.

2.6.2 The delivery of Initial Provisioning Material shall take place according to the conditions specified in the commercial offer mentioned in Article 2.5 above.

2.7 Buy-Back Period and Buy-Back of Initial Provisioning Surplus Material

a) The “Buy-Back Period” is defined as the period [***] to the Buyer.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 129/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

b) At any time during the Buy-Back Period, the Buyer shall have the right to return to the Seller solely Seller Parts as per Article 1.2.1 (i) or Supplier Parts as per Article 1.2.1 (ii), subject to the Buyer providing sufficient evidence that such Material fulfils the conditions defined hereunder.

c) Material as set forth in Article b) above shall be eligible for Buy-Back provided:

i) The Material is unused and undamaged and is accompanied by the Seller’s original documentation (tag, certificates);

ii) The Seller provided the Buyer with an Initial Provisioning recommendation for such Material at the time of the Initial Provisioning Conference based upon [***];

iii) The quantity procured by the Buyer was not in excess of the provisioning quantities recommended by the Seller;

iv) The Material was purchased for Initial Provisioning purposes by the Buyer directly from the Seller;

v) The Material ordered by the Buyer is identified as an Initial Provisioning order and was placed on routine, and not expedite, basis;

vi) The Material and its components have at least [***] remaining when returned;

vii) The Material is returned to the Seller by the Buyer and has effectively been received and accepted by the Seller before the end of the Buy-Back Period.

d) If any Material is accepted for Buy-Back, the Seller shall credit the Buyer as follows:

- For Seller Parts as per Article 1.2.1 (i) the Seller shall credit the Buyer one hundred percent (100 %) of the price originally paid;

- For Supplier Parts as per Article 1.2.1 (ii) the Seller shall [***].

e) In the event of the Buyer electing to procure Material in excess of the Seller’s recommendation, the Buyer shall notify the Seller thereof in writing, with due reference to the present Article 2.7. The Seller’s acknowledgement and agreement in writing shall be necessary before any Material in excess of the Seller’s Initial Provisioning recommendation shall be considered for Buy-Back.

f) It is expressly understood and agreed that all credits described in Article 2.7 (d) shall be provided by the Seller to the Buyer exclusively by means of credit notes to the Buyer’s Material account with the Seller.

g) Transportation costs for the agreed return of Material under this Article 2.7 shall be borne by the Buyer.

3. OTHER MATERIAL SUPPORT

3.1 Replenishment and Delivery

3.1.1 General

For the purpose of clarification, it is expressly stated that the provisions of Article 3.1.2 do not apply to Initial Provisioning Material and Provisioning Data as described in Article 2.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 130/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

3.1.2 Lead times

In general, lead times shall be in accordance with the provisions of the latest edition of the “World Airlines and Suppliers Guide”.

3.1.2.1 Seller Parts as per Article 1.2.1 (i) shall be dispatched within the lead times published by the Seller.

Lead times for Seller Parts as per Article 1.2.1 (i), which are not published by the Seller, shall be quoted upon request.

3.1.2.2 Material defined in Articles 1.2.1 (ii) through 1.2.1 (iv) can be dispatched within the Supplier’s lead time augmented by the Seller’s own order and delivery administration time.

3.1.3 Expedite Service

The Seller shall provide a twenty-four (24) hours a day / seven (7) days a week expedite service to provide for the supply of critically required parts (the “Expedite Service”).

3.1.3.1 The Expedite Service is operated in accordance with the “World Airlines and Suppliers Guide” and the Seller shall notify the Buyer of the action taken to satisfy an expedite order received from the Buyer within:

(i) four (4) hours after receipt of an AOG order;

(ii) twenty-four (24) hours after receipt of a critical order (imminent AOG or work stoppage);

(iii) seven (7) days after receipt of an expedite order (urgent stock replenishment).

3.1.3.2 In exceptional AOG circumstances, should the Buyer be unable to send a written order for reasons beyond his control, the Seller may deliver the Material after a telephone call, provided a purchase order is sent to the Seller by the end of the next Business Day. Should the Buyer fail to send such purchase order, the Seller reserves the right to refuse any subsequent purchase orders without receipt of a firm written purchase order.

3.1.4 Shortages, Overshipments, Non-Conformity in Orders

3.1.4.1 The Buyer shall, within [***] after delivery of Material pursuant to a purchase order, advise the Seller:

(i) of any alleged shortages or overshipments;

(ii) of any non-conformities of delivered Material.

In the event of the Buyer not having advised the Seller of any such alleged shortages, overshipments or non-conformities within the above-defined period, the Buyer shall be deemed to have accepted the delivery.

3.1.4.2 In the event of the Buyer reporting an overshipment or non-conformity to the order within the period defined in Article 3.1.4.1 the Seller shall, if the Seller recognizes such overshipment or non-conformity, either replace the concerned Material or credit the Buyer for the returned Material, if the Buyer chooses to return the Material subject of an overshipment or non-conformity. In such case, reasonable transportation costs shall be borne by the Seller.

3.1.5 Delivery Terms

Material shall be delivered to the Buyer as follows:

(i) Free Carrier (FCA) Airbus Material Center;

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 131/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

(ii) Free Carrier (FCA) Seller’s Regional Satellite Stores;

(iii) Free Carrier (FCA) Seller’s or Supplier’s facility for deliveries from any other Seller or Supplier facilities.

The term Free Carrier (FCA) is as defined in the Incoterms 2010 publication issued by the International Chamber of Commerce.

3.1.6 Packaging

All Material shall be packaged in accordance with ATA 300 Specification.

3.1.7 Cessation of Deliveries

The Seller reserves the right to restrict, stop or otherwise suspend deliveries if the Buyer fails to meet its obligations defined in Articles 5.2 through 5.3.

3.2 Seller Parts Leasing

The Seller offers the Buyer the option to lease certain Seller Parts as listed in the Customer Services Catalog. The terms and conditions applicable to such service shall be as set forth in the then current Customer Services Catalog.

3.3 Tools and Ground Support Equipment

The Seller offers for sale and/or loan a range of ground support equipment and specific-to-type tools, as defined in 1.2.1 (iv).

The terms and conditions applicable to such service shall be as set forth in the then current Customer Services Catalog.

3.4 Seller Parts Repair

The Seller may offer the Buyer a service whereby the Seller would manage the repair of Seller Parts as defined in Article 1.2.1 (i).

The terms and conditions applicable to such service shall be as set forth in the then current Customer Services Catalog.

4 WARRANTIES

4.1 Seller Parts

Subject to the limitations and conditions as hereinafter provided, the Seller warrants to the Buyer that all Seller Parts as per Article 1.2.1 (i) shall at delivery to the Buyer:

(i) be free from defects in material.

(ii) be free from defects in workmanship, including without limitation processes of manufacture.

(iii) be free from defects arising from failure to conform to the applicable specification for such part.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 132/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

4.1.1 Warranty Period

4.1.1.1 The warranty period for Seller Parts is [***] from delivery of such parts to the Buyer.

4.1.1.2 Whenever any Seller Part, which contains a defect for which the Seller is liable under Clause 4.1, has been corrected, replaced or repaired pursuant to the terms of this Clause 4.1, the period of the Seller’s warranty with respect to such corrected, repaired or replacement Seller Part, whichever the case may be, shall [***], whichever is longer.

4.1.2 Buyer’s Remedy and Seller’s Obligation

The Buyer’s remedy and Seller’s obligation and liability under this Article 4.1 are limited to the repair, replacement or correction, at the Seller’s expense and option, of any Seller Part that is defective.

The Seller may alternatively [***].

The provisions of Clauses 12.1.5 through 12.1.11 of the Agreement shall apply to this Article 4.1 of this Exhibit “H”.

4.2 Supplier Parts

With respect to Supplier Parts to be delivered to the Buyer under this Exhibit “H”, the Seller agrees to transfer to the Buyer the benefit of any warranties, which the Seller may have obtained from the corresponding Suppliers and the Buyer hereby agrees that it shall accept the same.

4.3 Waiver, Release and Renunciation

THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER (AS DEFINED HEREIN FOR THE PURPOSES OF THIS EXHIBIT H) AND REMEDIES OF THE BUYER SET FORTH IN THIS ARTICLE 4 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS OR IMPLIED, ARISING BY LAW, CONTRACT OR OTHERWISE, WITH RESPECT TO ANY NON-CONFORMITY OR DEFECT OF ANY KIND, IN ANY MATERIAL, LEASED PART AND/OR SERVICES DELIVERED UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

A. ANY WARRANTY AGAINST HIDDEN DEFECTS;

B. ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

C. ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE;

D. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT, WHETHER OR NOT ARISING FROM THE SELLER’S NEGLIGENCE, ACTUAL OR IMPUTED; AND

E. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, MATERIAL, LEASED PART, SOFTWARE, DATA OR SERVICES DELIVERED UNDER THIS AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES;

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 133/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

PROVIDED THAT IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE THE REMAINDER OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.

FOR THE PURPOSES OF THIS ARTICLE 4.3, THE “SELLER” SHALL BE UNDERSTOOD TO INCLUDE THE SELLER, ANY OF ITS SUPPLIERS AND SUBCONTRACTORS AND ITS AFFILIATES.

5. COMMERCIAL CONDITIONS

5.1 Price

5.1.1 All Material prices shall be quoted in accordance with the delivery terms set forth under Article 3.1.5.

5.1.2 Notwithstanding the provisions of Article 2.5, all prices shall be the Seller’s sales prices valid on the date of receipt of the order (subject to reasonable quantities and delivery time) and shall be expressed in US Dollars.

5.1.3 The prices of Seller Parts shall be as set forth in the then current Seller’s Spare Parts Price Catalog and shall be firm for each calendar year. The Seller however reserves the right to revise the prices of said Seller Parts during the course of the calendar year in case of any of the following:

(i) significant revision in the manufacturing costs and purchase price of materials;

(ii) significant variation of exchange rates;

(iii) significant error in the estimation or expression of any price.

5.1.4 The Seller’s prices for all other Material shall be the prices published by the Seller on the date of receipt of the order.

Prices that are not published by the Seller shall be quoted upon request.

The Seller however reserves the right to revise the prices for all other Material in case of any significant error in the estimation or expression of any price.

5.2 Payment Procedures and Conditions

All payment under this Exhibit “H” shall be made in accordance with the terms and conditions set forth in the then current Customer Services Catalog.

5.3 Title

With the exception of Material to be supplied under Article 3.2 above, title to any Material purchased under this Exhibit “H” shall remain with the Seller until full payment of the invoices and interest thereon, if any, has been received by the Seller.

The Buyer hereby undertakes that Material, title to which has not passed to the Buyer, shall be kept free from any debenture or mortgage or any similar charge or claim in favour of any third party.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 134/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT H

6. EXCUSABLE DELAY

Clauses 10.1 and 10.2 of the Agreement shall apply, mutatis mutandis, to all Material support and services provided under this Exhibit “H”.

7. TERMINATION OF MATERIAL PROCUREMENT COMMITMENTS

7.1 In the event of the Agreement being terminated with respect to any Aircraft due to causes provided for in Clauses 10, 11 or 20 of the Agreement, such termination may also affect the terms of this Exhibit H to the extent set forth in Article 7.2 below.

7.2 Any termination under Clauses 10, 11 or 20 of the Agreement shall discharge the parties of all obligations and liabilities hereunder with respect to undelivered spare parts, services, data or other items to be purchased hereunder and which are applicable to those Aircraft for which the Agreement has been terminated. Unused Material in excess of the Buyer’s requirements due to such Aircraft cancellation may be repurchased by the Seller, at the Seller’s option, as provided for in Article 2.7.

8. INCONSISTENCY

In the event of any inconsistency between this Exhibit “H” and the Customer Services Catalog or any order placed by the Buyer, this Exhibit “H” shall prevail to the extent of such inconsistency.

1104XX – CT1101195 – LAN – A320NEO-EXH H

Exhibit H - Page 135/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

[***].

EXHIBIT I

LICENSES AND ON LINE SERVICES

Part 1	END-USER LICENSE AGREEMENT FOR AIRBUS SOFTWARE
Part 2	GENERAL TERMS AND CONDITIONS OF ACCESS TO AND USE OF AIRBUSWORLD
Part 3	END-USER SUBLICENSE AGREEMENTS FOR SUPPLIER SOFTWARE

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 136/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

PART 1

END-USER LICENSE AGREEMENT FOR AIRBUS SOFTWARE

1 DEFINITIONS

For the purposes of this end-user license agreement for Airbus software (the “Software License”) the following definitions shall apply:

“Agreement” means the Purchase Agreement of even date herewith entered into between the Licensee and the Licensor covering the purchase and sale of the Aircraft subject thereof.

“Airbus Software” means each of the Licensor’s proprietary products including Composite Work, configurations, processes, rules (together with any related documentation), as well as any modifications, enhancements or extensions thereto as may be provided by the Licensor from time to time. The Airbus Software shall be supplied in machine-readable code form only, for use in connection with the Aircraft or operations related to the Aircraft. The Airbus Software shall be either On Board Certified Software or Software Products. For the avoidance of doubt, this Software License does not apply to (i) open source software contained in the Airbus Software, if any, and it is hereby acknowledged and agreed by both parties hereto that such open source software is independently distributed on an “as is” basis under the respective license terms therefor, and that the Licensor disclaims any liability in relation to such open source software, or (ii) any proprietary third party software that the Licensor purchases or licenses from any third party and delivers to the Licensee, either as a sublicense or as a direct license from such third party.

“Aircraft” means, individually or collectively, the Aircraft subject of the Agreement.

“Composite Work” means the package composed of various elements, such as database(s), software or data, and which necessitates the use of the Airbus Software.

“Licensee” means the Buyer under the Agreement.

“Licensor” means the Seller under the Agreement.

“On Board Certified Software” means those Airbus Part 125 and/or FAR 125 certified software that are installed on board the Aircraft and bear a part number of the Licensor, excluding any software embedded in any component, furnishing or equipment installed on the Aircraft and itself bearing a part number.

“Permitted Purpose” means use of the Airbus Software by the Licensee for its own internal business needs, solely in conjunction with the Aircraft and in particular pertaining to (i) operation of the Aircraft; (ii) on ground operational support of the Aircraft; or (iii) related authorized customization of software.

“Software Product(s)” means either those Airbus Software intended to be used on ground at the Licensee’s facilities or Airbus Software that are installed on board the Aircraft and that are not Part 125 and/or FAR 125 certified - whether or not bearing a part number of the Licensor - excluding any software embedded in any component, furnishing or equipment installed on the Aircraft and itself bearing a part number.

“Update(s)” means any update(s) or replacement(s) to the Airbus Software licensed hereunder, which the Licensor, at its discretion, makes generally available to the Licensee.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 137/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

“User Guide” means the documentation, which may be in electronic format, designed to assist the Licensee in using the Airbus Software.

Capitalized terms used herein and not otherwise defined in this Software License shall have the meaning assigned thereto in the Agreement.

2 LICENSE

In consideration of the purchase by the Licensee of the Aircraft, the Licensee is hereby granted a worldwide and non-exclusive right to use the Airbus Software, for a Permitted Purpose. The Licensor shall remain the owner of all intellectual property rights in the Airbus Software. There shall be one license encompassing all Airbus Software granted in respect of each Aircraft purchased by the Licensee.

Notwithstanding the foregoing, license rights regarding the use of Software Products may be subject to specific commercial conditions and to the payment of specific fees relating to such Software Products.

The Licensee hereby acknowledges that it is aware that certain Airbus Software subject of this Software License may incorporate some third party software or open source software components. The Licensee hereby agrees to be bound by the licensing terms and conditions applicable to such third party software and made available by the Licensor through AirbusWorld.

3 ASSIGNMENT AND DELEGATION

3.1 Assignment

3.1.1 On Board Certified Software

The Licensee may at any time assign or otherwise transfer all or part of its rights pertaining to any On Board Certified Software under this Software License only as part of, and to the extent of, a sale, transfer or lease of each Aircraft on which such On Board Certified Software is installed. The Licensee shall assign as many Software Licenses as the number of sold, transferred or leased Aircraft and shall retain all other Software Licenses attached to any Aircraft that the Licensee continues to operate.

In the event of any such assignment or transfer, the Licensee shall transfer the copies of the Airbus Software attached to the sold, transferred or leased Aircraft (including all component parts, media, any upgrades or backup copies and, if applicable, certificate(s) of authenticity), except as otherwise instructed by the Licensor.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 138/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

3.1.2 Software Products

Save as otherwise set forth in the Agreement, the right to use any Software Product is personal to the Licensee, for its own internal use, and is non-transferable, except with the Licensor’s prior written consent, in which case the Licensee shall cause the assignee or sub-licensee to agree to the terms of this Software License.

3.3 Delegation

Without prejudice to Article 6 (a) hereof, in the event of the Licensee intending to designate a maintenance and repair organization or a third party to perform the maintenance of the Aircraft or to perform data processing on its behalf (each a “Third Party”), the Licensee shall notify the Licensor of such intention prior to any disclosure of this Software License and/or the Airbus Software Services to such Third Party.

The Licensee hereby undertakes to cause such Third Party to agree to be bound by the conditions and restrictions set forth in this Software License with respect to the Airbus Software and shall in particular cause such Third Party to enter into a appropriate licensing conditions and to commit to use the Airbus Software solely for the purpose of maintaining the Licensee’s Aircraft and/or for processing the Licensee’s data.

4 COPIES

Use of the Airbus Software is limited to the number of copies delivered by the Licensor to the Licensee and to the medium on which the Airbus Software is delivered. No reproduction shall be made without the prior written consent of the Licensor, except that the Licensee is authorized to copy the Airbus Software for back-up and archiving purposes. Any copy the Licensor authorizes the Licensee to make shall be performed under the sole responsibility of the Licensee. The Licensee agrees to reproduce the copyright and other notices as they appear on or within the original media on any copies that the Licensee makes of the Airbus Software.

5 TERM

5.1 On Board Certified Software

Subject to the Licensee having complied with the terms of this Software License, the rights under this Software License shall be granted from the date of Delivery of each Aircraft until the earlier of (i) the Aircraft definitively ceasing to be operated, in which case the license rights pertaining to such Aircraft shall be deemed terminated on the date of the last operation thereof by the Licensee or any of its assignees, or (ii) the Agreement, this Software License or any part thereof being terminated for any reason whatsoever, in which case the Licensee shall immediately cease to use the On Board Certified Software.

5.2 Software Products

Save as otherwise specified in any applicable commercial conditions relating to any Software Product as set forth in the Agreement and subject to the Licensee having complied with the terms of this Software License, the rights under this Software License shall be granted from the date of first delivery of the Software Product until the earlier of (i) for Software Products that are installed on board the Aircraft, the Licensee ceasing to operate the Aircraft on which such Software Products are installed, or (ii) the Licensee no longer owning or operating any Aircraft, or (iii) the Agreement or this Software License being terminated for any reason whatsoever, in which case the Licensee shall immediately cease to use the Software Products.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 139/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

6 CONDITIONS OF USE

The Airbus Software shall only be used for the Permitted Purpose.

The Licensee shall be solely responsible for, and agrees to be careful in the use of, all outputs and results derived from the operation of the Airbus Software and all consequences, direct and indirect, relating to the use of such output and results. The Licensee agrees to use such outputs and results only once it has verified such outputs and results and has checked the relevance and correctness thereof, in the light of its particular needs.

The Licensee expressly acknowledges that it shall take all appropriate precautions for the use of the Airbus Software, including without limitation measures required for its compliance with the User Guide or any information or directive regarding the use of the Supplier Software.

Under the present Software License, the Licensee shall:

a) not permit any parent, subsidiary, affiliate, agent or third party to use the Airbus Software in any manner, including, but not limited to, any outsourcing, loan, commercialization of the Airbus Software or commercialization by merging the Airbus Software into another software or adapting the Airbus Software, without the prior written consent from the Licensor;

b) do its utmost to maintain the Airbus Software and the relating documentation in good working condition, in order to ensure the correct operation thereof;

c) use the Airbus Software in accordance with such documentation and the User Guide, and ensure that the personnel using the Airbus Software has received appropriate training;

d) use the Airbus Software exclusively in the technical environment defined in the applicable User Guide, except as otherwise agreed in writing between the parties;

e) except as permitted by Section 50C – Copyright, Designs and Patents Act 1988, not alter, reverse engineer, modify, correct, translate, disassemble, decompile or adapt the Airbus Software, nor integrate all or part of the Airbus Software in any manner whatsoever into another software product, nor create a software product derived from the Airbus Software save with the Licensor’s prior written approval.

f) should the Licensor have elected to provide the source code to the Licensee, have the right to study and test the Airbus Software, under conditions to be expressly specified by the Licensor, but in no event shall the Licensee have the right to correct, modify or translate the Airbus Software;

g) except with respect to Software Products intended to be used on ground, use the Airbus Software exclusively on the referenced machines and the declared sites ;

h) not attempt to discover or re-write the Airbus Software source codes in any manner whatsoever;

i) not delete any identification or declaration relative to the intellectual property rights, trademarks or any other information related to ownership or intellectual property rights in the Airbus Software;

j) not pledge, sell, distribute, grant, sublicense, lease, lend, whether on a free-of-charge basis or against payment, or permit access on a time-sharing basis or any other utilization of the Airbus Software, whether in whole or in part, for the benefit of a third party.

With respect to Software Products intended for use on ground, the Licensor shall be entitled, subject to providing reasonable prior written notice thereof to the Licensee, to verify at the Licensee’s facilities whether the conditions specified in the present Software License are fulfilled.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 140/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

7 TRAINING

In addition to the User Guide provided with the Airbus Software, training and other assistance may be provided upon the Licensee’s request, subject to the conditions set forth in the Agreement. Such assistance or training shall not operate to relieve the Licensee of its sole responsibility with respect to the use of the Airbus Software under this Software License.

8 PROPRIETARY RIGHTS - RIGHT TO CORRECT AND MODIFY

8.1 The Airbus Software is proprietary to the Licensor or the Licensor has acquired the intellectual property rights necessary to grant this Software License. The copyright and all other proprietary rights in the Airbus Software are and shall remain the property of the Licensor.

8.2 The Licensor reserves the right to correct and modify any Airbus Software at its sole discretion and the Licensee shall not undertake any correction or modification of the Airbus Software without the Licensor’s prior written approval. The Licensee shall install any Updates provided by the Licensor, at its own cost, in accordance with the time schedule notified with the provision of such Update(s). In the event of the Licensee failing to install any such Update(s), the Licensor shall be relieved of any warranty or liability of any kind with respect to the conformity or operation of the Airbus Software.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 141/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

9 COPYRIGHT INDEMNITY

9.1 Indemnity

9.1.1 Subject to the provisions of Article 9.2.3, the Licensor shall defend and indemnify the Licensee from and against any damages, costs and expenses including legal costs (excluding damages, costs, expenses, loss of profits and other liabilities in respect of or resulting from loss of use of the Aircraft) resulting from any infringement, or claim of infringement, by any Airbus Software provided by the Licensor, of any copyright, provided that the Licensor’s obligation to indemnify shall be limited to infringements in countries which, at the time of the infringement or alleged infringement, are members of The Berne Union and recognize computer software as a “work” under the Berne Convention.

9.1.2 In the event that the Licensee is prevented from using the Airbus Software for infringement of a copyright referred to in Article 9.1.1 (whether by a valid judgment of a court of competent jurisdiction or by a settlement arrived at between claimant, Licensor and Licensee), the Licensor shall at its expense either:

(i) procure for the Licensee the right to use the same free of charge to the Licensee; or

(ii) replace the infringing part of the Airbus Software as soon as possible with a non-infringing substitute complying in all other respects with the requirements of this Software License.

9.2 Administration of Copyright Indemnity Claims

9.2.1 If the Licensee receives a written claim or a suit is threatened or commenced against the Licensee for infringement of a copyright referred to in Article 9.1 as a result of the use of the Airbus Software, the Licensee shall:

(i) forthwith notify the Licensor giving particulars thereof;

(ii) furnish to the Licensor all data, papers and records within the Licensee’s control or possession relating to such claim or suit;

(iii) refrain from admitting any liability or making any payment or assuming any expenses, damages, costs or royalties or otherwise acting in a manner prejudicial to the defense or denial of such suit or claim provided always that nothing in this sub-Article (iii) shall prevent the Licensee from paying such sums as may be required in order to obtain the release of the Aircraft, provided such payment is accompanied by a denial of liability and is made without prejudice;

(iv) fully co-operate with, and render all such assistance to the Licensor as be may be pertinent to the defense or denial of the suit or claim;

(v) act in such way as to mitigate damages and/or reduce the amount of royalties that may be payable as well as to minimize costs and expenses.

9.2.2 The Licensor shall be entitled, either in its own name or on behalf of the Licensee, to conduct negotiations with the party or parties alleging infringement and may assume and conduct the defense or settlement of any suit or claim in the manner, which it deems proper.

9.2.3 The Licensor’s obligations and the Licensee’s remedies hereunder shall be conditional upon the strict and timely compliance by the Licensee with the terms of this Clause 9 and of Clauses 6(e), 6(h), 6(i) and 8.2 and are exclusive and in substitution for, and the Licensee hereby waives, releases and renounces all other obligations and liabilities of the Licensor and rights, claims and remedies of the Licensee against the Licensor, express or implied, arising by law or otherwise with respect to any infringement or claim of infringement of any copyright.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 142/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

10 CONFIDENTIALITY

The Airbus Software, this Software License and their contents are designated as confidential. The Licensee undertakes not to disclose the Software License, the Airbus Software or any parts thereof to any third party without the prior written consent of the Licensor, except to the lessee in case of lease of an Aircraft or to the buyer in case of resale of an Aircraft, without prejudice to any provisions set forth in the Agreement. In so far as it is necessary to disclose aspects of the Airbus Software to the Licensee’s employees, such disclosure is permitted solely for the purpose for which the Airbus Software is supplied and only to those employees who need to know the same, save as permitted herein or where otherwise required pursuant to an enforceable court order or any governmental decision or regulatory provision imposed on the Licensee, provided that reasonable prior notice of the intended disclosure is provided to the Licensor.

The obligations of the Licensee to maintain confidentiality shall survive the termination of this Software License for a period of ten (10) years.

11 ACCEPTANCE

On Board Certified Software shall be deemed accepted as part of the Technical Acceptance Process set out in Clause 8 of the Agreement.

Software Products shall be deemed accepted upon delivery thereof unless otherwise specifically provided for in the Agreement.

12 WARRANTY

12.1 On Board Certified Software

Any On Board Certified Software installed on board an Aircraft at Delivery thereof shall be deemed a Warranted Part for the purposes of Clause 12.1 of the Agreement and the relevant provisions of such Clause 12.1 shall be fully applicable to such On Board Certified Software.

12.2 Software Products

The Licensor warrants that Software Products are prepared in accordance with the state of art at the date of their conception and shall perform substantially in accordance with their functional and technical specifications current at the time of their initial delivery. Should the Software Products be found not to conform to their documentation, the Licensee shall notify the Licensor promptly thereof and the sole and exclusive liability of the Licensor under this Software License shall be to provide the Licensee with two (2) months free of charge maintenance services.

After these two (2) months, the terms and conditions applicable to maintenance services shall be those specified in the current Customer Services Catalog.

For the avoidance of doubt, this Article 12.2 shall not be applicable to Software Product Updates, modifications, enhancements and extensions.

12.3 The Licensor shall be relieved of any obligations under Articles 12.1 and 12.2 in case of:

(i) Airbus Software defects or non-conformities caused by alterations or modifications to the Airbus Software carried out without the prior approval of the Licensor;

(ii) Airbus Software defects or non-conformities caused by negligence of the Licensee or other causes beyond the Licensor’s reasonable control;

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 143/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

(iii) Failure of the Licensee to install any Update in accordance with Article 8 hereof;

(iv) Airbus Software defects or non-conformities caused by errors in or modifications of or Updates to operating systems, databases or other software or hardware with which the Airbus Software interfaces, where such elements have not been provided by the Licensor.

The Licensee shall be responsible for the cost and expense of any correction services provided by the Licensor as a result of any of the foregoing exclusions. Such correction services shall be subject to the then applicable commercial conditions.

12.4 Waiver, release and renunciation

THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE LICENSOR (AS DEFINED BELOW FOR THE PURPOSES OF THIS CLAUSE) AND REMEDIES OF THE LICENSEE SET FORTH IN THIS ARTICLE 12 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE LICENSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE LICENSOR AND RIGHTS, CLAIMS AND REMEDIES OF THE LICENSEE AGAINST THE LICENSOR, EXPRESS OR IMPLIED, ARISING BY LAW, CONTRACT OR OTHERWISE WITH RESPECT TO ANY NON-CONFORMITY OR DEFECT OF ANY KIND IN ANY AIRBUS SOFTWARE AND SERVICES DELIVERED UNDER THE AGREEMENT AND/OR THIS SOFTWARE LICENSE, INCLUDING BUT NOT LIMITED TO:

(A) ANY WARRANTY AGAINST HIDDEN DEFECTS;

(B) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

(C) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

(D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT AND WHETHER OR NOT ARISING FROM THE LICENSOR’S NEGLIGENCE, ACTUAL OR IMPUTED; AND

(E) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICES DELIVERED UNDER THE AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT OR FOR ANY OTHER DIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.

PROVIDED THAT, IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE, THE REMAINDER OF THIS SOFTWARE LICENSE SHALL REMAIN IN FULL FORCE AND EFFECT.

FOR THE PURPOSES OF THIS ARTICLE 12, “THE LICENSOR” SHALL BE UNDERSTOOD TO INCLUDE THE LICENSOR, ANY OF ITS SUPPLIERS, SUBCONTRACTORS AND AFFILIATES.

The Licensor shall have no liability for data that is entered into the Airbus Software by the Licensee and/or used for computation purposes.

13 LIABILITY AND INDEMNITY

The Airbus Software is supplied under the express condition that the Licensor shall have no liability in contract or in tort arising from or in connection with the use and/or possession by the Licensee of the Airbus Software and that the Licensee shall indemnify and hold the Licensor harmless from and against any liabilities and claims from third parties arising from such use and/or possession.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 144/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

14 EXCUSABLE DELAYS

14.1 The Licensor shall not be responsible nor be deemed to be in default on account of delays in delivery of any Airbus Software or Update due to causes reasonably beyond the Licensor’s or its subcontractors’ control including but not limited to: natural disasters, fires, floods, explosions or earthquakes, epidemics or quarantine restrictions, serious accidents, total or constructive total loss, any act of the government of the country of the Licensee or the governments of the countries of Licensor or its subcontractors, war, insurrections or riots, failure of transportation, communications or services, strikes or labor troubles causing cessation, slow down or interruption of services, inability after due and timely diligence to procure materials, accessories, equipment or parts, failure of a subcontractor or supplier to furnish materials, accessories, equipment or parts due to causes reasonably beyond such subcontractor’s or supplier’s control or failure of the Licensee to comply with its obligations arising out of the present Software License.

14.2 The Licensor shall, as soon as practicable after becoming aware of any delay falling within the provisions of this Article, notify the Licensee of such delay and of the probable extent thereof and shall, subject to the conditions as hereinafter provided and as soon as practicable after the removal of the cause or causes for delay, resume delivery of the delayed Airbus Software or Update.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 145/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

15 TERMINATION

In the event of breach of an obligation set forth in this Software License by either the Licensor or the Licensee or failure to comply with the commercial conditions applicable to Airbus Software as set forth in the Agreement, which is not cured within 30 days from the date of receipt of a written notice notifying the breach, the non-breaching party shall be entitled to terminate this Software License.

In the event of termination for any cause, the Licensee shall no longer have any right to use the Airbus Software and shall return to the Licensor all copies of the Airbus Software and any relating documentation together with an affidavit to that effect. In case of breach by the Licensee, the Licensor shall be entitled to retain any amount paid for the ongoing year.

16 GENERAL PROVISIONS

16.1 This Software License is an Exhibit to the Agreement and integrally forms part thereof. As a result, any non-conflicting terms of the Agreement are deemed incorporated herein to the extent they are relevant in the context of this Software License.

16.2 In the event of any inconsistency or discrepancy between any term of this Software License and any term of the Agreement (including any other Exhibit or Appendices thereto), the terms of this Software License shall take precedence over the conflicting terms of the Agreement to the extent necessary to resolve such inconsistency or discrepancy.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 146/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

PART 2

GENERAL TERMS AND CONDITIONS

OF

ACCESS TO

AND

USE OF

AIRBUSWORLD

This document and all information contained herein is the sole property of AIRBUS S.A.S. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without the express written consent of AIRBUS S.A.S. This document and its content shall not be used for any purpose other than that for which it is supplied.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 147/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

Preamble

For the sole purposes of the General Terms and Conditions of Access to and Use of AirbusWorld (the “GTC”), the Buyer and the Seller hereby agree that in such GTC:

“The Seller” shall be referred to as AIRBUS S.A.S.,

“The Buyer” shall be referred to as “the Company”,

“The Agreement” shall have the meaning assigned thereto in the GTC.

For the sake of clarification, it is understood that the term “Agreement” as defined in the Clause 00B shall be referred to within the GTC with the meaning assigned thereto under the definition of “Contracts”

GENERAL TERMS AND CONDITIONS OF ACCESS TO AND USE OF

AIRBUSWORLD

ARTICLE 1: DEFINITIONS

Administrator(s):	Company’s employee(s) appointed by the Company, entitled to represent the Company for and in the management of the Agreement and responsible for the compliance by the Designated Users and the Company’s employees with the Agreement.
Agreement	The agreement between the Parties shall be understood as including, in the following order of precedence, (i) Specific Terms and Conditions applicable to specific Services if any and to that extent only, (ii) these General Terms and Conditions, and any other relating functional or technical document agreed between the Parties, it being understood that, in the event of any inconsistency the former ranking document shall prevail over the following one(s) to the extent of such inconsistency.
AIRBUS S.A.S.	AIRBUS S.A.S, a French Société par Actions Simplifiée, with a share capital of Euros 2 704 375, registered with the Trade and Companies Registry of Toulouse (France) under n° 383 474 814 and whose registered office is located 1 Rond Point Maurice Bellonte, 31700 Blagnac, France
AIRBUS	Collectively AIRBUS S.A.S and the legal entities controlled by AIRBUS S.A.S, the term “control” meaning the direct or indirect ownership of at least fifty percent (50%) of the voting stocks in such legal entities.
AIRBUS Data	Any and all data, information and material made accessible and available by AIRBUS to the Company through AW.
AW	AirbusWorld, access to which may be given by AIRBUS S.A.S. to Designated Users of the Company.
Company	The company entering into these General Terms and Conditions as identified on the execution page of this document.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 148/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

Company Data	Any and all data, information and other material made accessible and available by the Company to AIRBUS through AW.
CONTRACTS	Any and all present and future contracts, agreements or letters, the terms of which imply a commitment of the Company and/or AIRBUS other than related to the present Agreement, namely but without limitation: confidentiality agreements, exchanges in the course of a call for tender, contracts for the supply of services, procurement/sale agreements, aircraft purchase agreements, co-operation agreements, research contracts, maintenance contracts.
Data	Collectively the AIRBUS Data and the Company Data.
Databases	Any and all collections of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means by the Company through AW.
Designated Users	Employees of the Company authorized by a Company Administrator to access and use AW.
Force Majeure Event	An event the occurrence of which is beyond the reasonable control of either party to this Agreement, including (without limitation) the following: Act of God, explosion, earthquake, act of terrorism, war, riot, civil commotion, malicious damage, failure of a utility service or transport network, failure of third party suppliers, industrial action, failure of plant or equipment, fire or flood.
Identification Codes	Confidential and personal identification codes attached to each Designated User and which formally identify each Designated User accessing and using AW.
Party or Parties	Individually or collectively AIRBUS S.A.S. and/or the Company.
Personal Data	Personal data as defined in the Data Protection Act 1998, including personal data files or personal data automated processing systems.
Services	Any and all on line services made available to the Company through AW under the terms and conditions of the Agreement.
Specific Terms and Conditions	Terms and conditions under which AIRBUS S.A.S. grants access to specific Services to the Company.
System	Equipment (hardware, software, connections, etc) set up by AIRBUS S.A.S. and enabling AIRBUS S.A.S. to provide the Services on AW through the internet.
User Documentation	Documentation intended for the Administrators and Designated Users of AW describing the technical means enabling connection to the System and access to AW and providing information related to the use of AW and/or the Services. User Documentation may be modified from time to time by AIRBUS S.A.S and is available on AW.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 149/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

ARTICLE 2: PURPOSE / CONTRACTUAL DOCUMENTS

2.1 The purpose of these General Terms and Conditions is to define the terms and conditions under which AIRBUS S.A.S. authorizes the Company to access and use AW and to benefit from some of the Services offered through the latter.

2.2 Access to and use of certain Services may be subject to acceptance by the Company of Specific Terms and Conditions.

2.3 AW may be used by the Company for the purpose of exchanging information with AIRBUS and specifically for the performance of the Contracts. The Agreement shall not be construed as interfering with the terms and conditions of any such Contracts. The terms and conditions of the Contracts shall in any case prevail over the terms of the Agreement.

2.4 The Company and AIRBUS shall not exchange Data through AW that are not necessary for professional or business purposes as mentioned in Article 2.3. Activities directly or indirectly related to spamming are prohibited on AW.

2.5 Should there be a need for the Company to use AW in its quality of subcontractor of a supplier, a customer, or a co-contractor of AIRBUS (hereafter individually and collectively an “AIRBUS Co-contractor”), then the Company hereby guarantees that it is duly authorised by such AIRBUS Co-contractor to request from AIRBUS S.A.S. an access to AW and the use of the Services. The Agreement between AIRBUS S.A.S. and the Company is entered into for the sole purpose of the use of AW and shall in no event be construed as a change to the contracts entered into by AIRBUS and the AIRBUS Co-contractor and/or establish a direct contractual relationship between AIRBUS and the Company other than the Agreement.

ARTICLE 3: EXTENT OF ACCESS TO AND USE OF AW

3.1 AIRBUS S.A.S. grants to the Company, a worldwide, personal, non-exclusive and non-transferable right to access and use AW and the Services, pursuant to the terms and conditions of and for the duration of the Agreement. The Company shall not fully or partially assign, sublicense nor subcontract any of its rights and/or obligations under the Agreement, without the express prior written authorization of AIRBUS S.A.S.

3.2 No right other than that provided in Article 3.1 above is granted by AIRBUS S.A.S. to the Company under these General Terms and Conditions, and the Company shall not, directly or indirectly, without limitation, extract, reproduce, represent, adapt, modify and/or translate, all or part of AW, the System and/or the Databases, nor create any derivative work therefrom, nor use any and/or all of the aforesaid elements for any purposes other than those agreed upon between the Parties.

3.3 AW, the System, the Databases and the AIRBUS Data shall remain the sole ownership of AIRBUS and/or its licensors.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 150/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

ARTICLE 4: ADMINISTRATORS AND DESIGNATED USERS

4.1 AIRBUS S.A.S. shall propose on-line standard training for the Administrator on AW at AIRBUS S.A.S’ expense and AIRBUS S.A.S. shall make available appropriate documentation to the Designated Users.

4.2 The Company shall be solely responsible for the enforcement of the Agreement by its employees, including the Administrator(s) and the Designated Users. The Company shall ensure, at its own expense, that the Administrator(s) and the Designated Users are qualified and properly trained for the purpose of the performance of the Agreement.

4.3 The Company shall designate one Administrator. AIRBUS S.A.S. may, at its sole discretion and upon the Company’s request, authorise in writing the Company to designate additional Administrator(s), provided the Company defines non-overlapping areas and/or timeframes for each of the Administrators, e.g. for different branches or sites of the Company. It is understood that the Company shall be solely responsible in the event of inconsistent instructions received from the Administrators.

4.4 The Administrator(s) shall have the capacity to represent the Company with respect to the execution and performance of any contractual document related to the access, use and operation of AW.

4.5 The Administrator(s) shall appoint Designated Users among the employees of the Company. Each Designated User shall be provided with a personal and confidential Identification Code, at AIRBUS S.A.S.’ discretion, either by the Administrator, by AIRBUS S.A.S. or by an independent, reputable and reliable organism.

4.6 Each and every access, use and operation of AW with an Identification Code shall be deemed to have been made by the corresponding Designated User.

4.7 The Company shall ensure that:

(I) each Identification Code is used by the corresponding Designated User only and is personal to such Designated User;

(II) each personal Identification Code shall not be communicated to any person other than the corresponding Designated User;

(III) each Designated User accesses and uses AW in accordance with the specific rights he/she has been granted under the Agreement;

(IV) no third party can access the Identification Codes or AW.

4.8 Should the Company become aware of any potential risk that Identification Code(s) could be or could have been disclosed to anyone other than the corresponding Designated User, then the Administrator(s) shall, without any delay, cancel the access to AW in respect of such Identification Code(s) and notify AIRBUS S.A.S. of such potential risk and of such cancellation of the Identification Code(s), notwithstanding AIRBUS S.A.S.’ rights to cancel such access.

4.9 The Company shall inform AIRBUS S.A.S., without any delay, of (i) any modification in the professional situation of the Administrator(s) and/or Designated Users, including without limitation leave or resignation from the Company, (ii) the termination/expiration of any or all of the Contracts (iii) the termination/expiration of any contract of the Company with an AIRBUS Co-contractor as referred to in Article 2.5 above. In any of such cases, the Company shall without delay cancel the access to AW for the corresponding Designated Users, notwithstanding AIRBUS S.A.S.’ rights to cancel such access.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 151/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

4.10 Should any one of Designated Users and/or Administrators not comply with any provision of the Agreement and/or any applicable laws and regulations, or should AIRBUS S.A.S. fear that his/her access may possibly result in a breach of the Agreement, including but not limited to confidentiality and/or security provisions and/or result in an illegal situation, AIRBUS S.A.S. shall be entitled, at any time, without prejudice to its other rights and without prior notice, to restrict or suspend access to all or part of AW by any or all such Designated User(s) and/or Administrator(s).

ARTICLE 5: ACCESS REQUIREMENTS

5.1 The Company shall, at its own costs and under its sole responsibility and liability, procure, install and maintain the information technology equipment necessary to access the System and AW. The Company shall use all care and means available in the state of the art necessary to prevent intrusion of any third party and/or malicious codes into the System and/or AW.

5.2 The Company shall be responsible for obtaining and maintaining any relevant authorisations and/or accomplishing any and all relevant formalities necessary to have access to and benefit from AW as well as for performing its own obligations under the Agreement and/or any applicable laws and regulations.

5.3 AIRBUS S.A.S. shall be entitled, without limitation for security purposes, to at any time modify or have the Company modify, the Identification Codes. Any modification of such Identification Codes shall be notified by the modifying Party to the other Party.

ARTICLE 6: CHARACTERISTICS AND AVAILABILITY OF AW

6.1 AIRBUS S.A.S. shall make its reasonable efforts to provide the necessary means in order to make AW accessible seven (7) days a week and twenty-four (24) hours a day. Should the access to or use of AW be disturbed, AIRBUS S.A.S. shall take all reasonable and proper steps to restore the access to or use of AW.

6.2 In this respect and without limitation, AIRBUS S.A.S. shall be entitled, at any time and without notification, to suspend, temporarily or permanently, access to all or part of AW:

(i) in order to proceed with any maintenance of the System and/or updating of AW, the Databases and/or the Data;

(ii) for security reasons;

(iii) in order to comply with any regulatory constraints and/or court injunction or decision.

6.3 Should AIRBUS S.A.S. foresee that the unavailability of AW, in whole or in part, will exceed twenty-four (24) consecutive hours, AIRBUS S.A.S. shall make reasonable efforts to inform as promptly as possible the Company, by whatever means, of such unavailability.

6.4 Without prejudice to any other provision of the Agreement, should the Company be unable for any reason to access AW for more than twenty four (24) consecutive hours and/or for a period

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 152/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

incompatible with the performance schedule of a Contract requiring the use of AW, the Company shall inform AIRBUS S.A.S. and the Parties shall determine together alternative solutions, related but not limited to, the exchange of data.

ARTICLE 7: CONFIDENTIALITY

7.1 UNLESS OTHERWISE AGREED UPON IN THE AGREEMENT AND/OR THE CONTRACTS, AND UNLESS THE SAME INFORMATION MAY BE ACCESSED IN THE FREELY ACCESSIBLE PUBLIC AREA OF AW, ALL INFORMATION MADE AVAILABLE BY THE COMPANY AND AIRBUS TO EACH OTHER THROUGH AW SHALL BE DEEMED CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED BY THE RECEIVING PARTY TO ANY THIRD PARTY AND SHALL NOT BE USED FOR ANY PURPOSE OTHER THAN THOSE AGREED UPON BY THE COMPANY AND AIRBUS, EVEN IF THAT PURPOSE IS FOR THE RECEIVING PARTY’S INTERNAL NEEDS. THE FOLLOWING SHALL NOT BE DEEMED TO BE CONFIDENTIAL INFORMATION FOR THE PURPOSES OF THIS AGREEMENT: (I) INFORMATION WHICH IS IN THE PUBLIC DOMAIN OTHER THAN AS A RESULT OF A BREACH OF THIS AGREEMENT OR A CONTRACT; (II) INFORMATION WHICH THE RECEIVING PARTY CAN DEMONSTRATE WAS RECEIVED, FREE OF ANY OBLIGATION OF CONFIDENCE, FROM A THIRD PARTY WHICH ITSELF WAS NOT UNDER ANY OBLIGATION OF CONFIDENCE IN RELATION TO THAT INFORMATION; AND (III) INFORMATION WHICH WAS DEVELOPED OR CREATED INDEPENDENTLY BY OR ON BEHALF OF THE RECEIVING PARTY.

7.2 The Company hereby authorises AIRBUS to disclose such information within AIRBUS, provided the AIRBUS legal entities exchanging such information have entered with each other into a confidentiality agreement.

ARTICLE 8: EXCHANGE OF DATA

8.1 As part of the Services, AW enables the Company and AIRBUS to exchange or have access to the Data, for the purpose of collaboration between the Company and AIRBUS and/or performance of the Contracts.

8.2 The Company shall have the right to access to and use the AIRBUS Data, and AIRBUS shall have the right to access to and use the Company Data, solely to the extent defined in the Agreement and/or the Contracts.

8.3 Except as otherwise agreed in the Agreement and/or the Contracts, the Company and AIRBUS may, during the term of the Agreement, for internal use only, adapt, translate, make hard copies and/or numeric reproductions of the Data received from the disclosing party, for the sole purpose of the Agreement and of, as the case may be, the performance of the Contract(s) or the collaboration of the Company and AIRBUS. The Data received from the disclosing party, their hard copies and numeric reproductions, may be processed by and circulated worldwide only to the employees of the receiving party having a need to know the same for the purpose of the Agreement and of, as the case may be, the performance of the Contract(s) or the collaboration of the Company and AIRBUS.

8.4 The Company and AIRBUS shall ensure that all proprietary rights and confidentiality mentions stated on any original document are replicated on any reproduction made thereof. Any translation and/or adaptation shall expressly state that it is a derivative from the original document. The Company and AIRBUS shall refrain from removing and/or altering any of these mentions.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 153/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

8.5 The Company shall take care and use all means available in the state of the art at any time of the Agreement in order to prevent the Company Data from creating permanent or temporary disturbance of the operation and/or the use of the System, AW and/or the Database.

8.6 The Company shall immediately notify AIRBUS S.A.S. of the occurrence or possible occurrence of any of the events referred to in Article 8.3 above. Should AIRBUS S.A.S. be aware of any of such aforesaid events, it shall be entitled, without notice and without prejudice to its other rights, to delete the implicated Company Data from the System.

8.7 Taking into account the electronic nature of the Data exchanged through AW, the Company and AIRBUS agree to give to such electronic exchanges the same probatory value as exchanges made by registered mail.

8.8 Should any creation or development be made by the Company when accessing and using AW and/or exchanging Data with AIRBUS, then the rights of each party on such creation or development shall be determined pursuant to the corresponding Contract or Specific Terms and Conditions, if any.

ARTICLE 9: PRIVACY

9.1 Each party shall comply at all times with its obligations under all local data protection laws and regulations in relation to all Personal Data provided to it by the other party in connection with this Agreement or a Contract and shall inform the other party of any information system evolution which could affect such obligations.

9.2 The Company is hereby notified that AIRBUS may request Personal Data directly from the Administrator(s) and the Designated Users for accessing and using AW. The Company shall inform the Administrator(s) and the Designated Users (i) in accordance with applicable data protection laws, (ii) of the provisions of this Article 9 and their related rights.

9.3 The Company undertakes to comply with the Data Protection Act 1998 and to inform the Administrator(s) and the Designated Users that:

(i) failure to provide such Personal Data may prevent access to AW;

(ii) such Personal Data shall be used by AIRBUS for the sole purpose of (a) security, operation and maintenance of AW and (b) the Services and/or communication with and the provision of information to the Administrator(s) and the Designated Users in respect of AW and the Services;

(iii) such Personal Data may be transferred to AIRBUS service providers or other AIRBUS entities throughout the world in compliance with the Data Protection Act 1998; and

(iv) they benefit from a right of access to and rectification of, their Personal Data archived by AIRBUS.

9.4 AW uses “cookies” (small data files transferred to computer hard drives for the sole purpose of recording computer connections to AW such as date, time, consulted pages, etc.). AIRBUS S.A.S. may access and record this information during Designated Users’ visits. The use of cookies is a prerequisite to the operation of AW and the Company recognizes that any Designated User exercising his/her right to disable cookies shall not have access to AW.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 154/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

9.5 Personal Data may be accessed by the Company, Administrators and/or Designated Users and, as the case may be, rectified upon written request to AIRBUS S.A.S, 1 Rond-Point Maurice Bellonte, 31707 Blagnac Cedex, France.

9.6 As the performance of the Agreement may imply cross-border transfer of Personal Data, the Company hereby declares that it is aware of (i) the Council of Europe Convention for the Protection of Individuals with regards to Automatic Processing of Personal Data, (ii) the European Directive n° 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data and (iii) the Data Protection Act 1998, and the Company shall ensure that it remains aware of any further modification of the applicable laws in force and undertakes to comply with the same.

ARTICLE 10: WARRANTY / LIABILITY

10.1 To the extent permitted by law, the Company acknowledges that AW, including any and all of its supporting elements and contents, i.e. without limitation the System, the Databases and, unless otherwise stated in the Contracts, AIRBUS Data, are provided “as is” and “as available”.

10.2 To the extent permitted by law, AIRBUS S.A.S. excludes that (i) all warranties and representations that AW, the System, the Services and/or the User Documentation shall meet the Company’s requirements and expectations, or shall be uninterrupted, timely, secure or error-free, (ii) all warranties and representations that the results that may be displayed through AW, the Data, Databases and/or any material obtained through AW shall be accurate, reliable or error free; and (iii) any warranties, conditions, terms, undertakings and obligations implied by statute, common law, custom, trade usage, course of dealing or otherwise (including but not limited to implied undertakings of satisfactory quality, conformity with description and reasonable fitness for purpose).

10.3 Access to and use of AW are therefore performed at the Company’s sole risk and the Company shall be solely responsible for such access or use and AIRBUS S.A.S. shall not be liable for any loss, damages, costs or expenses, howsoever arising (whether in contract, tort or otherwise and including any infringement of a third party’s rights or otherwise), arising out of or in connection with the Company’s access, and use of AW, the AIRBUS Data and the Databases, computer intrusion, security failure, or unavailability of the Services, the AW and/or the materials contained therein or accessed through AW. In no event, shall AIRBUS or its successive successors and assignees be liable for any damage, whether direct or indirect, such as but without limitation loss of data or of programs, loss of use, financial loss, any deterioration or infection by malicious codes of the Company’s information technology equipment (including but not limited to software, hardware, connections and/or any system or network).

10.4 Notwithstanding the preceding provisions, AIRBUS S.A.S. agrees to support the defence of the Company against any claim alleging that the normal use by the Company of the System infringes the intellectual property rights of any third party by answering the Company’s reasonable related information requests, provided the Company notifies AIRBUS S.A.S. in writing of any such claim within fifteen (15) days from the date it has knowledge of the latter.

10.5 Should any provision of the Agreement become prohibited or unlawful or unenforceable under any applicable law actually applied by any court of competent jurisdiction, such provision shall, to the extent required by such law, be severed from the Agreement and rendered ineffective insofar as possible without modifying the remaining provisions. Where, however, the provisions of any such applicable law may be waived, the Parties hereby agree that they shall waive such provisions to the fullest extent permitted by such law, with the result that the provisions of the Agreement shall be valid, binding and enforceable. The Parties agree to replace, as far as practicable, any provision which is prohibited, unlawful or unenforceable with another provision having substantially the same effect (in

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 155/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

its legal and commercial content) as the replaced provision, but which is not prohibited, unlawful or unenforceable. The invalidity in whole or in part of any provision(s) of the Agreement shall not void or affect the validity of any other provision.

ARTICLE 11: DURATION / TERMINATION

11.1 These General Terms and Conditions shall enter into force on the date of their execution by both Parties. The entry into force or termination of these General Terms and Conditions shall not interfere in any way with the term of any Contracts in force.

The duration of any other contractual document entered into by the Parties as part of the Agreement shall be provided in the corresponding document. Should these General Terms and Conditions be terminated, all such documents shall, automatically and notwithstanding any other provision in the Agreement, be terminated concurrently therewith.

In the event of the Company being in breach any of its obligations under the Agreement, AIRBUS S.A.S. shall be entitled, without prejudice to any of its other rights and without prior notice, to immediately and automatically suspend access to AW or terminate all or part of the Agreement.

11.2 Upon termination, for whatever reason, of all or part of the Agreement, the Company shall immediately, at AIRBUS S.A.S.’ discretion, (i) cease to access AW and/or the corresponding Service(s) and (ii) return or destroy, except in the event that a dispute arises or is raised between the Company and AIRBUS under the Agreement or the Contracts, the Identification Codes as well as all AIRBUS Data the Company may have held in relation to the terminated part of the Agreement.

11.3 Should either party be prevented from complying with its obligations under this Agreement due to a Force Majeure Event and such Force Majeure Event continue for a period of more than one (1) month, then either Party may terminate the Agreement upon written notice to the other Party.

ARTICLE 12: MISCELLANEOUS

AIRBUS S.A.S. is entitled to assign all or part of its rights and/or obligations under the Agreement to any legal entity controlled by AIRBUS S.A.S.

Airbus S.A.S. is entitled to subcontract any of its obligations under the Agreement.

The Agreement shall not be modified except through a written amendment signed by the duly authorized representatives of both Parties.

This Agreement constitutes the entire agreement between the parties in relation to the use of AW, the System, the Data and the Databases. Each party acknowledges that in entering into this Agreement it has not relied upon, and shall have no rights or remedies (whether in tort, under statute or otherwise) in respect of any statements, collateral or other warranties, assurances, undertakings or representations (whether innocently or negligently made) by the other party to this Agreement.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 156/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

ARTICLE 13: LAW – JURISDICTION

THE AGREEMENT IS GOVERNED BY THE LAWS OF ENGLAND AND THE EXCLUSIVE JURISDICTION FOR ANY DISPUTE ARISING OUT OR IN CONNECTION WITH ITS EXISTENCE, VALIDITY, INTERPRETATION OR EXECUTION SHALL BE GIVEN TO THE COURTS OF ENGLAND, WITH AIRBUS RESERVING THE RIGHT TO PETITION ANY OTHER COMPETENT COURT.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 157/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

PART 3

END-USER SUBLICENSE AGREEMENT FOR SUPPLIER SOFTWARE

1 DEFINITIONS

For the purposes of this end-user sublicense agreement for Supplier Software (the “Software Sublicense”) the following definitions shall apply:

“Agreement” means the Purchase Agreement of even date herewith covering the purchase and sale of the Aircraft subject thereof.

“Aircraft” means, individually or collectively, the Aircraft subject of the Agreement.

“Composite Work” means the package composed of various elements, such as database(s), software or data, and which necessitates the use of the Supplier Software.

“Permitted Purpose” means use of the Supplier Software by the Sublicensee for its own internal business needs, solely in conjunction with the Aircraft and in particular pertaining to (i) operation of the Aircraft; (ii) on ground operational support of the Aircraft; or (iii) related authorized customization of software.

“Sublicensee” means the Buyer under the Agreement.

“Sublicensor” means the Seller under the Agreement as authorized by the Supplier to sublicense the Supplier Software to the operators of Airbus aircraft.

“Supplier” means each of the Sublicensor’s suppliers owning the intellectual property rights in the corresponding Supplier Software (or holding the right to authorize the Sublicensor to sublicense such Supplier Software) and having granted to the Sublicensor the right to sublicense such Supplier Software.

“Supplier Product Support Agreement” shall have the meaning set forth in Clause 12.3.1.3 of the Agreement.

“Supplier Software” means each of the Supplier’s proprietary products including Composite Work, configurations, processes, rules (together with any related documentation) as well as any modifications, enhancements or extensions thereto, as may be provided by the Supplier or the Sublicensor from time to time and the supply of which to the Sublicensee is governed by a Supplier Product Support Agreement. The Supplier Software shall be supplied in machine-readable code form only, for use in connection with the Aircraft or operations related to the Aircraft. For the avoidance of doubt, this Software Sublicense does not apply to (i) any software embedded in any component, furnishing or equipment installed on the Aircraft and itself bearing a partnumber (ii) third party software not provided under a Supplier Product Support Agreement, including but not limited to any standard, “off the shelf” software (Components Off The Shelf/COTS) and (iii) open source software contained in the Supplier Software, if any, and it is hereby acknowledged and agreed by both parties hereto that such open source software is independently distributed on an “as is” basis under the respective license terms therefor, and that the Sublicensor disclaims any liability in relation to such open source software.

“Update(s)” means any update(s) or replacement(s) to the Supplier Software licensed hereunder, which the Sublicensor or the Supplier, at their discretion, make generally available to the Sublicensee.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 158/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

“User Guide” means the documentation, which may be in electronic format, designed to assist the Sublicensee in using the Supplier Software.

Capitalized terms used herein and not otherwise defined in this Software Sublicense shall have the meaning assigned thereto in the Agreement.

2 LICENSE

In consideration of the purchase by the Sublicensee of the Aircraft, the Sublicensee is hereby granted a free of charge, worldwide and non-exclusive right to use the Supplier Software, for a Permitted Purpose. Each Supplier shall remain the owner of all intellectual property rights in the Supplier Software. There shall be one Software Sublicense granted in respect of each Aircraft purchased by the Sublicensee.

The Sublicensee hereby acknowledges that it is aware that certain Supplier Software subject of this Software Sublicense may incorporate some third party software or open source software components. The Sublicensee hereby agrees to be bound by the licensing terms and conditions applicable to such third party software and made available by the Sublicensor through AirbusWorld.

3 ASSIGNMENT AND DELEGATION

3.1 Assignment

The Sublicensee may, at any time, assign or otherwise transfer all or part of its rights under this Software Sublicense only as part of, and to the extent of, a sale, transfer or lease of any or all of the Aircraft to which the Supplier Software are related provided that the Sublicensee causes the assignee to agree to the terms of this Software Sublicense.

The Sublicensee shall assign a Software Sublicense for all Supplier Software installed on the sold, transferred or leased Aircraft and shall retain all other Software Sublicenses attached to any Aircraft that the Sublicensee continues to operate.

In the event of any such assignment or transfer, the Sublicensee shall transfer the copies of the Supplier Software attached to the sold, transferred or leased Aircraft (including all component parts, media, any upgrades or backup copies, this Software Sublicense, and if applicable, certificate(s) of authenticity), except as otherwise instructed by the Sublicensor.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 159/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

3.2 Delegation

Without prejudice to Article 10 hereof, in the event of the Sublicensee intending to designate a maintenance and repair organization or a third party to perform the maintenance of the Aircraft or to perform data processing on its behalf (each a “Third Party”), the Sublicensee shall notify the Sublicensor of such intention prior to any disclosure of this Software Sublicense and/or the Supplier Software to such Third Party.

The Sublicensee hereby undertakes to cause such Third Party to enter into appropriate licensing conditions with the corresponding Supplier and to commit to use the Supplier Software solely for the purpose of maintaining the Sublicensee’s Aircraft and/or processing the Sublicensee’s data.

4 COPIES

Use of the Supplier Software is limited to the number of copies delivered by the Sublicensor to the Sublicensee and to the medium on which the Supplier Software is delivered. No reproduction shall be made without the written consent of the Sublicensor, except that the Sublicensee is authorized to copy the Supplier Software for back-up and archiving purposes. Any copy the Sublicensor authorizes the Sublicensee to make shall be performed under the sole responsibility of the Sublicensee. The Sublicensee agrees to reproduce the copyright and other notices as they appear on or within the original media on any copies that the Sublicensee makes of the Supplier Software.

5 TERM

Subject to the Sublicensee having complied with the terms of this Software Sublicense, the rights under this Software Sublicense shall be granted from the date of Delivery of each Aircraft until the earlier of (i) the Aircraft ceasing to be operated, in which case the license rights pertaining to such Aircraft shall be deemed terminated for such Aircraft on the date of the last operation thereof by the Sublicensee or any of its assignees, or (ii) the Agreement, this Software Sublicense or any part thereof, being terminated for any reason whatsoever, in which case the Sublicensee shall immediately cease to use the affected Supplier Software upon the effective termination date.

6 CONDITIONS OF USE

The Supplier Software shall only be used for the Permitted Purpose.

The Sublicensee shall be solely responsible for, and agrees to be be careful in the use of, all outputs and results derived from the operation of the Supplier Software and all consequences, direct and indirect, relating to the use of such output and results. The Sublicensee agrees to use such outputs and results only once it has verified such outputs and results and has checked the relevance and correctness thereof, in the light of its particular needs.

The Sublicensee expressly acknowledges that it will take all appropriate precautions for the use of the Supplier Software, including without limitation measures required for its compliance with the User Guide or any information or directive regarding the use of the Supplier Software.

Under the present Software Sublicense, the Sublicensee shall:

a) not permit any parent, subsidiary, affiliate, agent or other third party to use the Supplier Software in any manner, including, but not limited to, any outsourcing, loan, commercialization of the Supplier Software or commercialization by merging the Supplier Software into another software or adapting the Supplier Software, without the prior written consent from the Supplier;

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 160/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

b) do its utmost to maintain the Supplier Software and the relating documentation in good working condition, in order to ensure the correct operation thereof;

c) use the Supplier Software in accordance with such documentation and the User Guide, and ensure that the personnel using the Supplier Software has received appropriate training;

d) use the Supplier Software exclusively in the technical environment defined in the applicable User Guide, except as otherwise agreed in writing between the parties;

e) except as permitted by Section 50C – Copyright, Designs and Patents Act 1988, not alter, reverse engineer, modify, correct, translate, disassemble, decompile or adapt the Supplier Software, nor integrate all or part of the Supplier Software in any manner whatsoever into another software product; nor create a software product derived from the Supplier Software save with the Supplier’s prior written approval;

f) should the Sublicensor or the Supplier have elected to provide the source code to the Sublicensee, have the right to study and test the Supplier Software, under conditions to be expressly specified by the Sublicensor, but in no event shall the Sublicensee have the right to correct, modify or translate the Supplier Software;

g) not attempt to discover or re-write the Supplier Software source codes in any manner whatsoever;

h) not delete any identification or declaration relative to the intellectual property rights, trademarks or any other information related to ownership or intellectual property rights in the Supplier Software;

i) not pledge, sell, distribute, grant, sublicense, lease, lend, whether on a free-of-charge basis or against payment, or permit access on a time-sharing basis or any other utilization of the Supplier Software, whether in whole or in part, for the benefit of a third party;

7 TRAINING

In addition to the User Guide provided with the Supplier Software, training and other assistance shall be provided upon the Sublicensee’s request, subject to conditions set forth in the Agreement. Such assistance or training shall not operate to relieve the Sublicensee of its sole responsibility with respect to the use of the Supplier Software under this Software Sublicense.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 161/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

8 PROPRIETARY RIGHTS - RIGHT TO CORRECT AND MODIFY

8.1 The Supplier Software is proprietary to the Supplier and the Sublicensor represents and warrants that it has been granted the intellectual property rights necessary to grant this Software Sublicense. The copyright and all other proprietary rights in the Supplier Software are and shall remain the property of the Supplier.

8.2 The Supplier may correct or modify its Supplier Software from time to time at its sole discretion and the Sublicensee shall not undertake any correction or modification of the Supplier Software without the Sublicensor’s prior written approval.The Sublicensee shall install any Updates provided either by the Supplier or the Sublicensor in accordance with the time schedule notified with the provision of such Update(s). In the event of the Sublicensee failing to install any such Update(s), both the Sublicensor and the Supplier shall be relieved of any warranty or liability of any kind with respect to the conformity or operation of the Supplier Software.

9 COPYRIGHT INDEMNITY

The Sublicensee hereby accepts the transfer to its benefit of all transferable and enforceable copyright indemnity conditions related to the corresponding Supplier Software and contained in the applicable Supplier Product Support Agreement.

10 CONFIDENTIALITY

The Supplier Software, this Software Sub-license and their contents are designated as confidential. The Sublicensee undertakes not to disclose the Software Sub-license, the Supplier Software or any parts thereof to any third party without the prior written consent of the Sublicensor, except to the lessee in case of lease of an Aircraft or to the buyer in case of resale of the Aircraft, without prejudice to any provisions set forth in the Agreement. In so far as it is necessary to disclose aspects of the Supplier Software to the Sublicensee’s employees, such disclosure is permitted solely for the purpose for which the Supplier Software is supplied and only to those employees who need to know the same, save as permitted herein or where otherwise required pursuant to an enforceable court order or any governmental decision or regulatory provision imposed on the Sublicensee, provided that reasonable prior notice of the intended disclosure is provided to the Sublicensor.

The obligations of the Sublicensee to maintain confidentiality shall survive the termination of this Software Sublicense for a period of ten (10) years.

11 ACCEPTANCE

Supplier Software shall be deemed accepted as part of the Technical Acceptance Process set out in Clause 8 of the Agreement.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 162/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

12 WARRANTY

The Sublicensee hereby accepts the transfer to its benefit of all transferable and enforceable warranties related to the corresponding Supplier Software and contained in the applicable Supplier Product Support Agreement.

As a result, THE SUBLICENSEE acknowledges that the transferable and enforceable warranties, OBLIGATIONS and LIABILITIES contained in the Supplier Product Support Agreement shall constitute the sole and exclusive remedy available in the event of any defect or non-conformity of the Supplier Software.

Neither the Supplier nor the Sublicensor shall have any liability for data that is entered into the Supplier Software by the Sublicensee and/or used for computation purposes.

13 LIABILITY AND INDEMNITY

The Supplier Software is supplied under the express condition that neither the Supplier nor the Sublicensor shall have any liability in contract or in tort arising from or in connection with the use and/or possession by the Sublicensee of the Supplier Software and that the Sublicensee shall indemnify and hold the Sublicensor and the Supplier harmless from and against any liabilities and claims from third parties arising from such use and/or possession.

14 EXCUSABLE DELAYS

14.1 Neither the Sublicensor nor the Supplier(s) shall be responsible nor be deemed to be in default on account of delays in delivery of any Supplier Software or Updates due to causes reasonably beyond Sublicensor’s or its suppliers’ or subcontractors’ (including the Supplier) control including but not limited to: natural disasters, fires, floods, explosions or earthquakes, epidemics or quarantine restrictions, serious accidents, total or constructive total loss, any act of the government of the country of the Sublicensee or the governments of the countries of Sublicensor or its subcontractors or its suppliers (including the Supplier), war, insurrections or riots, failure of transportation, communications or services, strikes or labor troubles causing cessation, slow down or interruption of services, inability after due and timely diligence to procure materials, accessories, equipment or parts, failure of a subcontractor or supplier (including the Supplier) to furnish materials, accessories, equipment or parts due to causes reasonably beyond such subcontractor’s or supplier’s (including the Supplier) control or failure of the Sublicensee or the Supplier to comply with its obligations arising out of the present Software Sublicense.

14.2 The Sublicensor shall, and/or shall cause the Supplier to, as soon as practicable after becoming aware of any delay falling within the provisions of this Article, notify the Sublicensee of such delay and of the probable extent thereof and shall, subject to the conditions as hereinafter provided and as soon as practicable after the removal of the cause or causes for delay, resume delivery of the delayed Supplier Software or Update.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 163/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

EXHIBIT I

15 TERMINATION

In the event of breach of an obligation set forth in this Software Sublicense by either the Sublicensor or the Sublicensee, which is not cured within 30 days from the date of receipt of a written notice notifying the breach, the non-breaching party shall be entitled to terminate this Software Sublicense.

In the event of termination for any cause, the Sublicensee shall no longer have any right to use the Supplier Software and shall return to the Supplier all copies of the Supplier Software and any relating documentation together with an affidavit to that effect.

16 GENERAL PROVISIONS

16.1 This Software Sublicense is an Exhibit to the Agreement and integrally forms part thereof. As a result, any non-conflicting terms of the Agreement are deemed incorporated herein to the extent they are relevant in the context of this Software Sublicense.

16.2 In the event of any inconsistency or discrepancy between any term of this Software Sublicense and any term of the Agreement (including any Appendix or other Exhibits thereto), the terms of this Software Sublicense shall take precedence over the conflicting terms of the Agreement to the extent necessary to resolve such inconsistency or discrepancy.

16.3 The Sublicensee acknowledges that the Supplier Software covered under the present Sub-license Agreement is also subject to the conditions relative to each Supplier Software set forth in the corresponding Supplier Product Support Agreement. In the event of any inconsistency between the terms of this Sub-license Agreement and the terms contained in the corresponding Supplier Product Support Agreement, the latter shall prevail to the extent of such inconsistency.

06/11 – CT1101195 – LAN – A320NEO-EXH I

Exhibit I - Page 164/212

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

LETTER AGREEMENT N° 1

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: Commercial Concessions

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 1 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 1 - Page 165/212

LETTER AGREEMENT N° 1

1. The A319 NEO Aircraft [***]

1.1 The Seller shall provide to the Buyer, [***] A319 NEO Aircraft, the following A319 [***] ([***] “A319 [***]”):

[***]

1.2 The A319 [***] A319 NEO Aircraft [***].

Such A319 [***] A319 NEO Aircraft in accordance with the Seller Price Revision Formula set forth in Exhibit C Part 1 of the Agreement ([***]).

2 A319 [***]

2.1 The Seller shall provide to the Buyer, [***].

2.2 The Seller shall provide to the Buyer, [***].

2.3 The Fixed [***] A319 NEO Aircraft [***].

06/11 – CT1101195 – LAN – A320NEO PA

LA 1 - Page 166/212

LETTER AGREEMENT N° 1

3. The A320 NEO Aircraft [***]

3.1 The Seller shall provide to the Buyer, [***] A320 NEO Aircraft, the following A320 [***] ([***]):

[***]

3.2 The A320 [***] A320 NEO Aircraft [***].

Such A320 [***] A320 NEO Aircraft in accordance with the Seller Price Revision Formula set forth in Exhibit C Part 1 of the Agreement ([***]).

4. A320 [***]

4.1 The Seller shall provide to the Buyer, [***].

4.2 The Seller shall provide to the Buyer, [***].

4.3 The A320 [***] A320 NEO Aircraft [***].

5. The A321 [***]

5.1 The Seller shall provide to the Buyer, [***] ([***]):

[***].

5.2 The A321 [***] the A321 NEO Aircraft [***].

Such A321 [***] A321 NEO Aircraft in accordance with the Seller Price Revision Formula set forth in Exhibit C Part 1 of the Agreement ([***]).

6. A321 [***]

6.1 The Seller shall provide to the Buyer, [***].

6.2 The Seller shall provide to the Buyer, [***].

6.2 The A321 [***] A321 NEO Aircraft [***].

7. A321 [***]

The [***] A321 [***] A321 NEO Aircraft [***].

When it becomes impossible for the Buyer [***] A321 [***].

If at the earliest time at which it becomes impossible for the Buyer [***] under the Agreement or if the A321 NEO [***]:

[***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 1 - Page 167/212

LETTER AGREEMENT N° 1

8. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

9. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

10. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 1 - Page 168/212

LETTER AGREEMENT N° 1

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 1 - Page 169/212

LETTER AGREEMENT N° 2

As of June 22^nd , 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***.]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 2 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 2 - Page 170/212

LETTER AGREEMENT N° 2

1. [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 2 - Page 171/212

LETTER AGREEMENT N° 2

2. [***]

3. [***].

4. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

5. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

6. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 2 - Page 172/212

LETTER AGREEMENT N° 2

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 2 - Page 173/212

LETTER AGREEMENT N° 3

As of June 22^nd , 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***.]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 3 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 3 - Page 174/212

LETTER AGREEMENT N° 3

1 [***].

2. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

3. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

4. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 3 - Page 175/212

LETTER AGREEMENT N° 3

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 3 - Page 176/212

LETTER AGREEMENT N° 4

As of June 22^nd , 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***.]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 4 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11– CT1101195 – LAN – A320NEO PA

LA 4 - Page 177/212

LETTER AGREEMENT N° 4

1. [***].

2. [***].

3. [***].

06/11– CT1101195 – LAN – A320NEO PA

LA 4 - Page 178/212

LETTER AGREEMENT N° 4

4. Assignment

The parties agree that clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

5. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

6. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11– CT1101195 – LAN – A320NEO PA

LA 4 - Page 179/212

LETTER AGREEMENT N° 4

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11– CT1101195 – LAN – A320NEO PA

LA 4 - Page 180/212

LETTER AGREEMENT N° 6

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the, “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 5 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

1. [***]

2. [***]

3. [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 181/212

LETTER AGREEMENT N° 6

4. [***]

5. [***]

6. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

7. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

8. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 182/212

LETTER AGREEMENT N° 6

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 183/212

LETTER AGREEMENT N° 6

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***.]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 6 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

1. [***]

2. [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 184/212

LETTER AGREEMENT N° 6

3. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement...

4. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

5. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 185/212

LETTER AGREEMENT N° 6

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 6 - Page 186/212

LETTER AGREEMENT N° 7

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: Product Support

LAN Airlines S.A. (the, “Buyer”) and AIRBUS S.A.S. (the, “Seller”) have entered into a Purchase Agreement (the, “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 7 (the, “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 7 - Page 187/212

LETTER AGREEMENT N° 7

1 Flight Crew Training [***]

The Buyer shall be entitled to exchange its Flight Crew training for [***] in accordance with the Airbus exchange matrix.

2 Technical Data

[***].

3 [***]

4 Seller Representative Services

Notwithstanding the provisions set out in Appendix A of Clause 15, the Seller shall consider [***] Seller Representatives [***].

5 Software Services

[***].

6 Customer Originated Changes

[***]

7 [***]

[***].

8 Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

9 Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

10 Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 7 - Page 188/212

LETTER AGREEMENT N° 7

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By :	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 7 - Page 189/212

APPENDIX A

[***]

LETTER AGREEMENT N° 8A

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***]

LAN Airlines S.A. (the, “Buyer”) and AIRBUS S.A.S. (the, “Seller”) have entered into a Purchase Agreement (the, “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 8 (the, “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 191/212

LETTER AGREEMENT N° 8A

1 [***]

2 [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 192/212

LETTER AGREEMENT N° 8A

3 [***]

4 [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 193/212

LETTER AGREEMENT N° 8A

5 [***]

6 [***]

7 [***]

8 [***].

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 194/212

LETTER AGREEMENT N° 8A

9 [***]

10 Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

11 Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

12 Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 195/212

LETTER AGREEMENT N° 8A

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement N° 8 to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of

LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
Date:	Date:
LAN AIRLINES S.A.
By:
Its:
Date:

06/11 – CT1101195 – LAN – A320NEO PA

LA 8A - Page 196/212

LETTER AGREEMENT N° 8A

APPENDIX No. 1 to LETTER AGREEMENT No. 8A

[***]

06/11 – CT1101195 – LAN – A320NEO-

LA 8A - Page 197/212

LETTER AGREEMENT N° 8B

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***]

LAN Airlines S.A. (the, “Buyer”) and AIRBUS S.A.S. (the, “Seller”) have entered into a Purchase Agreement (the, “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 8B (the, “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO-

LA 8B - Page 198/212

LETTER AGREEMENT N° 8B

1 [***]

2 [***]

3 [***]

4 [***]

5 [***]

6 [***]

7 [***]

8 [***]

06/11 – CT1101195 – LAN – A320NEO-

LA 8B - Page 199/212

LETTER AGREEMENT N° 8B

9 [***]

10 Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

11 Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

12 Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO-

LA 8B - Page 200/212

LETTER AGREEMENT N° 8B

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement N° x to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
Date:	Date :
LAN AIRLINES S.A.
By:
Its:
Date:

06/11 – CT1101195 – LAN – A320NEO-

LA 8B - Page 201/212

LETTER AGREEMENT N° 8B

APPENDIX No.1 to LETTER AGREEMENT No. x

[***]

1104XX – CT1101195 – LAN – A320NEO-LA8

LA 8B - Page 202/212

LETTER AGREEMENT N° 9

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: Miscellaneous Matters

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 9 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 9 - Page 203/212

LETTER AGREEMENT N° 9

1. [***]

2. [***]

3. Assignment

The parties agree that Clause 21 of the Agreement shall govern the assignability and transferability of each party’s rights and obligations under this Letter Agreement.

4. Confidentiality

The provisions of Clause 22.12 of the Agreement shall be incorporated by reference into this Letter Agreement as if the same were set out in full herein, mutatis mutandis.

5. Counterparts

This Letter Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

06/11 – CT1101195 – LAN – A320NEO PA

LA 9 - Page 204/212

LETTER AGREEMENT N° 9

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and Accepted	Agreed and Accepted
For and on behalf of	For and on behalf of
LAN AIRLINES S.A.	AIRBUS S.A.S.
By:	By:
Its:	Its:
By:
Its:

06/11 – CT1101195 – LAN – A320NEO PA

LA 9 - Page 205/212

LETTER AGREEMENT N° 9

[***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 9 - Page 206/212

LETTER AGREEMENT N° 10

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: [***]

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 10 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 10 - Page 207/212

LETTER AGREEMENT N° 10

[***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 10 - Page 208/212

LETTER AGREEMENT N° 10

If the foregoing correctly sets forth our understanding, please execute two (2) originals in the space provided below and return one (1) original of this Letter Agreement to the Seller.

Agreed and accepted,	Agreed and accepted,
For and on behalf of	For and on behalf of
LAN	AIRBUS S.A.S.
By:	By:
Its:	Its:
Date:	Date:

06/11 – CT1101195 – LAN – A320NEO PA

LA 10 - Page 209/212

LETTER AGREEMENT N° 10

APPENDIX A

[***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 10 - Page 210/212

Letter Agreement No. 11

As of June 22^nd, 2011

LAN Airlines S.A.

Edificio Huidobro

Avenida Presidente Riesco 5711

20^th Floor

Las Condes

Santiago, Chile

Subject: Other Matters

LAN Airlines S.A. (the “Buyer”) and AIRBUS S.A.S. (the “Seller”) have entered into a Purchase Agreement (the “Agreement”) dated as of even date herewith which covers the manufacture and the sale by the Seller and the purchase by the Buyer of the A320 NEO Aircraft as described in the Agreement.

Capitalized terms used herein and not otherwise defined in this Letter Agreement No. 11 (the “Letter Agreement”) shall have the meanings assigned thereto in the Agreement.

Both parties agree that this Letter Agreement, upon execution thereof, shall constitute an integral, nonseverable part of said Agreement and shall be governed by all its provisions, as such provisions have been specifically amended pursuant to this Letter Agreement.

In the event of any inconsistency between the terms of this Letter Agreement and the terms contained in Clause 0 to 22 of the Agreement and any of its Exhibits, in each such case the terms of this Letter Agreement shall prevail.

06/11 – CT1101195 – LAN – A320NEO PA

LA 11 - Page 211/212

1. [***]

06/11 – CT1101195 – LAN – A320NEO PA

LA 11 - Page 212/212

EX-4.21

Exhibit 4.21

DATED                    

LAN AIRLINES S.A.

as the Seller

and

AIRBUS FINANCIAL SERVICES

as the Buyer

BUYBACK AGREEMENT

relating to

ONE (1) AIRBUS A318-100 AIRCRAFT MSN 3001

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

CONTENTS

Clause		Page
1.	Definitions		1
2.	Interpretation		1
3.	Representations And Warranties		1
4.	Agreement To Sell And Purchase		2
5.	Conditions Precedent		2
6.	Payments		3
7.	Delivery Procedure And Acceptance		4
8.	Total Loss		5
9.	Condition Of Aircraft		6
10.	Operational Indemnities		7
11.	Taxes		9
12.	Liability Insurance		9
13.	Manufacturer’s Warranties		10
14.	Benefit Of Agreement		10
15.	Waiver		10
16.	Notices		10
17.	Law And Jurisdiction		11
18.	Miscellaneous		11
19.	Confidentiality		13
Schedule 1			14
Definitions			14
Schedule 2			16
Seller Representations And Warranties			16
Schedule 3			17
Buyer Representations And Warranties			17
Schedule 4			18
Seller Conditions Precedent			18
Schedule 5			20
Buyer Conditions Precedent			20
Schedule 6			22
Form Of Bill Of Sale			22
Schedule 7			26

Schedule 8	27
Schedule 9	30
EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3001)	35

This BUYBACK AGREEMENT is made on    day of        2011

BETWEEN:

1. LAN AIRLINES S.A., a sociedad anónima existing under the laws of Chile, having its registered office at Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile (the Seller); and

2. AIRBUS FINANCIAL SERVICES, a company incorporated under the laws of Ireland whose registered office is at 5th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland (the Buyer).

WHEREAS:

The Seller has agreed to sell or, as the case may be, procure that the Owner sells the Aircraft to the Buyer and the Buyer has agreed to purchase the Aircraft from the Seller or, as the case may be, the Owner on the terms and conditions set out herein.

IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement, capitalised words and expressions have the meanings given to them in Schedule 1 except as otherwise provided for herein. Capitalised terms and expressions used in this Agreement and not specifically defined herein shall have the meanings given to such terms and expressions in the Buyback Support Agreement.

2. INTERPRETATION

In this Agreement, unless the contrary intention is stated, a reference to:

2.1 each of the Seller, the Owner and the Buyer or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor, assignee or transferee;

2.2 words importing the plural shall include the singular and vice versa;

2.3 any document shall include that document as amended, novated, assigned or supplemented;

2.4 a clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

2.5 any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted.

2.6 Clause or schedule headings are for ease of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement.

3. REPRESENTATIONS AND WARRANTIES

3.1 Seller Representations and Warranties

The Seller represents and warrants to the Buyer on the terms set out in Schedule 2. The representations and warranties in Schedule 2 will survive the execution of this Agreement and will be deemed to be repeated by the Seller on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1

3.2 Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller on the terms set out in Schedule 3. The representations and warranties in Schedule 3 will survive the execution of this Agreement and will be deemed to be repeated by the Buyer on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

3.3 No Prejudice

The rights of the Buyer and the Seller in relation to any misrepresentation or breach of warranty by the Buyer or, as the case may be, the Seller shall not be prejudiced by any investigation by or on behalf of the Buyer or, as the case may be, the Seller into the affairs of such other party.

4. AGREEMENT TO SELL AND PURCHASE

Subject to the provisions of this Agreement, the Seller agrees to procure that the Owner sells the Aircraft to the Buyer and the Buyer agrees to purchase the Aircraft from the Owner in an as is, where is condition in its actual state and without any warranty as to condition from the Seller or the Owner.

5. CONDITIONS PRECEDENT

5.1 Seller Conditions Precedent

5.1.1 The obligation of the Seller to sell or, as the case may be, to procure that the Owner sells the Aircraft shall be subject to fulfilment of the Seller Conditions Precedent set out in Schedule 4, on or prior to the date for fulfilment of such Seller Conditions Precedent (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

5.1.2 The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

5.2 Buyer Conditions Precedent

5.2.1 The obligation of the Buyer to purchase the Aircraft shall be subject to fulfilment of the Buyer Conditions Precedent set out in Schedule 5, on or prior to the date for fulfilment of such Buyer Conditions Precedent (except to the extent that the Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

5.2.2 The Buyer Conditions Precedent have been inserted for the benefit of the Buyer and may be waived in writing, in whole or in part and with or without conditions, by the Buyer without prejudicing the right of the Buyer to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

5.3 Non-fulfilment of Conditions Precedent

Subject to the grace periods set out in Schedule 4 and Schedule 5, if any of the Conditions Precedent remain outstanding as at the Scheduled Delivery Date (subject to the expiration of any applicable grace periods set out in such Schedules) and are not either satisfied or irrevocably waived or deferred in writing by the Seller or, as the case may be, the Buyer, the Seller (in the case of the non-fulfilment of a Seller Condition Precedent) or the Buyer (in the case of the non-fulfilment of a Buyer Condition Precedent) shall by notice to the other party be entitled to terminate its obligation to sell or, as the case may be, purchase the Aircraft. The Buyer and the Seller acknowledge that, pursuant to and in accordance with the terms set out in the Buyback Support Agreement, an Aircraft may be replaced with a Substitute Aircraft (as defined in the Buyback Support Agreement) and, if any such substitution were to occur, the abovementioned Conditions Precedent shall be deemed to apply to the Substitute Aircraft in place of the Aircraft.

5.4 Effective Time

The Buyer and the Seller each agree that neither party shall have any obligation to perform any of its respective obligations under this Agreement unless and until each of the following conditions are satisfied to the Buyer’s satisfaction:

5.4.1 the Aircraft is physically located outside of Chile;

5.4.2 the Seller has deregistered the Aircraft from the Chilean aviation authority’s (the DGAC) register of civil aircraft and the Buyer has received a copy of the de-registration telex to be sent by the DGAC to the Brazilian aviation authority confirming that the Aircraft has been de-registered; and

5.4.3 the Seller has provided to the Buyer a certified copy of the letter provided by the Seller to the relevant Chilean customs authority (attaching a copy of the de-registration telex referred to above) duly stamped by such relevant Chilean customs authority in confirmation of its acceptance of the terms set out therein.

Upon the satisfaction of each of the above, the Buyer shall confirm the same to the Seller and thereafter the acceptance, delivery and transfer of title to the Aircraft shall thereafter take place in accordance with the terms and conditions set out in Clause 7 below.

6. PAYMENTS

6.1 Purchase Price

The gross purchase price for the Aircraft shall be [***] (the Gross Purchase Price). The Gross Purchase Price less the Aggregate Reduction (if any) shall be the Net Purchase Price.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

6.2 Delivery Date Payment

Subject to the satisfaction of the Buyer Conditions Precedent and the terms of this Agreement, the Buyer shall pay the Net Purchase Price to the Seller in accordance with the provisions of Clause 6.3.

6.3 Payment of Net Purchase Price

Notwithstanding any other provision of this Agreement or any other Buyback Document, the Seller hereby directs the Buyer to pay the Net Purchase Price not to the Seller but, instead, to its subsidiary LAN Cargo S.A. and, in accordance with such direction but subject always to the provisions of Clause 6.4, the Buyer agrees that it shall pay the Net Purchase Price in US Dollars for value on or before the Delivery Date and in immediately available funds by wire transfer to the following account of LAN Cargo S.A.:

Beneficiary:	LAN Cargo S.A.
Account Number:	36132267
Bank:	Citibank N.A.
Address:	Wall Street - New York, NY 10043
ABA Code:	021000089
SWIFT:	CITIUS33

No payment shall be considered made until it is credited to the above account.

6.4 Payment Account Direction

The Seller covenants with the Buyer that:

6.4.1 the payment by the Buyer of the Net Purchase Price to the abovementioned account of LAN Cargo S.A. in accordance with the direction of the Seller set out in Clause 6.3 above shall be in full and final settlement of the obligation of the Buyer to pay the Net Purchase Price to the Seller under this Agreement; and

6.4.2 the Seller shall indemnify and hold the Buyer harmless on an after-tax basis in respect of any and all Losses or Taxes imposed on, incurred by or asserted against the Buyer (regardless of when the same are incurred) in any way arising out of or connected in any way with the Buyer’s payment of the Net Purchase Price to LAN Cargo S.A. but only to the extent that any such Loss or Tax (or any increase in any such Loss or Tax) would not have been imposed upon, incurred by or asserted against the Buyer had the payment of the Net Purchase Price been made by the Buyer to an account of the Seller.

7. DELIVERY PROCEDURE AND ACCEPTANCE

7.1 Delivery Conditions

The Buyer’s obligation to purchase the Aircraft is conditional upon, amongst other things, the Aircraft complying on the Delivery Date with the Delivery Conditions set out in Schedule 9.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

7.2 Inspection and Delivery Procedures

The Buyer (and its designated representatives) shall be entitled to inspect the Aircraft and the Aircraft Documents for the purposes of confirming that the Aircraft meets the Delivery Conditions (the Inspection). The Inspection and Delivery procedures are set out in Schedule 8.

7.3 Delivery

The Seller shall, subject to the satisfaction of the Seller Conditions Precedent, tender the Aircraft (or procure that the Aircraft is tendered) for Delivery to the Buyer in the Delivery Condition but otherwise in an as is, where is condition in its actual state and without any warranty at the Delivery Location on the Delivery Date. The Buyer shall, subject to the satisfaction of the Buyer Conditions Precedent, be obligated to accept delivery of the Aircraft when tendered for delivery in accordance with the terms of this Agreement.

7.4 Acceptance

Subject to the satisfaction (or waiver by the Buyer) of the Buyer Conditions Precedent set out in Schedule 5, the Buyer shall on the Delivery Date accept delivery of the Aircraft by executing and delivering the Acceptance Certificate to the Seller, which shall be conclusive evidence of the matters stated therein.

7.5 Transfer of Title

Upon:

(a) delivery to the Seller of the Acceptance Certificate duly executed by the Buyer; and

(b) receipt or waiver by the Seller of the Seller Conditions Precedent set out in Schedule 4,

the Seller shall procure that the Owner passes title to the Aircraft to the Buyer by delivering the Bill of Sale to the Buyer and the Seller shall, pursuant to and in accordance with the terms and conditions set out in the Deed of Covenant, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens.

7.6 Risk Passing

Risk of loss or destruction of the Aircraft or damage to the Aircraft shall pass to the Buyer upon Delivery.

8. TOTAL LOSS

8.1 If before the Scheduled Delivery Date the Aircraft suffers a Total Loss the Seller shall, upon being notified of the Total Loss, notify the Buyer in writing thereof as soon as is reasonably practicable thereafter and, with effect from the date such Total Loss is notified to the Buyer, this Agreement shall terminate and thereafter neither party shall have any further obligation or liability to the other under this Agreement and the rights and obligations of the parties hereunder shall cease and be discharged without further liability on the part of the Seller or the Buyer.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

8.2 Without prejudice to the obligation of the Seller to tender the Aircraft in the Delivery Condition on the Scheduled Delivery Date in accordance with the terms set out herein (subject to the grace period set out in Schedule 5), if on or before the Scheduled Delivery Date: (i) any of the events described in paragraph (d) of the definition of Total Loss shall have occurred; or (ii) an event or circumstance shall have occurred which could be reasonably be expected to result in a constructive, compromised or arranged total loss as contemplated by paragraph (a) of the definition of Total Loss and, the event referred to in part (i) or the event or circumstance referred to in part (ii) is or may be continuing on the Scheduled Delivery Date, then the Seller shall notify the Buyer in writing accordingly as soon as reasonably practicable, and:

8.2.1 in relation to part (i) above, upon the first to occur after the Scheduled Delivery Date of: (x) the cessation of the event in question; and (y) the Aircraft becoming a Total Loss, then, with regard to the case described in (x), the Scheduled Delivery Date shall be deferred until sixty (60) days after such cessation or, with regard to the case described in (y), Clause 8.1 will apply; and

8.2.2 in relation to part (ii) above, upon the first to occur after the Scheduled Delivery Date of: (x) a declaration by insurers that the Aircraft is not a Total Loss; (y) the expiration of sixty (60) days after the occurrence of any such event or circumstance (provided that, under no circumstances shall any such period extend beyond the sixty (60) day or, as the case may be, one hundred twenty (120) day grace period extended with respect to the Aircraft’s compliance with the Delivery Conditions set out in Schedule 5); and (z) the Aircraft becoming a Total Loss, then, if either of the cases described in (x) or (y) is the first to occur, Clause 6.1.1(a) of the Buyback Support Agreement shall apply or, if the case described in (z) is the first to occur, Clause 8.1 will apply.

8.3 In the event that Clause 8.2.1(x) applies, the Seller shall be entitled to exercise the LAN Substitution Right (pursuant to and in accordance with Clause 14 of the Buyback Support Agreement) within ten (10) days after the Scheduled Delivery Date, provided that, at the time of such exercise, no more than twenty (20) days shall have elapsed since the occurrence of the events or circumstances described in paragraph (d) of the definition of Total Loss.

9. CONDITION OF AIRCRAFT

9.1 Disclaimers

SUBJECT ALWAYS TO THE TERMS AND CONDITIONS SET OUT IN THIS AGREEMENT, THE BUYER AGREES THAT AS BETWEEN THE BUYER AND THE SELLER THE AIRCRAFT AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE HAS BEEN GIVEN BY THE SELLER OR ITS AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE TECHNICAL RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS,

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

9.2 Waiver

THE BUYER HEREBY WAIVES, AS BETWEEN ITSELF (ON THE ONE HAND) AND THE SELLER (ON THE OTHER HAND), ALL OF ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED STATUTORY OR OTHERWISE, ON THE PART OF THE SELLER AND ALL CLAIMS AGAINST THE SELLER HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE OF THE AIRCRAFT, THIS AGREEMENT OR THE OTHER BUYBACK DOCUMENTS, PROVIDED ALWAYS THAT THIS WAIVER SHALL NOT APPLY TO THE EXPRESS WARRANTIES AND REPRESENTATIONS GIVEN BY THE SELLER TO THE BUYER IN ANY OF THE BUYBACK DOCUMENTS.

10. OPERATIONAL INDEMNITIES

10.1 The Seller will indemnify and hold harmless on an after-tax basis each of the Indemnitees in respect of any and all Losses imposed on, incurred by or asserted against any such Indemnitees (regardless of when the same are incurred) in any way arising out of or connected in any way with the purchase, ownership, possession, registration, de-registration, transportation, management, sale, control, inspection, use or operation, condition, delivery, acceptance, maintenance, repair, service, modification, overhaul, removal of the Aircraft, or any loss of or damage to the Aircraft or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters or any Losses which constitute Taxes (regardless of when imposed) which arise out of any act, omission, event or circumstance occurring in relation to the Aircraft prior to Delivery; other than:

(i) Losses resulting from the gross negligence or wilful misconduct of such Indemnitees; or

(ii) to the extent that such Losses arise out of any act, omission, event or circumstance occurring after Delivery; or

(iii) any Losses which constitute Taxes which arise as the result of, or are imposed in respect of, the sale of the Aircraft by the Seller to the Buyer in accordance with this Agreement; or

(iv) Losses which represent an operating or internal overhead expense except to the extent that the same arise as a consequence of a breach by the Seller of any of its obligations under the Buyback Documents; or

(v) Losses which are the result of a breach by the Buyer of its obligations under the Buyback Documents or, as the case may be, by Airbus S.A.S. of its obligations under the Buyback Support Agreement; or

(vi) any costs or expenses which the Buyer (or any Indemnitee) has expressly agreed to assume pursuant to this Agreement or any applicable Buyback Document; or

(vii) Losses which arise out of any product liability claim.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

10.2 The Buyer agrees to use its reasonable efforts to obtain the subsequent operator of the Aircraft’s agreement to indemnify and hold the Indemnitees harmless in respect of any Losses imposed on, incurred by or asserted against any such Indemnitees in any way arising out of or connected in any way with the acts, omissions events or circumstances referred to in Clause 10.1 above in any operational indemnity given to the Buyer by any such subsequent operator and, if the agreement of the subsequent operator is so obtained, the indemnity in Clause 10.1 shall, to the extent of such operator’s indemnity, cease to apply.

10.3 The Buyer agrees to notify the Seller in writing reasonably promptly upon becoming aware of a claim by an Indemnitee for indemnification from the Seller pursuant to Clause 10.1 (a Claim); provided that, the Seller shall not be required to indemnify any Indemnitee in respect of any increase in any Claim to the extent that any such increase arises solely and directly as a result of the Buyer’s failure to give the Seller reasonably prompt written notice of any such Claim.

10.4 Without prejudice to the underlying obligation of the Seller to indemnify any such Indemnitee(s) in accordance with Clause 10.1 in respect of any such Claim, the Buyer agrees that:

10.4.1 commencing on the date the Claim is notified to the Seller, the Seller’s obligation to pay to the relevant Indemnitee(s) the full amount of the Claim shall be stayed for a period of ten (10) Business Days (or such longer period as the relevant Indemnitee(s) may agree, acting reasonably) (a Standstill Period) in order to allow the Seller the opportunity to evaluate the Claim and to decide whether or not it wishes to contest its validity or, as the case may be, the amount claimed thereunder (a Contest) and so that the Seller and the Buyer (acting on behalf of any relevant Indemnitee(s)) may consult with each other in order to determine what action (if any) may be reasonably be taken in order to avoid or mitigate such Claim;

10.4.2 if the Buyer and the Seller cannot agree on a course of action as regards any such Contest, the Seller shall be entitled (acting at all times reasonably and in good faith) to procure a legal opinion (or, as the case may be, an opinion of another relevant expert having regard to the nature of the Claim) from a suitably qualified expert with a view to confirming that a reasonable basis exists for any such Contest and the actions recommended to be undertaken in order to properly conduct any such Contest. If the opinion of the relevant expert confirms that there does not exist a reasonable basis for any such Contest, the Seller shall promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1;

10.4.3 if the Seller’s appointed expert has confirmed in its opinion that it is necessary for the Seller to take action in the name of the relevant Indemnitee(s), the Buyer (acting on the instructions of such Indemnitee(s)) shall be entitled to request that the Buyer and the Seller instruct an independent expert (the costs thereof to be shared equally between the Buyer and the Seller) to evaluate the Contest’s prospects of success and/or actions recommended to be undertaken in the name of the relevant Indemnitee(s) in order to properly conduct any such Contest. If the independent expert confirms that: (i) there does not exist a reasonable basis for any such Contest; and/or (ii) that it is necessary that any action be taken in the name of any Indemnitee, the Seller shall, with regard to (i), promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1 or, with regard to (ii), proceed to take any action in the name of the relevant Indemnitee as recommended by such independent expert;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

10.4.4 following the receipt of any positive opinion of the Seller’s expert pursuant to Clause 10.4.2 or, as the case may be, of the independent expert appointed pursuant to Clause 10.4.3 above, the Seller may proceed to take, at its sole cost and expense, any action(s) as may have been recommended thereunder; provided that:

(a) no Termination Event has occurred and is continuing; and/or

(b) the relevant Indemnitee(s) shall have received the full amount to be indemnified pursuant to Clause 10.1 or, if agreed by such Indemnitee(s), adequate reserves, satisfactory to such Indemnitee(s), shall have been made in respect of the Claim and the costs thereof; and/or

(c) taking of any such action (or, as the case may be, the entitlement to continue to take any such action) would not be deemed by the relevant Indemnitee(s) to be prejudicial to the relevant Indemnitee(s) position as regards the Claim or otherwise would not be likely to have any adverse effect upon the relevant Indemnitee(s)’s reputation, business, operations or financial condition (other than any minor costs and expenses of an administrative nature).

10.5 Subject to the relevant Indemnitee(s) having received from the Seller the full amount required to indemnify and hold such Indemnitee(s) harmless with regards to any Claim, the Buyer agrees to procure that the relevant Indemnitee(s) take(s) such steps (at no cost to the Buyer or to such Indemnitee(s)) as may be reasonably requested by the Seller so as to enable the Seller to be subrogated to the rights of such relevant Indemnitee(s) in respect of such Claim.

11. TAXES

The parties will use all reasonable endeavours to mitigate or avoid any Taxes which arise as a result of the sale of the Aircraft by (or otherwise procured by) the Seller to the Buyer in accordance with this Agreement and the Seller and the Buyer shall each co-operate with the other in good faith and take such steps as are reasonably practicable in respect thereof; provided that, the cost of any such mitigation or avoidance action shall be borne by the party requesting the same and that any such steps contemplated above shall not result in any of the rights or obligations of the non-requesting party under this Agreement being adversely affected.

12. LIABILITY INSURANCE

The Buyer shall maintain or procure that liability insurance is maintained in respect of the Aircraft during the period commencing on the Delivery Date and ending on the earlier of: (i) the completion of the next zonal/structural inspection (due at either 6 years or 12 years); and (ii) the second anniversary of the Delivery Date. On the Delivery Date and on the occasion of each renewal of such liability insurance, the Buyer shall provide (or procure that the then current operator provides) a certificate issued by the insurance broker of the then current operator which includes the following:

(a) the Seller, the Owner (if applicable) (and their respective directors, officers, employees and agents) as additional named assureds on the passenger, third party, cargo, baggage and mail liability policies which shall have a combined single limit of liability of not less than the lesser of: (a) the level of coverage maintained by the Seller as at the Delivery Date; and (b) the level of coverage maintained by prudent operators of single-aisle aircraft in the region within which such next operator of the Aircraft operates;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

(b) an appropriate cross liabilities clause and breach of warranty protection in favour of such additional named assureds;

(c) a provision confirming that the hull insurers waive any subrogation rights against such additional named assureds; and

(d) a provision confirming that the Seller is to be given at least thirty (30) days (or such lesser period as may be stipulated by the insurers of such subsequent operator in respect of war risks coverage) notice of cancellation, termination or material alteration,

provided always that; requirements set out in sub-Clauses (a) through (d) are not inconsistent with the prevailing practice in the London international aviation insurance market as at the Delivery Date or on the occasion of each renewal. If there is a inconsistency between the requirements of any of sub-Clauses (a) through (d) above and such prevailing practice, then the provision of a certificate complying with such prevailing practice shall satisfy the Buyer’s obligations set out in this Clause 12.

13. MANUFACTURER’S WARRANTIES

The Seller hereby agrees to: (i) assign to the Buyer any warranties of any manufacturer or vendor of any part of the Aircraft; and (ii) procure (at no cost to the Seller) that the Buyer receives the benefit of any non-assignable warranties of any manufacturer or vendor of any part of the Aircraft which may exist as at Delivery in respect of any claim arising under any such warranties.

14. BENEFIT OF AGREEMENT

Neither party shall assign, transfer, novate or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of the other party.

15. WAIVER

15.1 The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option herein provided, or to require at any time performance by the other party of any of the provisions herein, shall in no way be construed to be a present or future waiver of such provision nor in any way affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision.

15.2 The express waiver (whether made one (1) or several times) by any party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

15.3 The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by applicable law.

16. NOTICES

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee, provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 16 shall also be sent by e-mail to the addresses set out below.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

The Buyer’s address for notices is:

Airbus Financial Services

5^th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland

Attention:	Managing Director
E-mail:	afscontracts@airbus.com

The Seller’s address for notices is:

LAN Airlines S.A.

Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile

Attention:	Fleet Management Director
E-mail:	oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

17. LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with English law.

17.2 The Buyer and the Seller each hereby agrees that the courts of England shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection with this Agreement.

17.3 As a foreign company that has, pursuant to the Overseas Companies Regulations 2009 (the “Overseas Regulations”) (registration number FC029342), registered in the United Kingdom as having a “UK establishment”, in accordance with the Companies Act 2006 and the Overseas Regulations the Seller irrevocably appoints as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement the person from time to time appointed by the Seller as its agent for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being as of the date of this Agreement Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If, for any reason, Mr. Gonzalo Garcia (or any replacement to Mr. Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Seller to receive service process, the Seller shall promptly appoint another agent and advise the Buyer thereof.

17.4 The Buyer appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement and the other Buyback Documents.

18. MISCELLANEOUS

18.1 Severability

If a provision of this Agreement or any of the other Buyback Documents is or becomes illegal, invalid or unenforceable in any jurisdiction that will not affect:

18.1.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or the relevant Buyback Document; or

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

18.1.2 the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement or the relevant Buyback Document.

18.2 Expenses

As between the Buyer and the Seller (and the Owner, if applicable), each of them will pay for its own respective costs, fees (including legal and documentation fees) and other expenses incurred in connection with the preparation and execution of the documentation relating to, and the implementation of, the transactions contemplated by this Agreement and any documents related thereto.

18.3 Sole and Entire Agreement

This Agreement (together with any relevant Buyback Document related hereto) contains the entire agreement between the Buyer and the Seller in relation to the matters referred to herein and supersedes any previous understandings, commitments or representations whatsoever oral or written. No provision of this Agreement may be changed, waived or discharged except by an instrument in writing signed by the both parties hereto (or by their duly authorised representatives or agents). In the event that any term or condition of this Agreement conflicts with any term and condition set out in the Buyback Support Agreement, the Buyer and the Seller agree that the provisions of this Agreement shall, to the extent of any such conflict, prevail.

18.4 Language

All notices to be given under this Agreement will be in English. All documents delivered pursuant to this Agreement will be in English.

18.5 Counterparts

This Agreement may be executed in counterparts, each of which will constitute one and the same document.

18.6 Further Assurances

The Buyer and the Seller each agree from time to time and at the requesting party’s cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by the other party to establish, maintain and protect the rights and remedies of such party and to carry out and effect the intent and purpose of this Agreement.

18.7 Third Party Rights

The parties do not intend that any term of this Agreement shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by the Owner or any other person who is not a party to this Agreement. The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

18.8 No Brokers

The Buyer and the Seller each represent and warrant to the other that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with this Agreement or the other Buyback Documents or any of the

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

transactions contemplated hereby or thereby. Each party agrees to indemnify and hold the other harmless from and against any and all claims, suits, damages, costs and expenses (including reasonable legal fees) asserted by any agent, broker or third party appointed by the indemnifying party in respect of any commission or compensation of any nature whatsoever based upon the Aircraft, this Agreement, the other Buyback Documents or any of the transactions contemplated hereby or thereby.

18.9 Default Interest

If any payment due from either party under this Agreement is not received on the due date, without prejudice to the receiving party’s other rights under this Agreement and at law, the receiving party shall be entitled to interest for late payment calculated on the amount due from and including the due date of payment up to and including the date when the payment is received by such party at a rate equal to one (1) month US Dollar LIBOR plus three per cent. (3%) per year (part year to be prorated). All such interest shall be compounded monthly and calculated on the basis of the actual number of days elapsed in the month assuming a thirty (30) day month and a three hundred and sixty (360) day year.

19. CONFIDENTIALITY

19.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

19.2 The Buyer and the Seller agree that the provisions of this Agreement are personal to it and will not without the prior written consent of the other party disclose such information to any other party. However, the parties may disclose any confidential information to: (i) any governmental authority to which it is obliged to disclose such information; (ii) its legal advisers, auditors and insurers (provided that such parties are bound by a professional or a legal duty of confidentiality); (iii) any parties entitled pursuant to an order or relevant request of any court, legal or regulatory body having jurisdiction over the disclosing party; (iv) or otherwise in accordance with any obligation to disclose imposed by any applicable law.

IN WITNESS whereof this Agreement has been signed on the day and year first above written.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

SCHEDULE 1

DEFINITIONS

In this Agreement, capitalised words and expressions have the following meanings:

Acceptance Certificate means the certificate of acceptance regarding the Aircraft substantially in the form set out in Schedule 7.

Agreement means this agreement made between the Seller and the Buyer as it may from time to time be amended, varied, or supplemented in accordance with the terms hereof, and the Recitals and the Schedules hereto shall form an integral part of this Agreement.

Aircraft means the Airframe together with the Aircraft Documents, Engines and parts.

Aircraft Documents shall have the meaning given in Schedule 9, paragraph 7(a).

Airframe means the Airbus A318-100 airframe with manufacturer’s serial number 3001.

Bill of Sale means the bill of sale in respect of the Aircraft substantially in the form set out in Part A of Schedule 6.

Business Day means any day other than a Saturday or Sunday on which business of the nature contemplated by this Agreement is carried out in Santiago de Chile, Dublin and Toulouse and, where used in relation to payments, any day on which commercial banks are open for business in New York.

Buyback Documents means this Agreement, the Bill of Sale, the Deed of Covenant, the Acceptance Certificate, the Buyback Support Agreement and any agreement amending or supplementing any of the foregoing documents.

Buyback Support Agreement means the buyback support agreement entered into between Airbus S.A.S. and the Seller on December 23, 2009 as such has been amended by Amendment No.1 to the Buyback Support Agreement entered into between Airbus S.A.S. and the Seller on 23 December 2010.

Buyer Conditions Precedent means the documents, evidence and conditions specified in Schedule 5 each in a form and substance satisfactory to the Buyer.

Conditions Precedent means, collectively, the Buyer Conditions Precedent and the Seller Conditions Precedent.

Deed of Covenant means the deed of covenant in respect of the Aircraft substantially in the form set out in Part B of Schedule 6.

Delivery means the delivery of, sale and transfer of title to the Aircraft in accordance with Clause 7.

Delivery Date means the date (being a Business Day) on which Delivery of the Aircraft occurs.

Delivery Location means an airport in Santiago de Chile or such other location agreed between the Buyer and the Seller each acting reasonably.

Engines means the two (2) Pratt & Whitney PW6000 engines, bearing manufacturer’s serial numbers P318139 and P318105.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

14

Indemnitees means the Buyer (and its shareholders directors, officers, servants, agents and employees).

LIBOR means the London Interbank Offer Rate, as quoted on the Reuters 01 page (or equivalent Reuters page) from time to time.

Lien means any mortgage, charge, assignment, pledge, lien, statutory right in rem, right of possession, attachment or detention, title retention arrangement, encumbrance or any other arrangement which has the effect of giving another person any security claim or interest.

Owner means Conure Leasing Limited a company incorporated under the laws of the Cayman Islands and domiciled at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Previous Security Documents means any mortgages, charges, pledges, assignments, leases or other such documents, agreements, deeds or arrangements pursuant to which any of the Previous Financiers had the benefit of any form of Lien over the Aircraft or any part thereof.

Previous Financier means any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

Release means any deed of release or any other form of written confirmation received by the Seller or the Owner pursuant to which any Previous Financier has irrevocably confirmed that any right, title or interest of any nature whatsoever held by any such Previous Financier in or to the Aircraft or any part thereof prior to Delivery has been fully and unconditionally released.

Scheduled Delivery Date means 28 March 2011 or such other date designated by the terms of the Buyback Support Agreement as the “Scheduled Buyback Date” or, subject to an agreement in writing between the Buyer and the Seller, any such other date as may be agreed from time to time.

Seller Conditions Precedent means the documents, evidence and conditions specified in Schedule 4, each in a form and substance satisfactory to the Seller.

US Dollars and US$ shall mean the lawful currency of the United States.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

15

SCHEDULE 2

SELLER REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer that:

(a) Status: the Seller is a company duly incorporated under the laws of Chile.

(b) Power and authority: the Seller has the power to: (i) enter into and perform and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is a party; (ii) to own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitute, or when entered into will constitute, the Seller’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Seller is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Seller or any of its assets is bound or affected.

(e) No immunity:

(i) the Seller is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which the Seller is party; and

(ii) neither the Seller nor any of its assets is entitled to any right of immunity, and the entry into and performance of this Agreement and the other Buyback Documents to which it is party by the Seller constitute private and commercial acts.

(f) No Liens:

At Delivery the Aircraft shall be free and clear of all Liens.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

16

SCHEDULE 3

BUYER REPRESENTATIONS AND WARRANTIES

The Buyer represents and warrants to the Seller that:

(a) Status: the Buyer is a company duly incorporated under the laws of Ireland.

(b) Power and authority: the Buyer has the power to (i) enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is party; (ii) own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitutes, or when entered into will constitute, the Buyer’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Buyer is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Buyer or any of its assets are bound or affected.

(e) No immunity:

(i) the Buyer is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which it is a party; and

(ii) neither the Buyer nor any of its assets is entitled to any right of immunity, and the entry into and performance by the Buyer of this Agreement and the other Buyback Documents to which it is a party constitute private and commercial acts.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

17

SCHEDULE 4

SELLER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Seller to sell and deliver the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Seller:

A Documents

(a) Insurance: receipt by the Seller of an insurance certificate procured by the Buyer in respect of the Aircraft which reflects the requirements set out in Clause 12 of this Agreement;

(b) Licences, Consents and Registrations: receipt by the Seller of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Seller have been made for the effectiveness of the same within any applicable time limit); and

(c) Opinions: the receipt by the Seller of legal and tax opinions, in form and substance satisfactory to the Seller, acting reasonably, from independent counsel of the Seller’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery.

B Other Conditions Precedent

(a) No Default: no default on the part of the Buyer shall have occurred and be continuing under this Agreement, any other Buyback Document or any Manufacturer Agreement;

(b) Representations: the representations and warranties of the Buyer contained in Clause 3.2 shall be true and accurate in all material respects as though made on and as of the dates set out therein

(c) No Litigation: no action or proceeding shall have been instituted against the Buyer in any particular case where, if a finding were to be made against the Buyer that finding or the result of that finding would prevent the Buyer from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Buyer; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or government entity, in each case, to set aside, restrain, enjoin or prevent the Buyer’s completion and consummation of the Buyback Documents to which it is a party;

(d) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

(e) Taxes: the Seller shall be satisfied that the Delivery Location and the arrangements described in Clause 7 do not give rise to any Taxes;

(f) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

18

(g) Net Purchase Price: the Seller shall have received the Net Purchase Price.

The conditions precedent set out in paragraphs A(a), A(b), A(c), B(a), B(b), B(c), B(d) and B(e) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(g) above, shall be subject to a grace period of five (5) Business Days commencing on the Scheduled Delivery Date.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

19

SCHEDULE 5

BUYER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Buyer to purchase the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Buyer:

A Documents

(a) Opinions: the receipt by the Buyer of legal and tax opinions, in form and substance satisfactory to the Buyer, acting reasonably, from independent counsel of the Buyer’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery;

(b) Licences, Consents and Registrations: receipt by the Buyer of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Buyer have been made for the effectiveness of the same within any applicable time limit);

(c) Customer Due Diligence: receipt by the Buyer of the “customer due diligence” information from both the Seller and the Owner in form and substance satisfactory to the Buyer; and

(d) Title History: receipt by the Buyer of certified true copies of each bill of sale (or, if applicable, any such other document evidencing the transfer of the legal and beneficial title) evidencing the back-to-birth title history of the Airframe and each Engine.

B Other Conditions Precedent

(i) No Default: no default on the part of the Seller shall have occurred and be continuing under this Agreement, any other Buyback Document or under any Manufacturer Agreement;

(ii) Representations: the representations and warranties of the Seller contained in Clause 3.1 shall be true and accurate in all material respects as though made on and as of the dates set out therein;

(iii) No Litigation: no action or proceeding shall have been instituted against the Seller in any particular case where, if a finding were to be made against the Seller that finding or the result of that finding would prevent the Seller from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Seller; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or Government Entity, in each case, to set aside, restrain, enjoin or prevent the Seller’s completion and consummation of the Buyback Documents to which it is a party;

(iv) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

20

(v) Taxes: the Buyer shall be satisfied that the Delivery Location, and that the arrangements described in Clause 7, do not give rise to any Taxes;

(vi) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date;

(vii) Delivery Condition: the Aircraft complies in all respects with the Delivery Conditions; and

(viii) Delivery of Reference Aircraft: the Reference Aircraft corresponding to the Aircraft (construed in accordance with Clause 1.2.1(n) of the Buyback Support Agreement) has been delivered to the Seller in accordance with the terms and conditions set out in the Purchase Agreement.

The conditions precedent set out in paragraphs A(a), A(b), B(i), B(ii), B(iii), B(iv) and B(v) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(vii) above, shall, with regard to any non-fulfilment of such condition precedent which results solely from a Third Party Event, be subject to a grace period of one hundred twenty (120) days and, in any other circumstances, sixty (60) days, but in either case commencing on the Scheduled Delivery Date.

C Buyer Conditions Subsequent

Release Documentation: the Seller shall forward (or procure that its legal advisors forward) by e-mail to the Buyer electronic copies (in pdf format) of:

(i) no later than three (3) Business Days after Delivery, each of the duly executed Releases received by the Seller or, as the case may be, the Owner from each of the Previous Financiers; and

(ii) within three (3) Business Days of receipt by the Seller or the Owner, any notifications or confirmations of any description received from any applicable registry or authority with which any of the Previous Security Documents were registered, recorded or otherwise filed confirming that any such registrations, recordings or filings have been fully and unconditionally released,

with certified copies of each of the documents referred to in both (i) and (ii) above to be received by the Buyer no later than sixty (60) days after Delivery.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

21

SCHEDULE 6

Part A

FORM OF BILL OF SALE

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Conure Leasing Limited (the “Owner”), being the owner of the aircraft described below (hereinafter referred to as the “Aircraft”):

1. one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3001;

2. two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318139 and P318105;

3. all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

4. the documents, data and records relating to the Aircraft,

does hereby sell, grant, transfer and deliver all of the Owner’s rights, title and interest in and to the Aircraft to Airbus Financial Services (the “Buyer”), and its successors and assigns, to have and hold forever.

The Owner makes no representations or warranties of any kind, any implied warranties are expressly excluded and the Owner shall have no liability to the Buyer pursuant to this Bill of Sale and all recourse to the Seller hereunder is waived.

This Bill of Sale is governed by and shall be construed in accordance with English law.

IN WITNESS whereof, this Bill of Sale is hereby executed at             (CET) this     day of             2011.

SIGNED by	)
	)
For and on behalf of	)
CONURE LEASING LIMITED	)
in the presence of:	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

22

Part B

FORM OF DEED OF COVENANT

DEED OF COVENANT

(the Deed)

From:	LAN Airlines S.A. (LAN)
	Avenida Presidente Riesco 5711
	19th Floor, Las Condes
	Santiago
	Chile
To:	Airbus Financial Services (AFS)
	5th Floor, 6 George’s Dock
	IFSC, Dublin 1
	Ireland

             2011

WHEREAS

A. LAN and AFS have entered into a buyback agreement dated — 2011 pursuant to which, amongst other things, LAN has agreed to procure the sale of one (1) Airbus A318-100 aircraft bearing manufacturer’s serial number 3001 to AFS on the terms and conditions set out therein (the Buyback Agreement).

B. In accordance with the terms and conditions set out in the Buyback Agreement, the Seller shall procure that the Owner passes title to the Aircraft to AFS by delivering the Bill of Sale to AFS and the Seller shall, pursuant to and in accordance with the terms and conditions set out in this Deed, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens

Capitalised terms and expressions used in this Deed (including the recitals) shall, unless otherwise defined in this Deed, have the meanings given to such terms and expressions in the Buyback Agreement. In this Deed, the following terms shall have the following meanings:

Beneficiary shall mean AFS (and its successors and assigns) or, pursuant to paragraph 3 below, any party to which AFS (or any of its successors and assigns) sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s (or any of its successors’ and assigns’) interest in the Aircraft may, from time to time, be financed or refinanced.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

23

Previous Financier shall mean any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

LAN HEREBY COVENANTS AS FOLLOWS:

1. In consideration of the payment by AFS of the Net Purchase Price in accordance with the Buyback Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by LAN, with regard to the aircraft described below (hereinafter referred to as the Aircraft):

(i) one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3001;

(ii) two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318139 and P318105;

(iii) all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

(iv) the documents, data and records relating to the Aircraft,

LAN hereby represents, warrants and covenants to AFS and its successors and assigns and each Beneficiary that:

(a) neither LAN, the Owner or any Previous Financier (nor any person affiliated or otherwise associated with the Owner, LAN or any Previous Financier or any person claiming through any such person) has any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof;

(b) the Aircraft is free and clear of all Liens; and

(c) the full legal and beneficial title to the Aircraft, with full title guarantee, free and clear of all Liens has been conveyed to AFS to have and hold forever and LAN hereby covenants that it shall warrant and defend such title forever against all claims and demands whatsoever.

2. LAN agrees to indemnify and hold each Beneficiary harmless against any Losses or Taxes suffered or incurred by any Beneficiary as a result of: (a) any of LAN’s representations or warranties set out in this Deed being incorrect, inaccurate or in any way misleading; or (b) LAN’s failure to perform any of its obligations or otherwise comply with any of its covenants set out in this Deed.

3. AFS and any Beneficiary shall be entitled to assign or otherwise transfer the benefit of this Deed to any person to which AFS or any such Beneficiary sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s or any such Beneficiary’s interest in the Aircraft may, from time to time, be financed or refinanced. LAN shall, at its own cost, promptly execute all documents requested by AFS or, as the case may be, any Beneficiary to effect, perfect, record or implement any such assignment or transfer, and will promptly comply with any other requests of AFS or any Beneficiary (or any of their respective successors and assigns) in respect of any such assignment or transfer.

4. LAN agrees from time to time and at its cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by AFS or any Beneficiary to establish, maintain and protect the rights and remedies of AFS or any Beneficiary and to carry out and effect the intent and purpose of this Deed.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

24

5. This Deed shall be governed by and construed in accordance with English law.

IN WITNESS whereof, this Deed is hereby executed as a deed as of                    am / pm this    day of        2011.

SIGNED by		)
		)
For and on behalf of	)
LAN AIRLINES S.A.		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

25

SCHEDULE 7

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE RELATING TO ONE (1) A318-100 AIRCRAFT,

MANUFACTURER’S SERIAL NUMBER 3001 AND HAVING TWO (2) PRATT &

WHITNEY PW6000 ENGINES BEARING MANUFACTURER’S SERIAL NUMBERS

P318139 AND P318105

(THE AIRCRAFT)

Airbus Financial Services (the Buyer) hereby certifies that pursuant to the buyback agreement dated        20— between LAN Airlines S.A. (the Seller) and the Buyer (the Buyback Agreement):

(a) the Buyer has inspected the Aircraft, found it to be complete and satisfactory to it and that the Aircraft conforms with the description and is in the condition and equipped as required by the Buyback Agreement;

(b) the Buyer has accepted delivery of the Aircraft, as is where is;

(c) the Buyer has inspected, found to be complete and satisfactory to it and has received all of the documents, data and records relating to the Aircraft (the Aircraft Documents); and

(d) the Buyer acknowledges that it has no rights or claims whatsoever against Seller or the Owner in respect of: (i) the condition of the Aircraft or the Aircraft Documents; or (ii) any of the other matters referred to in Clause 9 of the Buyback Agreement.

Capitalised terms and expressions used in this Acceptance Certificate shall have the meanings given in the Buyback Agreement.

This Acceptance Certificate is governed by and shall be construed in accordance with English law.

Date:        20—

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

26

SCHEDULE 8

INSPECTION PROCEDURE

All references to Airbus in this Schedule 8, are made in relation to its capacity as the authorised representative of the Buyer.

All references to “Seller” in this Schedule 8 shall be deemed to refer to LAN Airlines S.A. (even if LAN Airlines S.A. is not the seller).

Airbus shall cover the costs of its personnel during the Pre-Recovery Inspection and the Delivery Inspection.

1. Pre-Recovery Inspection by Airbus

a) The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives, at the inspection location, no later than six (6) months before the Scheduled Buyback Date (the Pre-Recovery Inspection).

b) The Pre-Recovery Inspection will not disrupt the commercial operation or maintenance of the Aircraft.

c) After the Pre-Recovery Inspection has been performed, Airbus will deliver to the Seller within thirty (30) calendar days following the last day of the Pre-Recovery Inspection a list of all the inspected items (including areas, components and Aircraft Documents), indicating any discrepancies found and specifying the remedial works required in order to comply with the Delivery Conditions. The list of discrepancies provided to the Seller following the Pre-Recovery Inspection will be an exhaustive list of discrepancies identified at the occasion of the Pre-Recovery Inspection and such list shall be updated as required during the Delivery Inspection.

2. Delivery Inspection by Airbus

In order to verify that the Aircraft is in compliance with the requirements of this Agreement, Airbus is entitled but is not obliged to conduct each of the following during the delivery inspection (the Delivery Inspection):

2.1. Ground Inspection

The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives at the inspection location. Such inspection shall be scheduled early enough to allow sufficient time to verify compliance with all the requirements set out in Schedule 9. The Seller shall provide opening and access to all necessary areas as reasonably required to perform the checks described in this Schedule 8 and shall allow Airbus or their authorised representatives, to accomplish their inspection in order to determine if the Aircraft is in compliance with the Delivery Conditions. During such checks, Airbus or its representatives may make reasonable requests that adjacent additional panels or areas of the Aircraft be opened in order to allow further inspection of suspect areas, provided reasonable grounds exist for such request. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

27

2.2. Operational Ground Check

Promptly after completion of all (if any) corrections required under paragraph 2.1 above, the Seller shall conduct an operational ground check in accordance with Part 1, Chapter 1 of the Airbus In Service Aircraft Test Manual (ISATM) for the purpose of demonstrating in the presence of an Airbus ground test inspector, the satisfactory operations of all systems. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

2.3. Engine Performance Check

Compliance with full rated performances as defined in the Aircraft flight manual will be demonstrated (i) by an on-wing static inspection, (ii) by testing any system of the powerplants (engines, nacelles and accessories) and (iii) by performing an engine power assurance run in accordance with Part 1, Chapter 2 of the ISATM. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such powerplant tests so as to comply with the Delivery Conditions.

2.4. Acceptance Flight

a) Promptly after completion of the inspections, checks and all (if any) corrections required under paragraphs 2.1, 2.2 and 2.3 above, the Aircraft shall be test flown by the Seller for not more than three hours in the vicinity of the Delivery Location in accordance with Part 2 of the ISATM. Airbus shall have the right to have, during such acceptance flight, and subject to applicable law, (i) one of its test pilots participate as a member of the flight crew (but not as pilot in command) and (ii) one of its flight test engineers seated on the flight deck’s third occupant seat and (iii) one of its cabin engineers for participating in the flight in order to observe the testing of the cabin systems. In addition, upon reasonable request from Airbus and subject to applicable law, the Seller shall authorize a representative of the Aircraft’s prospective lessee or purchaser to participate, preferably as a flight deck observer, in such acceptance flight (provided always that the Seller shall not be obliged to repeat, for the benefit of any of such representative, any flight manoeuvres previously performed in the course of the flight test).

b) All flights pursuant to paragraph 2.4 (a) above shall be carried out at the Seller’s expense, including, but not limited to, costs for fuel, oil, airport fees, insurance, takeoff/landing fees, airway communication fees and ground handling fees.

2.5. Acceptance Criteria

a) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall be conducted using Airbus’ ISATM.

b) Upon completion of such acceptance flight or testing, the representative of Airbus participating in such flight or testing shall indicate in writing to the Seller any discrepancies in the Aircraft required to be corrected by the Seller in order to comply with the provisions of the Delivery Conditions. In case an alleged discrepancy is disputed, Airbus and the Seller will jointly select and appoint a suitably qualified and independent third party to assess such discrepancy and the cost of that third party will be shared equally between Airbus and the Seller. If Airbus and the Seller cannot agree on the selection of such third party in a timely manner, Avitas Inc shall be appointed to select such third party. If following such third party determination, the discrepancy is confirmed, the Seller shall promptly correct any such discrepancy and if required, another test flight will be conducted (to the extent necessary to verify the correction of the discrepancy) at Seller’s cost.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

28

c) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall establish that all equipment is functioning in accordance with the relevant limits specified in the AMM, Flight Manual, Flight Crew Operating Manual or any other relevant manual and meet the Delivery Conditions.

3. Ferry Flight

Subject to reasonable written notice, Airbus may request the Seller to fly the Aircraft to a destination not further than 6,000 nautical miles away from the Delivery Location. Such flight, if reasonably practicable for the Seller (subject to, inter alia, crew availability) shall be completed at Airbus’ cost and risk.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

29

SCHEDULE 9

DELIVERY CONDITIONS

[***].

1. Maintenance

[***].

2. Condition of Aircraft

[***].

3. Certificate of Airworthiness Matters, Export and Deregistration

[***].

4. Condition of Airframe

[***].

5. Condition of Engines

[***].

6. Condition of APU

[***].

7. Aircraft Documents

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

30

8. Ground Lock Safety Pins and covers

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

31

APPENDIX 1

AIRCRAFT RECORDS REQUIREMENT

1. OPERATIONAL & TECHNICAL MANUALS

[***].

2. TECHNICAL RECORDS

[***].

2.1. General - Aircraft records

[***].

2.2. Engines records

[***].

2.3. APU records

[***].

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

32

APPENDIX 2

LIST OF PMA PARTS IN USE BY LAN

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

33

APPENDIX 3

FLY AWAT KIT

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

34

EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3001)

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

SIGNED by	)
for and on behalf of	)
LAN AIRLINES S.A.	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

35

EX-4.22

Exhibit 4.22

DATED             2011

LAN AIRLINES S.A.

as the Seller

and

AIRBUS FINANCIAL SERVICES

as the Buyer

BUYBACK AGREEMENT

relating to

ONE (1) AIRBUS A318-100 AIRCRAFT MSN 3030

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

CONTENTS

Clause		Page
1.	Definitions		1
2.	Interpretation		1
3.	Representations And Warranties		1
4.	Agreement To Sell And Purchase		2
5.	Conditions Precedent		2
6.	Payments		3
7.	Delivery Procedure And Acceptance		5
8.	Total Loss		6
9.	Condition Of Aircraft		7
10.	Operational Indemnities		7
11.	Taxes		10
12.	Liability Insurance		10
13.	Manufacturer’s Warranties		10
14.	Benefit Of Agreement		11
15.	Waiver		11
16.	Notices		11
17.	Law And Jurisdiction		11
18.	Miscellaneous		12
19.	Confidentiality		13
Schedule 1			15
Definitions			15
Schedule 2			17
Seller Representations And Warranties			17
Schedule 3			18
Buyer Representations And Warranties			18
Schedule 4			19
Seller Conditions Precedent			19
Schedule 5			21
Buyer Conditions Precedent			21
Schedule 6			23
Bill Of Sale			23
Deed Of Covenant			24

Schedule 7	27
Schedule 8	28
Schedule 9	31
EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3030)	36

This BUYBACK AGREEMENT is made on              2011

BETWEEN:

1. LAN AIRLINES S.A., a sociedad anónima existing under the laws of Chile, having its registered office at Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile (the Seller); and

2. AIRBUS FINANCIAL SERVICES, a company incorporated under the laws of Ireland whose registered office is at 5th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland (the Buyer).

WHEREAS:

The Seller has agreed to sell or, as the case may be, procure that the Owner sells the Aircraft to the Buyer and the Buyer has agreed to purchase the Aircraft from the Seller or, as the case may be, the Owner on the terms and conditions set out herein.

IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement, capitalised words and expressions have the meanings given to them in Schedule 1 except as otherwise provided for herein. Capitalised terms and expressions used in this Agreement and not specifically defined herein shall have the meanings given to such terms and expressions in the Buyback Support Agreement.

2. INTERPRETATION

In this Agreement, unless the contrary intention is stated, a reference to:

2.1 each of the Seller, the Owner and the Buyer or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor, assignee or transferee;

2.2 words importing the plural shall include the singular and vice versa;

2.3 any document shall include that document as amended, novated, assigned or supplemented;

2.4 a clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

2.5 any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted.

2.6 Clause or schedule headings are for ease of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement.

3. REPRESENTATIONS AND WARRANTIES

3.1 Seller Representations and Warranties

The Seller represents and warrants to the Buyer on the terms set out in Schedule 2. The representations and warranties in Schedule 2 will survive the execution of this Agreement and will be deemed to be repeated by the Seller on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1

3.2 Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller on the terms set out in Schedule 3. The representations and warranties in Schedule 3 will survive the execution of this Agreement and will be deemed to be repeated by the Buyer on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

3.3 No Prejudice

The rights of the Buyer and the Seller in relation to any misrepresentation or breach of warranty by the Buyer or, as the case may be, the Seller shall not be prejudiced by any investigation by or on behalf of the Buyer or, as the case may be, the Seller into the affairs of such other party.

4. AGREEMENT TO SELL AND PURCHASE

Subject to the provisions of this Agreement, the Seller agrees to procure that the Owner sells the Aircraft to the Buyer and the Buyer agrees to purchase the Aircraft from the Owner in an as is, where is condition in its actual state and without any warranty as to condition from the Seller or the Owner.

5. CONDITIONS PRECEDENT

5.1 Seller Conditions Precedent

5.1.1 The obligation of the Seller to sell or, as the case may be, to procure that the Owner sells the Aircraft shall be subject to fulfilment of the Seller Conditions Precedent set out in Schedule 4, on or prior to the date for fulfilment of such Seller Conditions Precedent (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

5.1.2 The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

5.2 Buyer Conditions Precedent

5.2.1 The obligation of the Buyer to purchase the Aircraft shall be subject to fulfilment of the Buyer Conditions Precedent set out in Schedule 5, on or prior to the date for fulfilment of such Buyer Conditions Precedent (except to the extent that the Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

5.2.2 The Buyer Conditions Precedent have been inserted for the benefit of the Buyer and may be waived in writing, in whole or in part and with or without conditions, by the Buyer without prejudicing the right of the Buyer to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

5.3 Non-fulfilment of Conditions Precedent

Subject to the grace periods set out in Schedule 4 and Schedule 5, if any of the Conditions Precedent remain outstanding as at the Scheduled Delivery Date (subject to the expiration of any applicable grace periods set out in such Schedules) and are not either satisfied or irrevocably waived or deferred in writing by the Seller or, as the case may be, the Buyer, the Seller (in the case of the non-fulfilment of a Seller Condition Precedent) or the Buyer (in the case of the non-fulfilment of a Buyer Condition Precedent) shall by notice to the other party be entitled to terminate its obligation to sell or, as the case may be, purchase the Aircraft. The Buyer and the Seller acknowledge that, pursuant to and in accordance with the terms set out in the Buyback Support Agreement, an Aircraft may be replaced with a Substitute Aircraft (as defined in the Buyback Support Agreement) and, if any such substitution were to occur, the abovementioned Conditions Precedent shall be deemed to apply to the Substitute Aircraft in place of the Aircraft.

5.4 Effective Time

The Buyer and the Seller each agree that neither party shall have any obligation to perform any of its respective obligations under this Agreement unless and until each of the following conditions are satisfied to the Buyer’s satisfaction:

5.4.1 the Aircraft is physically located outside of Chile;

5.4.2 the Seller has deregistered the Aircraft from the Chilean aviation authority’s (the DGAC) register of civil aircraft and the Buyer has received a copy of the de-registration telex to be sent by the DGAC to the Brazilian aviation authority confirming that the Aircraft has been de-registered; and

5.4.3 the Seller has provided to the Buyer a certified copy of the letter provided by the Seller to the relevant Chilean customs authority (attaching a copy of the de-registration telex referred to above) duly stamped by such relevant Chilean customs authority in confirmation of its acceptance of the terms set out therein.

Upon the satisfaction of each of the above, the Buyer shall confirm the same to the Seller and thereafter the acceptance, delivery and transfer of title to the Aircraft shall thereafter take place in accordance with the terms and conditions set out in Clause 7 below.

6. PAYMENTS

6.1 Purchase Price

The gross purchase price for the Aircraft shall be [***] (the Gross Purchase Price). The Gross Purchase Price less the Aggregate Reduction (if any) shall be the Net Purchase Price.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

6.2 Delivery Date Payment

Subject to the satisfaction of the Buyer Conditions Precedent and the terms of this Agreement, the Buyer shall pay the Net Purchase Price to the Seller in accordance with the provisions of Clause 6.3.

6.3 Payment of Net Purchase Price

6.3.1 The Buyer shall pay in immediately available funds by wire transfer:

(a) an initial payment equal to the aggregate of: (i) thirteen million US Dollars (US$13,000,000); less (ii) an amount equal to fifty per cent. (50%) of the Aggregate Reduction, for value on or before the Delivery Date;

(b) on the date falling one (1) year after the Delivery Date, a balancing payment equal to the aggregate of: (i) ten million US Dollars (US$10,000,000); less (ii) an amount equal to fifty per cent. (50%) of the Aggregate Reduction; and

(c) on the date falling one (1) year after the Delivery Date, interest (in recognition of the payment terms) on the aggregate amount set out in (b) above calculated at a rate of one (1) year US Dollar LIBOR plus two percent 2% per annum.

6.3.2 The payment due under Clause 6.3.1(a) shall be made (and shall not be considered to have been made) until it is credited to the following account:

Beneficiary:	LAN Cargo S.A.
Account Number:	36132267
Bank:	Citibank N.A.
Address:	Wall Street - New York, NY 10043
ABA Code:	021000089
SWIFT:	CITIUS33

The payments due under Clauses 6.3.1(b) and 6.3.1(c) shall be made to an account to be notified by the Seller to the Buyer no later than the date falling eleven (11) months after the Delivery Date; provided that, any such account designated by the Seller shall not give rise to any obligation on the Buyer to make any withholding or deduction (or, as the case may be, any other Tax liability) in respect of such payments.

6.3.3 Without prejudice to provisions of Clause 6.3.2 above, the payments due under Clauses 6.3.1(b) and 6.3.1(c) shall be equal to the full amounts expressed to be due thereunder and shall be made in full without any deduction or withholding in respect of Taxes. In the event that any such payments becomes subject to a withholding (or any other such applicable deduction), Airbus and LAN will consult with each other and cooperate in good faith in order to restructure such payments or make any such modifications to the transactions described in this Agreement or the relevant Buyback Documents which would mitigate the effect of or eliminate such withholding or deduction; provided that any such restructuring or modifications shall be at no cost to the Seller nor result in any of its rights or obligations under this Agreement being adversely affected. If the Buyer is compelled by law to make any such deduction or withholding, the Buyer shall pay such additional amounts as may be necessary in order that the net amount received by the Seller after such deduction or withholding shall equal the amounts which would have been received in the absence of such deduction or withholding.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

6.4 Payment Account Direction

The Seller covenants with the Buyer that:

6.4.1 the payment by the Buyer of the Net Purchase Price to the abovementioned account of LAN Cargo S.A. in accordance with the direction of the Seller set out in Clause 6.3 above shall be in full and final settlement of the obligation of the Buyer to pay the Net Purchase Price to the Seller under this Agreement; and

6.4.2 the Seller shall indemnify and hold the Buyer harmless on an after-tax basis in respect of any and all Losses or Taxes imposed on, incurred by or asserted against the Buyer (regardless of when the same are incurred) in any way arising out of or connected in any way with the Buyer’s payment of the Net Purchase Price to LAN Cargo S.A. but only to the extent that any such Loss or Tax (or any increase in any such Loss or Tax) would not have been imposed upon, incurred by or asserted against the Buyer had the payment of the Net Purchase Price been made by the Buyer to an account of the Seller.

7. DELIVERY PROCEDURE AND ACCEPTANCE

7.1 Delivery Conditions

The Buyer’s obligation to purchase the Aircraft is conditional upon, amongst other things, the Aircraft complying on the Delivery Date with the Delivery Conditions set out in Schedule 9.

7.2 Inspection and Delivery Procedures

The Buyer (and its designated representatives) shall be entitled to inspect the Aircraft and the Aircraft Documents for the purposes of confirming that the Aircraft meets the Delivery Conditions (the Inspection). The Inspection and Delivery procedures are set out in Schedule 8.

7.3 Delivery

The Seller shall, subject to the satisfaction of the Seller Conditions Precedent, tender the Aircraft (or procure that the Aircraft is tendered) for Delivery to the Buyer in the Delivery Condition but otherwise in an as is, where is condition in its actual state and without any warranty at the Delivery Location on the Delivery Date. The Buyer shall, subject to the satisfaction of the Buyer Conditions Precedent, be obligated to accept delivery of the Aircraft when tendered for delivery in accordance with the terms of this Agreement.

7.4 Acceptance

Subject to the satisfaction (or waiver by the Buyer) of the Buyer Conditions Precedent set out in Schedule 5, the Buyer shall on the Delivery Date accept delivery of the Aircraft by executing and delivering the Acceptance Certificate to the Seller, which shall be conclusive evidence of the matters stated therein.

7.5 Transfer of Title

Upon:

(a) delivery to the Seller of the Acceptance Certificate duly executed by the Buyer; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

(b) receipt or waiver by the Seller of the Seller Conditions Precedent set out in Schedule 4,

the Seller shall procure that the Owner passes title to the Aircraft to the Buyer by delivering the Bill of Sale to the Buyer and the Seller shall, pursuant to and in accordance with the terms and conditions set out in the Deed of Covenant, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens.

7.6 Risk Passing

Risk of loss or destruction of the Aircraft or damage to the Aircraft shall pass to the Buyer upon Delivery.

8. TOTAL LOSS

8.1 If before the Scheduled Delivery Date the Aircraft suffers a Total Loss the Seller shall, upon being notified of the Total Loss, notify the Buyer in writing thereof as soon as is reasonably practicable thereafter and, with effect from the date such Total Loss is notified to the Buyer, this Agreement shall terminate and thereafter neither party shall have any further obligation or liability to the other under this Agreement and the rights and obligations of the parties hereunder shall cease and be discharged without further liability on the part of the Seller or the Buyer.

8.2 Without prejudice to the obligation of the Seller to tender the Aircraft in the Delivery Condition on the Scheduled Delivery Date in accordance with the terms set out herein (subject to the grace period set out in Schedule 5), if on or before the Scheduled Delivery Date: (i) any of the events described in paragraph (d) of the definition of Total Loss shall have occurred; or (ii) an event or circumstance shall have occurred which could be reasonably be expected to result in a constructive, compromised or arranged total loss as contemplated by paragraph (a) of the definition of Total Loss and, the event referred to in part (i) or the event or circumstance referred to in part (ii) is or may be continuing on the Scheduled Delivery Date, then the Seller shall notify the Buyer in writing accordingly as soon as reasonably practicable, and:

8.2.1 in relation to part (i) above, upon the first to occur after the Scheduled Delivery Date of: (x) the cessation of the event in question; and (y) the Aircraft becoming a Total Loss, then, with regard to the case described in (x), the Scheduled Delivery Date shall be deferred until sixty (60) days after such cessation or, with regard to the case described in (y), Clause 8.1 will apply; and

8.2.2 in relation to part (ii) above, upon the first to occur after the Scheduled Delivery Date of: (x) a declaration by insurers that the Aircraft is not a Total Loss; (y) the expiration of sixty (60) days after the occurrence of any such event or circumstance (provided that, under no circumstances shall any such period extend beyond the sixty (60) day or, as the case may be, one hundred twenty (120) day grace period extended with respect to the Aircraft’s compliance with the Delivery Conditions set out in Schedule 5); and (z) the Aircraft becoming a Total Loss, then, if either of the cases described in (x) or (y) is the first to occur, Clause 6.1.1(a) of the Buyback Support Agreement shall apply or, if the case described in (z) is the first to occur, Clause 8.1 will apply.

8.3 In the event that Clause 8.2.1(x) applies, the Seller shall be entitled to exercise the LAN Substitution Right (pursuant to and in accordance with Clause 14 of the Buyback Support Agreement) within ten (10) days after the Scheduled Delivery Date, provided that, at the time of such exercise, no more than twenty (20) days shall have elapsed since the occurrence of the events or circumstances described in paragraph (d) of the definition of Total Loss.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

9. CONDITION OF AIRCRAFT

9.1 Disclaimers

SUBJECT ALWAYS TO THE TERMS AND CONDITIONS SET OUT IN THIS AGREEMENT, THE BUYER AGREES THAT AS BETWEEN THE BUYER AND THE SELLER THE AIRCRAFT AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE HAS BEEN GIVEN BY THE SELLER OR ITS AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE TECHNICAL RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

9.2 Waiver

THE BUYER HEREBY WAIVES, AS BETWEEN ITSELF (ON THE ONE HAND) AND THE SELLER (ON THE OTHER HAND), ALL OF ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED STATUTORY OR OTHERWISE, ON THE PART OF THE SELLER AND ALL CLAIMS AGAINST THE SELLER HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE OF THE AIRCRAFT, THIS AGREEMENT OR THE OTHER BUYBACK DOCUMENTS, PROVIDED ALWAYS THAT THIS WAIVER SHALL NOT APPLY TO THE EXPRESS WARRANTIES AND REPRESENTATIONS GIVEN BY THE SELLER TO THE BUYER IN ANY OF THE BUYBACK DOCUMENTS.

10. OPERATIONAL INDEMNITIES

10.1 The Seller will indemnify and hold harmless on an after-tax basis each of the Indemnitees in respect of any and all Losses imposed on, incurred by or asserted against any such Indemnitees (regardless of when the same are incurred) in any way arising out of or connected in any way with the purchase, ownership, possession, registration, de-registration, transportation, management, sale, control, inspection, use or operation, condition, delivery, acceptance, maintenance, repair, service, modification, overhaul, removal of the Aircraft, or any loss of or damage to the Aircraft or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters or any Losses which constitute Taxes (regardless of when imposed) which arise out of any act, omission, event or circumstance occurring in relation to the Aircraft prior to Delivery; other than:

(i) Losses resulting from the gross negligence or wilful misconduct of such Indemnitees; or

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

(ii) to the extent that such Losses arise out of any act, omission, event or circumstance occurring after Delivery; or

(iii) any Losses which constitute Taxes which arise as the result of, or are imposed in respect of, the sale of the Aircraft by the Seller to the Buyer in accordance with this Agreement; or

(iv) Losses which represent an operating or internal overhead expense except to the extent that the same arise as a consequence of a breach by the Seller of any of its obligations under the Buyback Documents; or

(v) Losses which are the result of a breach by the Buyer of its obligations under the Buyback Documents or, as the case may be, by Airbus S.A.S. of its obligations under the Buyback Support Agreement; or

(vi) any costs or expenses which the Buyer (or any Indemnitee) has expressly agreed to assume pursuant to this Agreement or any applicable Buyback Document; or

(vii) Losses which arise out of any product liability claim.

10.2 The Buyer agrees to use its reasonable efforts to obtain the subsequent operator of the Aircraft’s agreement to indemnify and hold the Indemnitees harmless in respect of any Losses imposed on, incurred by or asserted against any such Indemnitees in any way arising out of or connected in any way with the acts, omissions events or circumstances referred to in Clause 10.1 above in any operational indemnity given to the Buyer by any such subsequent operator and, if the agreement of the subsequent operator is so obtained, the indemnity in Clause 10.1 shall, to the extent of such operator’s indemnity, cease to apply.

10.3 The Buyer agrees to notify the Seller in writing reasonably promptly upon becoming aware of a claim by an Indemnitee for indemnification from the Seller pursuant to Clause 10.1 (a Claim); provided that, the Seller shall not be required to indemnify any Indemnitee in respect of any increase in any Claim to the extent that any such increase arises solely and directly as a result of the Buyer’s failure to give the Seller reasonably prompt written notice of any such Claim.

10.4 Without prejudice to the underlying obligation of the Seller to indemnify any such Indemnitee(s) in accordance with Clause 10.1 in respect of any such Claim, the Buyer agrees that:

10.4.1 commencing on the date the Claim is notified to the Seller, the Seller’s obligation to pay to the relevant Indemnitee(s) the full amount of the Claim shall be stayed for a period of ten (10) Business Days (or such longer period as the relevant Indemnitee(s) may agree, acting reasonably) (a Standstill Period) in order to allow the Seller the opportunity to evaluate the Claim and to decide whether or not it wishes to contest its validity or, as the case may be, the amount claimed thereunder (a Contest) and so that the Seller and the Buyer (acting on behalf of any relevant Indemnitee(s)) may consult with each other in order to determine what action (if any) may be reasonably be taken in order to avoid or mitigate such Claim;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

10.4.2 if the Buyer and the Seller cannot agree on a course of action as regards any such Contest, the Seller shall be entitled (acting at all times reasonably and in good faith) to procure a legal opinion (or, as the case may be, an opinion of another relevant expert having regard to the nature of the Claim) from a suitably qualified expert with a view to confirming that a reasonable basis exists for any such Contest and the actions recommended to be undertaken in order to properly conduct any such Contest. If the opinion of the relevant expert confirms that there does not exist a reasonable basis for any such Contest, the Seller shall promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1;

10.4.3 if the Seller’s appointed expert has confirmed in its opinion that it is necessary for the Seller to take action in the name of the relevant Indemnitee(s), the Buyer (acting on the instructions of such Indemnitee(s)) shall be entitled to request that the Buyer and the Seller instruct an independent expert (the costs thereof to be shared equally between the Buyer and the Seller) to evaluate the Contest’s prospects of success and/or actions recommended to be undertaken in the name of the relevant Indemnitee(s) in order to properly conduct any such Contest. If the independent expert confirms that: (i) there does not exist a reasonable basis for any such Contest; and/or (ii) that it is necessary that any action be taken in the name of any Indemnitee, the Seller shall, with regard to (i), promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1 or, with regard to (ii), proceed to take any action in the name of the relevant Indemnitee as recommended by such independent expert;

10.4.4 following the receipt of any positive opinion of the Seller’s expert pursuant to Clause 10.4.2 or, as the case may be, of the independent expert appointed pursuant to Clause 10.4.3 above, the Seller may proceed to take, at its sole cost and expense, any action(s) as may have been recommended thereunder; provided that:

(a) no Termination Event has occurred and is continuing; and/or

(b) the relevant Indemnitee(s) shall have received the full amount to be indemnified pursuant to Clause 10.1 or, if agreed by such Indemnitee(s), adequate reserves, satisfactory to such Indemnitee(s), shall have been made in respect of the Claim and the costs thereof; and/or

(c) taking of any such action (or, as the case may be, the entitlement to continue to take any such action) would not be deemed by the relevant Indemnitee(s) to be prejudicial to the relevant Indemnitee(s) position as regards the Claim or otherwise would not be likely to have any adverse effect upon the relevant Indemnitee(s)’s reputation, business, operations or financial condition (other than any minor costs and expenses of an administrative nature).

10.5 Subject to the relevant Indemnitee(s) having received from the Seller the full amount required to indemnify and hold such Indemnitee(s) harmless with regards to any Claim, the Buyer agrees to procure that the relevant Indemnitee(s) take(s) such steps (at no cost to the Buyer or to such Indemnitee(s)) as may be reasonably requested by the Seller so as to enable the Seller to be subrogated to the rights of such relevant Indemnitee(s) in respect of such Claim.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

11. TAXES

The parties will use all reasonable endeavours to mitigate or avoid any Taxes which arise as a result of the sale of the Aircraft by (or otherwise procured by) the Seller to the Buyer in accordance with this Agreement and the Seller and the Buyer shall each co-operate with the other in good faith and take such steps as are reasonably practicable in respect thereof; provided that, the cost of any such mitigation or avoidance action shall be borne by the party requesting the same and that any such steps contemplated above shall not result in any of the rights or obligations of the non-requesting party under this Agreement being adversely affected.

12. LIABILITY INSURANCE

The Buyer shall maintain or procure that liability insurance is maintained in respect of the Aircraft during the period commencing on the Delivery Date and ending on the earlier of: (i) the completion of the next zonal/structural inspection (due at either 6 years or 12 years); and (ii) the second anniversary of the Delivery Date. On the Delivery Date and on the occasion of each renewal of such liability insurance, the Buyer shall provide (or procure that the then current operator provides) a certificate issued by the insurance broker of the then current operator which includes the following:

(a) the Seller, the Owner (if applicable) (and their respective directors, officers, employees and agents) as additional named assureds on the passenger, third party, cargo, baggage and mail liability policies which shall have a combined single limit of liability of not less than the lesser of: (a) the level of coverage maintained by the Seller as at the Delivery Date; and (b) the level of coverage maintained by prudent operators of single-aisle aircraft in the region within which such next operator of the Aircraft operates;

(b) an appropriate cross liabilities clause and breach of warranty protection in favour of such additional named assureds;

(c) a provision confirming that the hull insurers waive any subrogation rights against such additional named assureds; and

(d) a provision confirming that the Seller is to be given at least thirty (30) days (or such lesser period as may be stipulated by the insurers of such subsequent operator in respect of war risks coverage) notice of cancellation, termination or material alteration,

provided always that; requirements set out in sub-Clauses (a) through (d) are not inconsistent with the prevailing practice in the London international aviation insurance market as at the Delivery Date or on the occasion of each renewal. If there is a inconsistency between the requirements of any of sub-Clauses (a) through (d) above and such prevailing practice, then the provision of a certificate complying with such prevailing practice shall satisfy the Buyer’s obligations set out in this Clause 12.

13. MANUFACTURER’S WARRANTIES

The Seller hereby agrees to: (i) assign to the Buyer any warranties of any manufacturer or vendor of any part of the Aircraft; and (ii) procure (at no cost to the Seller) that the Buyer receives the benefit of any non-assignable warranties of any manufacturer or vendor of any part of the Aircraft which may exist as at Delivery in respect of any claim arising under any such warranties.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

14. BENEFIT OF AGREEMENT

Neither party shall assign, transfer, novate or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of the other party.

15. WAIVER

15.1 The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option herein provided, or to require at any time performance by the other party of any of the provisions herein, shall in no way be construed to be a present or future waiver of such provision nor in any way affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision.

15.2 The express waiver (whether made one (1) or several times) by any party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

15.3 The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by applicable law.

16. NOTICES

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee, provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 16 shall also be sent by e-mail to the addresses set out below.

The Buyer’s address for notices is:

Airbus Financial Services

5^th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland

Attention:	Managing Director
E-mail:	afscontracts@airbus.com

The Seller’s address for notices is:

LAN Airlines S.A.

Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile

Attention:	Fleet Management Director
E-mail:	oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

17. LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with English law.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

17.2 The Buyer and the Seller each hereby agrees that the courts of England shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection with this Agreement.

17.3 As a foreign company that has, pursuant to the Overseas Companies Regulations 2009 (the “Overseas Regulations”) (registration number FC029342), registered in the United Kingdom as having a “UK establishment”, in accordance with the Companies Act 2006 and the Overseas Regulations the Seller irrevocably appoints as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement the person from time to time appointed by the Seller as its agent for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being as of the date of this Agreement Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If, for any reason, Mr. Gonzalo Garcia (or any replacement to Mr. Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Seller to receive service process, the Seller shall promptly appoint another agent and advise the Buyer thereof.

17.4 The Buyer appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement and the other Buyback Documents.

18. MISCELLANEOUS

18.1 Severability

If a provision of this Agreement or any of the other Buyback Documents is or becomes illegal, invalid or unenforceable in any jurisdiction that will not affect:

18.1.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or the relevant Buyback Document; or

18.1.2 the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement or the relevant Buyback Document.

18.2 Expenses

As between the Buyer and the Seller (and the Owner, if applicable), each of them will pay for its own respective costs, fees (including legal and documentation fees) and other expenses incurred in connection with the preparation and execution of the documentation relating to, and the implementation of, the transactions contemplated by this Agreement and any documents related thereto.

18.3 Sole and Entire Agreement

This Agreement (together with any relevant Buyback Document related hereto) contains the entire agreement between the Buyer and the Seller in relation to the matters referred to herein and supersedes any previous understandings, commitments or representations whatsoever oral or written. No provision of this Agreement may be changed, waived or discharged except by an instrument in writing signed by the both parties hereto (or by their duly authorised representatives or agents). In the event that any term or condition of this Agreement conflicts with any term and condition set out in the Buyback Support Agreement, the Buyer and the Seller agree that the provisions of this Agreement shall, to the extent of any such conflict, prevail.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

18.4 Language

All notices to be given under this Agreement will be in English. All documents delivered pursuant to this Agreement will be in English.

18.5 Counterparts

This Agreement may be executed in counterparts, each of which will constitute one and the same document.

18.6 Further Assurances

The Buyer and the Seller each agree from time to time and at the requesting party’s cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by the other party to establish, maintain and protect the rights and remedies of such party and to carry out and effect the intent and purpose of this Agreement.

18.7 Third Party Rights

The parties do not intend that any term of this Agreement shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by the Owner or any other person who is not a party to this Agreement. The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

18.8 No Brokers

The Buyer and the Seller each represent and warrant to the other that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with this Agreement or the other Buyback Documents or any of the transactions contemplated hereby or thereby. Each party agrees to indemnify and hold the other harmless from and against any and all claims, suits, damages, costs and expenses (including reasonable legal fees) asserted by any agent, broker or third party appointed by the indemnifying party in respect of any commission or compensation of any nature whatsoever based upon the Aircraft, this Agreement, the other Buyback Documents or any of the transactions contemplated hereby or thereby.

18.9 Default Interest

If any payment due from either party under this Agreement is not received on the due date, without prejudice to the receiving party’s other rights under this Agreement and at law, the receiving party shall be entitled to interest for late payment calculated on the amount due from and including the due date of payment up to and including the date when the payment is received by such party at a rate equal to one (1) month US Dollar LIBOR plus three per cent. (3%) per year (part year to be prorated). All such interest shall be compounded monthly and calculated on the basis of the actual number of days elapsed in the month assuming a thirty (30) day month and a three hundred and sixty (360) day year.

19. CONFIDENTIALITY

19.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

19.2 The Buyer and the Seller agree that the provisions of this Agreement are personal to it and will not without the prior written consent of the other party disclose such information to any other party. However, the parties may disclose any confidential information to: (i) any governmental authority to which it is obliged to disclose such information; (ii) its legal advisers, auditors and insurers (provided that such parties are bound by a professional or a legal duty of confidentiality); (iii) any parties entitled pursuant to an order or relevant request of any court, legal or regulatory body having jurisdiction over the disclosing party; (iv) or otherwise in accordance with any obligation to disclose imposed by any applicable law.

IN WITNESS whereof this Agreement has been signed on the day and year first above written.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

14

SCHEDULE 1

DEFINITIONS

In this Agreement, capitalised words and expressions have the following meanings:

Acceptance Certificate means the certificate of acceptance regarding the Aircraft substantially in the form set out in Schedule 7.

Agreement means this agreement made between the Seller and the Buyer as it may from time to time be amended, varied, or supplemented in accordance with the terms hereof, and the Recitals and the Schedules hereto shall form an integral part of this Agreement.

Aircraft means the Airframe together with the Aircraft Documents, Engines and parts.

Aircraft Documents shall have the meaning given in Schedule 9, paragraph 7(a).

Airframe means the Airbus A318-100 airframe with manufacturer’s serial number 3030.

Bill of Sale means the bill of sale in respect of the Aircraft substantially in the form set out in Part A of Schedule 6.

Business Day means any day other than a Saturday or Sunday on which business of the nature contemplated by this Agreement is carried out in Santiago de Chile, Dublin and Toulouse and, where used in relation to payments, any day on which commercial banks are open for business in New York.

Buyback Documents means this Agreement, the Bill of Sale, the Deed of Covenant, the Acceptance Certificate, the Buyback Support Agreement and any agreement amending or supplementing any of the foregoing documents.

Buyback Support Agreement means the buyback support agreement entered into between Airbus S.A.S. and the Seller on December 23, 2009 as such has been amended by Amendment No.1 to the Buyback Support Agreement entered into between Airbus S.A.S. and the Seller on 23 December 2010.

Buyer Conditions Precedent means the documents, evidence and conditions specified in Schedule 5 each in a form and substance satisfactory to the Buyer.

Conditions Precedent means, collectively, the Buyer Conditions Precedent and the Seller Conditions Precedent.

Deed of Covenant means the deed of covenant in respect of the Aircraft substantially in the form set out in Part B of Schedule 6.

Delivery means the delivery of, sale and transfer of title to the Aircraft in accordance with Clause 7.

Delivery Date means the date (being a Business Day) on which Delivery of the Aircraft occurs.

Delivery Location means an airport in Santiago de Chile or such other location agreed between the Buyer and the Seller each acting reasonably.

Engines means the two (2) Pratt & Whitney PW6000 engines, bearing manufacturer’s serial numbers P318128 and P318106.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

15

Indemnitees means the Buyer (and its shareholders directors, officers, servants, agents and employees).

LIBOR means the London Interbank Offer Rate, as quoted on the Reuters 01 page (or equivalent Reuters page) from time to time.

Lien means any mortgage, charge, assignment, pledge, lien, statutory right in rem, right of possession, attachment or detention, title retention arrangement, encumbrance or any other arrangement which has the effect of giving another person any security claim or interest.

Owner means Conure Leasing Limited a company incorporated under the laws of the Cayman Islands and domiciled at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Previous Security Documents means any mortgages, charges, pledges, assignments, leases or other such documents, agreements, deeds or arrangements pursuant to which any of the Previous Financiers had the benefit of any form of Lien over the Aircraft or any part thereof.

Previous Financier means any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

Release means any deed of release or any other form of written confirmation received by the Seller or the Owner pursuant to which any Previous Financier has irrevocably confirmed that any right, title or interest of any nature whatsoever held by any such Previous Financier in or to the Aircraft or any part thereof prior to Delivery has been fully and unconditionally released.

Scheduled Delivery Date means 13 August 2011 or such other date designated by the terms of the Buyback Support Agreement as the “Scheduled Buyback Date” or, subject to an agreement in writing between the Buyer and the Seller, any such other date as may be agreed from time to time.

Seller Conditions Precedent means the documents, evidence and conditions specified in Schedule 4, each in a form and substance satisfactory to the Seller.

US Dollars and US$ shall mean the lawful currency of the United States.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

16

SCHEDULE 2

SELLER REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer that:

(a) Status: the Seller is a company duly incorporated under the laws of Chile.

(b) Power and authority: the Seller has the power to: (i) enter into and perform and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is a party; (ii) to own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitute, or when entered into will constitute, the Seller’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Seller is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Seller or any of its assets is bound or affected.

(e) No immunity:

(i) the Seller is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which the Seller is party; and

(ii) neither the Seller nor any of its assets is entitled to any right of immunity, and the entry into and performance of this Agreement and the other Buyback Documents to which it is party by the Seller constitute private and commercial acts.

(f) No Liens:

At Delivery the Aircraft shall be free and clear of all Liens.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

17

SCHEDULE 3

BUYER REPRESENTATIONS AND WARRANTIES

The Buyer represents and warrants to the Seller that:

(a) Status: the Buyer is a company duly incorporated under the laws of Ireland.

(b) Power and authority: the Buyer has the power to (i) enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is party; (ii) own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitutes, or when entered into will constitute, the Buyer’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Buyer is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Buyer or any of its assets are bound or affected.

(e) No immunity:

(i) the Buyer is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which it is a party; and

(ii) neither the Buyer nor any of its assets is entitled to any right of immunity, and the entry into and performance by the Buyer of this Agreement and the other Buyback Documents to which it is a party constitute private and commercial acts.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

18

SCHEDULE 4

SELLER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Seller to sell and deliver the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Seller:

A Documents

(a) Insurance: receipt by the Seller of an insurance certificate procured by the Buyer in respect of the Aircraft which reflects the requirements set out in Clause 12 of this Agreement;

(b) Licences, Consents and Registrations: receipt by the Seller of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Seller have been made for the effectiveness of the same within any applicable time limit); and

(c) Opinions: the receipt by the Seller of legal and tax opinions, in form and substance satisfactory to the Seller, acting reasonably, from independent counsel of the Seller’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery.

B Other Conditions Precedent

(a) No Default: no default on the part of the Buyer shall have occurred and be continuing under this Agreement, any other Buyback Document or any Manufacturer Agreement;

(b) Representations: the representations and warranties of the Buyer contained in Clause 3.2 shall be true and accurate in all material respects as though made on and as of the dates set out therein

(c) No Litigation: no action or proceeding shall have been instituted against the Buyer in any particular case where, if a finding were to be made against the Buyer that finding or the result of that finding would prevent the Buyer from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Buyer; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or government entity, in each case, to set aside, restrain, enjoin or prevent the Buyer’s completion and consummation of the Buyback Documents to which it is a party;

(d) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

(e) Taxes: the Seller shall be satisfied that the Delivery Location and the arrangements described in Clause 7 do not give rise to any Taxes;

(f) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

19

(g) Net Purchase Price: the Seller shall have received the initial payment set out in Clause 6.3.1(a).

The conditions precedent set out in paragraphs A(a), A(b), A(c), B(a), B(b), B(c), B(d) and B(e) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(g) above, shall be subject to a grace period of five (5) Business Days commencing on the Scheduled Delivery Date.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

20

SCHEDULE 5

BUYER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Buyer to purchase the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Buyer:

A Documents

(a) Opinions: the receipt by the Buyer of legal and tax opinions, in form and substance satisfactory to the Buyer, acting reasonably, from independent counsel of the Buyer’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery;

(b) Licences, Consents and Registrations: receipt by the Buyer of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Buyer have been made for the effectiveness of the same within any applicable time limit);

(c) Customer Due Diligence: receipt by the Buyer of the “customer due diligence” information from both the Seller and the Owner in form and substance satisfactory to the Buyer; and

(d) Title History: receipt by the Buyer of certified true copies of each bill of sale (or, if applicable, any such other document evidencing the transfer of the legal and beneficial title) evidencing the back-to-birth title history of the Airframe and each Engine.

B Other Conditions Precedent

(i) No Default: no default on the part of the Seller shall have occurred and be continuing under this Agreement, any other Buyback Document or under any Manufacturer Agreement;

(ii) Representations: the representations and warranties of the Seller contained in Clause 3.1 shall be true and accurate in all material respects as though made on and as of the dates set out therein;

(iii) No Litigation: no action or proceeding shall have been instituted against the Seller in any particular case where, if a finding were to be made against the Seller that finding or the result of that finding would prevent the Seller from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Seller; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or Government Entity, in each case, to set aside, restrain, enjoin or prevent the Seller’s completion and consummation of the Buyback Documents to which it is a party;

(iv) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

21

(v) Taxes: the Buyer shall be satisfied that the Delivery Location, and that the arrangements described in Clause 7, do not give rise to any Taxes;

(vi) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date;

(vii) Delivery Condition: the Aircraft complies in all respects with the Delivery Conditions; and

(viii) Delivery of Reference Aircraft: the Reference Aircraft corresponding to the Aircraft (construed in accordance with Clause 1.2.1(n) of the Buyback Support Agreement) has been delivered to the Seller in accordance with the terms and conditions set out in the Purchase Agreement.

The conditions precedent set out in paragraphs A(a), A(b), B(i), B(ii), B(iii), B(iv) and B(v) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(vii) above, shall, with regard to any non-fulfilment of such condition precedent which results solely from a Third Party Event, be subject to a grace period of one hundred twenty (120) days and, in any other circumstances, sixty (60) days, but in either case commencing on the Scheduled Delivery Date.

C Buyer Conditions Subsequent

Release Documentation: the Seller shall forward (or procure that its legal advisors forward) by e-mail to the Buyer electronic copies (in pdf format) of:

(i) no later than three (3) Business Days after Delivery, each of the duly executed Releases received by the Seller or, as the case may be, the Owner from each of the Previous Financiers; and

(ii) within three (3) Business Days of receipt by the Seller or the Owner, any notifications or confirmations of any description received from any applicable registry or authority with which any of the Previous Security Documents were registered, recorded or otherwise filed confirming that any such registrations, recordings or filings have been fully and unconditionally released,

with certified copies of each of the documents referred to in both (i) and (ii) above to be received by the Buyer no later than sixty (60) days after Delivery.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

22

SCHEDULE 6

Part A

FORM OF BILL OF SALE

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Conure Leasing Limited (the “Owner”), being the owner of the aircraft described below (hereinafter referred to as the “Aircraft”):

1. one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3030;

2. two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318128 and P318106;

3. all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

4. the documents, data and records relating to the Aircraft,

does hereby sell, grant, transfer and deliver all of the Owner’s rights, title and interest in and to the Aircraft to Airbus Financial Services (the “Buyer”), and its successors and assigns, to have and hold forever.

The Owner makes no representations or warranties of any kind, any implied warranties are expressly excluded and the Owner shall have no liability to the Buyer pursuant to this Bill of Sale and all recourse to the Seller hereunder is waived.

This Bill of Sale is governed by and shall be construed in accordance with English law.

IN WITNESS whereof, this Bill of Sale is hereby executed at                    (CET) this    day of            2011.

SIGNED by		)
		)
For and on behalf of	)
CONURE LEASING LIMITED		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

23

Part B

FORM OF DEED OF COVENANT

DEED OF COVENANT

(the Deed)

From:	LAN Airlines S.A. (LAN)
	Avenida Presidente Riesco 5711
	19th Floor, Las Condes
	Santiago
	Chile
To:	Airbus Financial Services (AFS)
	5th Floor, 6 George’s Dock
	IFSC, Dublin 1
	Ireland

            2011

WHEREAS

A. LAN and AFS have entered into a buyback agreement dated — 2011 pursuant to which, amongst other things, LAN has agreed to procure the sale of one (1) Airbus A318-100 aircraft bearing manufacturer’s serial number 3030 to AFS on the terms and conditions set out therein (the Buyback Agreement).

B. In accordance with the terms and conditions set out in the Buyback Agreement, the Seller shall procure that the Owner passes title to the Aircraft to AFS by delivering the Bill of Sale to AFS and the Seller shall, pursuant to and in accordance with the terms and conditions set out in this Deed, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens

Capitalised terms and expressions used in this Deed (including the recitals) shall, unless otherwise defined in this Deed, have the meanings given to such terms and expressions in the Buyback Agreement. In this Deed, the following terms shall have the following meanings:

Beneficiary shall mean AFS (and its successors and assigns) or, pursuant to paragraph 3 below, any party to which AFS (or any of its successors and assigns) sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s (or any of its successors’ and assigns’) interest in the Aircraft may, from time to time, be financed or refinanced.

Previous Financier shall mean any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

24

LAN HEREBY COVENANTS AS FOLLOWS:

1. In consideration of the payment by AFS of the Net Purchase Price in accordance with the Buyback Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by LAN, with regard to the aircraft described below (hereinafter referred to as the Aircraft):

(i) one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3030;

(ii) two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318128 and P318106;

(iii) all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

(iv) the documents, data and records relating to the Aircraft,

LAN hereby represents, warrants and covenants to AFS and its successors and assigns and each Beneficiary that:

(a) neither LAN, the Owner or any Previous Financier (nor any person affiliated or otherwise associated with the Owner, LAN or any Previous Financier or any person claiming through any such person) has any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof;

(b) the Aircraft is free and clear of all Liens; and

(c) the full legal and beneficial title to the Aircraft, with full title guarantee, free and clear of all Liens has been conveyed to AFS to have and hold forever and LAN hereby covenants that it shall warrant and defend such title forever against all claims and demands whatsoever.

2. LAN agrees to indemnify and hold each Beneficiary harmless against any Losses or Taxes suffered or incurred by any Beneficiary as a result of: (a) any of LAN’s representations or warranties set out in this Deed being incorrect, inaccurate or in any way misleading; or (b) LAN’s failure to perform any of its obligations or otherwise comply with any of its covenants set out in this Deed.

3. AFS and any Beneficiary shall be entitled to assign or otherwise transfer the benefit of this Deed to any person to which AFS or any such Beneficiary sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s or any such Beneficiary’s interest in the Aircraft may, from time to time, be financed or refinanced. LAN shall, at its own cost, promptly execute all documents requested by AFS or, as the case may be, any Beneficiary to effect, perfect, record or implement any such assignment or transfer, and will promptly comply with any other requests of AFS or any Beneficiary (or any of their respective successors and assigns) in respect of any such assignment or transfer.

4. LAN agrees from time to time and at its cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by AFS or any Beneficiary to establish, maintain and protect the rights and remedies of AFS or any Beneficiary and to carry out and effect the intent and purpose of this Deed.

5. This Deed shall be governed by and construed in accordance with English law.

IN WITNESS whereof, this Deed is hereby executed as a deed as of                    am / pm this    day of        2011.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

25

SIGNED by		)
		)
For and on behalf of	)
LAN AIRLINES S.A.		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

26

SCHEDULE 7

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE RELATING TO ONE (1) A318-100 AIRCRAFT,

MANUFACTURER’S SERIAL NUMBER 3030 AND HAVING TWO (2) PRATT &

WHITNEY PW6000 ENGINES BEARING MANUFACTURER’S SERIAL NUMBERS

P318128 AND P318106

(THE AIRCRAFT)

Airbus Financial Services (the Buyer) hereby certifies that pursuant to the buyback agreement dated            20— between LAN Airlines S.A. (the Seller) and the Buyer (the Buyback Agreement):

(a) the Buyer has inspected the Aircraft, found it to be complete and satisfactory to it and that the Aircraft conforms with the description and is in the condition and equipped as required by the Buyback Agreement;

(b) the Buyer has accepted delivery of the Aircraft, as is where is;

(c) the Buyer has inspected, found to be complete and satisfactory to it and has received all of the documents, data and records relating to the Aircraft (the Aircraft Documents); and

(d) the Buyer acknowledges that it has no rights or claims whatsoever against Seller or the Owner in respect of: (i) the condition of the Aircraft or the Aircraft Documents; or (ii) any of the other matters referred to in Clause 9 of the Buyback Agreement.

Capitalised terms and expressions used in this Acceptance Certificate shall have the meanings given in the Buyback Agreement.

This Acceptance Certificate is governed by and shall be construed in accordance with English law.

Date:            20—

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

27

SCHEDULE 8

INSPECTION PROCEDURE

All references to Airbus in this Schedule 8, are made in relation to its capacity as the authorised representative of the Buyer.

All references to “Seller” in this Schedule 8 shall be deemed to refer to LAN Airlines S.A. (even if LAN Airlines S.A. is not the seller).

Airbus shall cover the costs of its personnel during the Pre-Recovery Inspection and the Delivery Inspection.

1. Pre-Recovery Inspection by Airbus

a) The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives, at the inspection location, no later than six (6) months before the Scheduled Buyback Date (the Pre-Recovery Inspection).

b) The Pre-Recovery Inspection will not disrupt the commercial operation or maintenance of the Aircraft.

c) After the Pre-Recovery Inspection has been performed, Airbus will deliver to the Seller within thirty (30) calendar days following the last day of the Pre-Recovery Inspection a list of all the inspected items (including areas, components and Aircraft Documents), indicating any discrepancies found and specifying the remedial works required in order to comply with the Delivery Conditions. The list of discrepancies provided to the Seller following the Pre-Recovery Inspection will be an exhaustive list of discrepancies identified at the occasion of the Pre-Recovery Inspection and such list shall be updated as required during the Delivery Inspection.

2. Delivery Inspection by Airbus

In order to verify that the Aircraft is in compliance with the requirements of this Agreement, Airbus is entitled but is not obliged to conduct each of the following during the delivery inspection (the Delivery Inspection):

2.1. Ground Inspection

The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives at the inspection location. Such inspection shall be scheduled early enough to allow sufficient time to verify compliance with all the requirements set out in Schedule 9. The Seller shall provide opening and access to all necessary areas as reasonably required to perform the checks described in this Schedule 8 and shall allow Airbus or their authorised representatives, to accomplish their inspection in order to determine if the Aircraft is in compliance with the Delivery Conditions. During such checks, Airbus or its representatives may make reasonable requests that adjacent additional panels or areas of the Aircraft be opened in order to allow further inspection of suspect areas, provided reasonable grounds exist for such request. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

28

2.2. Operational Ground Check

Promptly after completion of all (if any) corrections required under paragraph 2.1 above, the Seller shall conduct an operational ground check in accordance with Part 1, Chapter 1 of the Airbus In Service Aircraft Test Manual (ISATM) for the purpose of demonstrating in the presence of an Airbus ground test inspector, the satisfactory operations of all systems. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

2.3. Engine Performance Check

Compliance with full rated performances as defined in the Aircraft flight manual will be demonstrated (i) by an on-wing static inspection, (ii) by testing any system of the powerplants (engines, nacelles and accessories) and (iii) by performing an engine power assurance run in accordance with Part 1, Chapter 2 of the ISATM. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such powerplant tests so as to comply with the Delivery Conditions.

2.4. Acceptance Flight

a) Promptly after completion of the inspections, checks and all (if any) corrections required under paragraphs 2.1, 2.2 and 2.3 above, the Aircraft shall be test flown by the Seller for not more than three hours in the vicinity of the Delivery Location in accordance with Part 2 of the ISATM. Airbus shall have the right to have, during such acceptance flight, and subject to applicable law, (i) one of its test pilots participate as a member of the flight crew (but not as pilot in command) and (ii) one of its flight test engineers seated on the flight deck’s third occupant seat and (iii) one of its cabin engineers for participating in the flight in order to observe the testing of the cabin systems. In addition, upon reasonable request from Airbus and subject to applicable law, the Seller shall authorize a representative of the Aircraft’s prospective lessee or purchaser to participate, preferably as a flight deck observer, in such acceptance flight (provided always that the Seller shall not be obliged to repeat, for the benefit of any of such representative, any flight manoeuvres previously performed in the course of the flight test).

b) All flights pursuant to paragraph 2.4 (a) above shall be carried out at the Seller’s expense, including, but not limited to, costs for fuel, oil, airport fees, insurance, takeoff/landing fees, airway communication fees and ground handling fees.

2.5. Acceptance Criteria

a) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall be conducted using Airbus’ ISATM.

b) Upon completion of such acceptance flight or testing, the representative of Airbus participating in such flight or testing shall indicate in writing to the Seller any discrepancies in the Aircraft required to be corrected by the Seller in order to comply with the provisions of the Delivery Conditions. In case an alleged discrepancy is disputed, Airbus and the Seller will jointly select and appoint a suitably qualified and independent third party to assess such discrepancy and the cost of that third party will be shared equally between Airbus and the Seller. If Airbus and the Seller cannot agree on the selection of such third party in a timely manner, Avitas Inc shall be appointed to select such third party. If following such third party determination, the discrepancy is confirmed, the Seller shall promptly correct any such discrepancy and if required, another test flight will be conducted (to the extent necessary to verify the correction of the discrepancy) at Seller’s cost.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

29

c) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall establish that all equipment is functioning in accordance with the relevant limits specified in the AMM, Flight Manual, Flight Crew Operating Manual or any other relevant manual and meet the Delivery Conditions.

3. Ferry Flight

Subject to reasonable written notice, Airbus may request the Seller to fly the Aircraft to a destination not further than 6,000 nautical miles away from the Delivery Location. Such flight, if reasonably practicable for the Seller (subject to, inter alia, crew availability) shall be completed at Airbus’ cost and risk.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

30

SCHEDULE 9

DELIVERY CONDITIONS

[***].

1. Maintenance

[***].

2. Condition of Aircraft

[***].

3. Certificate of Airworthiness Matters, Export and Deregistration

[***].

4. Condition of Airframe

[***].

5. Condition of Engines

[***].

6. Condition of APU

[***].

7. Aircraft Documents

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

31

8. Ground Lock Safety Pins and covers

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

32

APPENDIX 1

AIRCRAFT RECORDS REQUIREMENT

1. OPERATIONAL & TECHNICAL MANUALS

[***].

2. TECHNICAL RECORDS

[***].

2.1. General - Aircraft records

[***].

2.2. Engines records

[***].

2.3. APU records

[***].

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

33

APPENDIX 2

LIST OF PMA PARTS IN USE BY LAN

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

34

APPENDIX 3

FLY AWAY KIT

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

35

EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3030)

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)
SIGNED by	)
for and on behalf of	)
LAN AIRLINES S.A.	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

36

EX-4.23

Exhibit 4.23

DATED                     

LAN AIRLINES S.A.

as the Seller

and

AIRBUS FINANCIAL SERVICES

as the Buyer

BUYBACK AGREEMENT

relating to

ONE (1) AIRBUS A318-100 AIRCRAFT MSN 3062

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

CONTENTS

Clause	Page
1. Definitions		1
2. Interpretation		1
3. Representations And Warranties		1
4. Agreement To Sell And Purchase		2
5. Conditions Precedent		2
6. Payments		3
7. Delivery Procedure And Acceptance		4
8. Total Loss		5
9. Condition Of Aircraft		6
10. Operational Indemnities		7
11. Taxes		9
12. Liability Insurance		9
13. Manufacturer’s Warranties		10
14. Benefit Of Agreement		10
15. Waiver		10
16. Notices		10
17. Law And Jurisdiction		11
18. Miscellaneous		11
19. Confidentiality		13
Schedule 1		14
Definitions		14
Schedule 2		16
Seller Representations And Warranties		16
Schedule 3		17
Buyer Representations And Warranties		17
Schedule 4		18
Seller Conditions Precedent		18
Schedule 5		20
Buyer Conditions Precedent		20
Schedule 6		22
Bill Of Sale		22
Deed Of Covenant		23

Schedule 7	26
Schedule 8	27
Schedule 9	30
EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3062)	34

This BUYBACK AGREEMENT is made on      day of                      2011

BETWEEN:

1. LAN AIRLINES S.A., a sociedad anónima existing under the laws of Chile, having its registered office at Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile (the Seller); and

2. AIRBUS FINANCIAL SERVICES, a company incorporated under the laws of Ireland whose registered office is at 5th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland (the Buyer).

WHEREAS:

The Seller has agreed to sell or, as the case may be, procure that the Owner sells the Aircraft to the Buyer and the Buyer has agreed to purchase the Aircraft from the Seller or, as the case may be, the Owner on the terms and conditions set out herein.

IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement, capitalised words and expressions have the meanings given to them in Schedule 1 except as otherwise provided for herein. Capitalised terms and expressions used in this Agreement and not specifically defined herein shall have the meanings given to such terms and expressions in the Buyback Support Agreement.

2. INTERPRETATION

In this Agreement, unless the contrary intention is stated, a reference to:

2.1 each of the Seller, the Owner and the Buyer or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor, assignee or transferee;

2.2 words importing the plural shall include the singular and vice versa;

2.3 any document shall include that document as amended, novated, assigned or supplemented;

2.4 a clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

2.5 any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted.

2.6 Clause or schedule headings are for ease of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement.

3. REPRESENTATIONS AND WARRANTIES

3.1 Seller Representations and Warranties

The Seller represents and warrants to the Buyer on the terms set out in Schedule 2. The representations and warranties in Schedule 2 will survive the execution of this Agreement and will be deemed to be repeated by the Seller on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1

3.2 Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller on the terms set out in Schedule 3. The representations and warranties in Schedule 3 will survive the execution of this Agreement and will be deemed to be repeated by the Buyer on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

3.3 No Prejudice

The rights of the Buyer and the Seller in relation to any misrepresentation or breach of warranty by the Buyer or, as the case may be, the Seller shall not be prejudiced by any investigation by or on behalf of the Buyer or, as the case may be, the Seller into the affairs of such other party.

4. AGREEMENT TO SELL AND PURCHASE

Subject to the provisions of this Agreement, the Seller agrees to procure that the Owner sells the Aircraft to the Buyer and the Buyer agrees to purchase the Aircraft from the Owner in an as is, where is condition in its actual state and without any warranty as to condition from the Seller or the Owner.

5. CONDITIONS PRECEDENT

5.1 Seller Conditions Precedent

5.1.1 The obligation of the Seller to sell or, as the case may be, to procure that the Owner sells the Aircraft shall be subject to fulfilment of the Seller Conditions Precedent set out in Schedule 4, on or prior to the date for fulfilment of such Seller Conditions Precedent (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

5.1.2 The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

5.2 Buyer Conditions Precedent

5.2.1 The obligation of the Buyer to purchase the Aircraft shall be subject to fulfilment of the Buyer Conditions Precedent set out in Schedule 5, on or prior to the date for fulfilment of such Buyer Conditions Precedent (except to the extent that the Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

5.2.2 The Buyer Conditions Precedent have been inserted for the benefit of the Buyer and may be waived in writing, in whole or in part and with or without conditions, by the Buyer without prejudicing the right of the Buyer to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

5.3 Non-fulfilment of Conditions Precedent

Subject to the grace periods set out in Schedule 4 and Schedule 5, if any of the Conditions Precedent remain outstanding as at the Scheduled Delivery Date (subject to the expiration of any applicable grace periods set out in such Schedules) and are not either satisfied or irrevocably waived or deferred in writing by the Seller or, as the case may be, the Buyer, the Seller (in the case of the non-fulfilment of a Seller Condition Precedent) or the Buyer (in the case of the non-fulfilment of a Buyer Condition Precedent) shall by notice to the other party be entitled to terminate its obligation to sell or, as the case may be, purchase the Aircraft. The Buyer and the Seller acknowledge that, pursuant to and in accordance with the terms set out in the Buyback Support Agreement, an Aircraft may be replaced with a Substitute Aircraft (as defined in the Buyback Support Agreement) and, if any such substitution were to occur, the abovementioned Conditions Precedent shall be deemed to apply to the Substitute Aircraft in place of the Aircraft.

5.4 Effective Time

The Buyer and the Seller each agree that neither party shall have any obligation to perform any of its respective obligations under this Agreement unless and until each of the following conditions are satisfied to the Buyer’s satisfaction:

5.4.1 the Aircraft is physically located outside of Chile;

5.4.2 the Seller has deregistered the Aircraft from the Chilean aviation authority’s (the DGAC) register of civil aircraft and the Buyer has received a copy of the de-registration telex to be sent by the DGAC to the Brazilian aviation authority confirming that the Aircraft has been de-registered; and

5.4.3 the Seller has provided to the Buyer a certified copy of the letter provided by the Seller to the relevant Chilean customs authority (attaching a copy of the de-registration telex referred to above) duly stamped by such relevant Chilean customs authority in confirmation of its acceptance of the terms set out therein.

Upon the satisfaction of each of the above, the Buyer shall confirm the same to the Seller and thereafter the acceptance, delivery and transfer of title to the Aircraft shall thereafter take place in accordance with the terms and conditions set out in Clause 7 below.

6. PAYMENTS

6.1 Purchase Price

The gross purchase price for the Aircraft shall be [***] (the Gross Purchase Price). The Gross Purchase Price less the Aggregate Reduction (if any) shall be the Net Purchase Price.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

6.2 Delivery Date Payment

Subject to the satisfaction of the Buyer Conditions Precedent and the terms of this Agreement, the Buyer shall pay the Net Purchase Price to the Seller in accordance with the provisions of Clause 6.3.

6.3 Payment of Net Purchase Price

Notwithstanding any other provision of this Agreement or any other Buyback Document, the Seller hereby directs the Buyer to pay the Net Purchase Price not to the Seller but, instead, to its subsidiary LAN Cargo S.A. and, in accordance with such direction but subject always to the provisions of Clause 6.4, the Buyer agrees that it shall pay the Net Purchase Price in US Dollars for value on or before the Delivery Date and in immediately available funds by wire transfer to the following account of LAN Cargo S.A.:

Beneficiary:	LAN Cargo S.A.
Account Number:	36132267
Bank:	Citibank N.A.
Address:	Wall Street - New York, NY 10043
ABA Code:	021000089
SWIFT:	CITIUS33

No payment shall be considered made until it is credited to the above account.

6.4 Payment Account Direction

The Seller covenants with the Buyer that:

6.4.1 the payment by the Buyer of the Net Purchase Price to the abovementioned account of LAN Cargo S.A. in accordance with the direction of the Seller set out in Clause 6.3 above shall be in full and final settlement of the obligation of the Buyer to pay the Net Purchase Price to the Seller under this Agreement; and

6.4.2 the Seller shall indemnify and hold the Buyer harmless on an after-tax basis in respect of any and all Losses or Taxes imposed on, incurred by or asserted against the Buyer (regardless of when the same are incurred) in any way arising out of or connected in any way with the Buyer’s payment of the Net Purchase Price to LAN Cargo S.A. but only to the extent that any such Loss or Tax (or any increase in any such Loss or Tax) would not have been imposed upon, incurred by or asserted against the Buyer had the payment of the Net Purchase Price been made by the Buyer to an account of the Seller.

7. DELIVERY PROCEDURE AND ACCEPTANCE

7.1 Delivery Conditions

The Buyer’s obligation to purchase the Aircraft is conditional upon, amongst other things, the Aircraft complying on the Delivery Date with the Delivery Conditions set out in Schedule 9.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

7.2 Inspection and Delivery Procedures

The Buyer (and its designated representatives) shall be entitled to inspect the Aircraft and the Aircraft Documents for the purposes of confirming that the Aircraft meets the Delivery Conditions (the Inspection). The Inspection and Delivery procedures are set out in Schedule 8.

7.3 Delivery

The Seller shall, subject to the satisfaction of the Seller Conditions Precedent, tender the Aircraft (or procure that the Aircraft is tendered) for Delivery to the Buyer in the Delivery Condition but otherwise in an as is, where is condition in its actual state and without any warranty at the Delivery Location on the Delivery Date. The Buyer shall, subject to the satisfaction of the Buyer Conditions Precedent, be obligated to accept delivery of the Aircraft when tendered for delivery in accordance with the terms of this Agreement.

7.4 Acceptance

Subject to the satisfaction (or waiver by the Buyer) of the Buyer Conditions Precedent set out in Schedule 5, the Buyer shall on the Delivery Date accept delivery of the Aircraft by executing and delivering the Acceptance Certificate to the Seller, which shall be conclusive evidence of the matters stated therein.

7.5 Transfer of Title

Upon:

(a) delivery to the Seller of the Acceptance Certificate duly executed by the Buyer; and

(b) receipt or waiver by the Seller of the Seller Conditions Precedent set out in Schedule 4,

the Seller shall procure that the Owner passes title to the Aircraft to the Buyer by delivering the Bill of Sale to the Buyer and the Seller shall, pursuant to and in accordance with the terms and conditions set out in the Deed of Covenant, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens.

7.6 Risk Passing

Risk of loss or destruction of the Aircraft or damage to the Aircraft shall pass to the Buyer upon Delivery.

8. TOTAL LOSS

8.1 If before the Scheduled Delivery Date the Aircraft suffers a Total Loss the Seller shall, upon being notified of the Total Loss, notify the Buyer in writing thereof as soon as is reasonably practicable thereafter and, with effect from the date such Total Loss is notified to the Buyer, this Agreement shall terminate and thereafter neither party shall have any further obligation or liability to the other under this Agreement and the rights and obligations of the parties hereunder shall cease and be discharged without further liability on the part of the Seller or the Buyer.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

8.2 Without prejudice to the obligation of the Seller to tender the Aircraft in the Delivery Condition on the Scheduled Delivery Date in accordance with the terms set out herein (subject to the grace period set out in Schedule 5), if on or before the Scheduled Delivery Date: (i) any of the events described in paragraph (d) of the definition of Total Loss shall have occurred; or (ii) an event or circumstance shall have occurred which could be reasonably be expected to result in a constructive, compromised or arranged total loss as contemplated by paragraph (a) of the definition of Total Loss and, the event referred to in part (i) or the event or circumstance referred to in part (ii) is or may be continuing on the Scheduled Delivery Date, then the Seller shall notify the Buyer in writing accordingly as soon as reasonably practicable, and:

8.2.1 in relation to part (i) above, upon the first to occur after the Scheduled Delivery Date of: (x) the cessation of the event in question; and (y) the Aircraft becoming a Total Loss, then, with regard to the case described in (x), the Scheduled Delivery Date shall be deferred until sixty (60) days after such cessation or, with regard to the case described in (y), Clause 8.1 will apply; and

8.2.2 in relation to part (ii) above, upon the first to occur after the Scheduled Delivery Date of: (x) a declaration by insurers that the Aircraft is not a Total Loss; (y) the expiration of sixty (60) days after the occurrence of any such event or circumstance (provided that, under no circumstances shall any such period extend beyond the sixty (60) day or, as the case may be, one hundred twenty (120) day grace period extended with respect to the Aircraft’s compliance with the Delivery Conditions set out in Schedule 5); and (z) the Aircraft becoming a Total Loss, then, if either of the cases described in (x) or (y) is the first to occur, Clause 6.1.1(a) of the Buyback Support Agreement shall apply or, if the case described in (z) is the first to occur, Clause 8.1 will apply.

8.3 In the event that Clause 8.2.1(x) applies, the Seller shall be entitled to exercise the LAN Substitution Right (pursuant to and in accordance with Clause 14 of the Buyback Support Agreement) within ten (10) days after the Scheduled Delivery Date, provided that, at the time of such exercise, no more than twenty (20) days shall have elapsed since the occurrence of the events or circumstances described in paragraph (d) of the definition of Total Loss.

9. CONDITION OF AIRCRAFT

9.1 Disclaimers

SUBJECT ALWAYS TO THE TERMS AND CONDITIONS SET OUT IN THIS AGREEMENT, THE BUYER AGREES THAT AS BETWEEN THE BUYER AND THE SELLER THE AIRCRAFT AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE HAS BEEN GIVEN BY THE SELLER OR ITS AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE TECHNICAL RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS,

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

9.2 Waiver

THE BUYER HEREBY WAIVES, AS BETWEEN ITSELF (ON THE ONE HAND) AND THE SELLER (ON THE OTHER HAND), ALL OF ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED STATUTORY OR OTHERWISE, ON THE PART OF THE SELLER AND ALL CLAIMS AGAINST THE SELLER HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE OF THE AIRCRAFT, THIS AGREEMENT OR THE OTHER BUYBACK DOCUMENTS, PROVIDED ALWAYS THAT THIS WAIVER SHALL NOT APPLY TO THE EXPRESS WARRANTIES AND REPRESENTATIONS GIVEN BY THE SELLER TO THE BUYER IN ANY OF THE BUYBACK DOCUMENTS.

10. OPERATIONAL INDEMNITIES

10.1 The Seller will indemnify and hold harmless on an after-tax basis each of the Indemnitees in respect of any and all Losses imposed on, incurred by or asserted against any such Indemnitees (regardless of when the same are incurred) in any way arising out of or connected in any way with the purchase, ownership, possession, registration, de-registration, transportation, management, sale, control, inspection, use or operation, condition, delivery, acceptance, maintenance, repair, service, modification, overhaul, removal of the Aircraft, or any loss of or damage to the Aircraft or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters or any Losses which constitute Taxes (regardless of when imposed) which arise out of any act, omission, event or circumstance occurring in relation to the Aircraft prior to Delivery; other than:

(i) Losses resulting from the gross negligence or wilful misconduct of such Indemnitees; or

(ii) to the extent that such Losses arise out of any act, omission, event or circumstance occurring after Delivery; or

(iii) any Losses which constitute Taxes which arise as the result of, or are imposed in respect of, the sale of the Aircraft by the Seller to the Buyer in accordance with this Agreement; or

(iv) Losses which represent an operating or internal overhead expense except to the extent that the same arise as a consequence of a breach by the Seller of any of its obligations under the Buyback Documents; or

(v) Losses which are the result of a breach by the Buyer of its obligations under the Buyback Documents or, as the case may be, by Airbus S.A.S. of its obligations under the Buyback Support Agreement; or

(vi) any costs or expenses which the Buyer (or any Indemnitee) has expressly agreed to assume pursuant to this Agreement or any applicable Buyback Document; or

(vii) Losses which arise out of any product liability claim.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

10.2 The Buyer agrees to use its reasonable efforts to obtain the subsequent operator of the Aircraft’s agreement to indemnify and hold the Indemnitees harmless in respect of any Losses imposed on, incurred by or asserted against any such Indemnitees in any way arising out of or connected in any way with the acts, omissions events or circumstances referred to in Clause 10.1 above in any operational indemnity given to the Buyer by any such subsequent operator and, if the agreement of the subsequent operator is so obtained, the indemnity in Clause 10.1 shall, to the extent of such operator’s indemnity, cease to apply.

10.3 The Buyer agrees to notify the Seller in writing reasonably promptly upon becoming aware of a claim by an Indemnitee for indemnification from the Seller pursuant to Clause 10.1 (a Claim); provided that, the Seller shall not be required to indemnify any Indemnitee in respect of any increase in any Claim to the extent that any such increase arises solely and directly as a result of the Buyer’s failure to give the Seller reasonably prompt written notice of any such Claim.

10.4 Without prejudice to the underlying obligation of the Seller to indemnify any such Indemnitee(s) in accordance with Clause 10.1 in respect of any such Claim, the Buyer agrees that:

10.4.1 commencing on the date the Claim is notified to the Seller, the Seller’s obligation to pay to the relevant Indemnitee(s) the full amount of the Claim shall be stayed for a period of ten (10) Business Days (or such longer period as the relevant Indemnitee(s) may agree, acting reasonably) (a Standstill Period) in order to allow the Seller the opportunity to evaluate the Claim and to decide whether or not it wishes to contest its validity or, as the case may be, the amount claimed thereunder (a Contest) and so that the Seller and the Buyer (acting on behalf of any relevant Indemnitee(s)) may consult with each other in order to determine what action (if any) may be reasonably be taken in order to avoid or mitigate such Claim;

10.4.2 if the Buyer and the Seller cannot agree on a course of action as regards any such Contest, the Seller shall be entitled (acting at all times reasonably and in good faith) to procure a legal opinion (or, as the case may be, an opinion of another relevant expert having regard to the nature of the Claim) from a suitably qualified expert with a view to confirming that a reasonable basis exists for any such Contest and the actions recommended to be undertaken in order to properly conduct any such Contest. If the opinion of the relevant expert confirms that there does not exist a reasonable basis for any such Contest, the Seller shall promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1;

10.4.3 if the Seller’s appointed expert has confirmed in its opinion that it is necessary for the Seller to take action in the name of the relevant Indemnitee(s), the Buyer (acting on the instructions of such Indemnitee(s)) shall be entitled to request that the Buyer and the Seller instruct an independent expert (the costs thereof to be shared equally between the Buyer and the Seller) to evaluate the Contest’s prospects of success and/or actions recommended to be undertaken in the name of the relevant Indemnitee(s) in order to properly conduct any such Contest. If the independent expert confirms that: (i) there does not exist a reasonable basis for any such Contest; and/or (ii) that it is necessary that any action be taken in the name of any Indemnitee, the Seller shall, with regard to (i), promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1 or, with regard to (ii), proceed to take any action in the name of the relevant Indemnitee as recommended by such independent expert;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

10.4.4 following the receipt of any positive opinion of the Seller’s expert pursuant to Clause 10.4.2 or, as the case may be, of the independent expert appointed pursuant to Clause 10.4.3 above, the Seller may proceed to take, at its sole cost and expense, any action(s) as may have been recommended thereunder; provided that:

(a) no Termination Event has occurred and is continuing; and/or

(b) the relevant Indemnitee(s) shall have received the full amount to be indemnified pursuant to Clause 10.1 or, if agreed by such Indemnitee(s), adequate reserves, satisfactory to such Indemnitee(s), shall have been made in respect of the Claim and the costs thereof; and/or

(c) taking of any such action (or, as the case may be, the entitlement to continue to take any such action) would not be deemed by the relevant Indemnitee(s) to be prejudicial to the relevant Indemnitee(s) position as regards the Claim or otherwise would not be likely to have any adverse effect upon the relevant Indemnitee(s)’s reputation, business, operations or financial condition (other than any minor costs and expenses of an administrative nature).

10.5 Subject to the relevant Indemnitee(s) having received from the Seller the full amount required to indemnify and hold such Indemnitee(s) harmless with regards to any Claim, the Buyer agrees to procure that the relevant Indemnitee(s) take(s) such steps (at no cost to the Buyer or to such Indemnitee(s)) as may be reasonably requested by the Seller so as to enable the Seller to be subrogated to the rights of such relevant Indemnitee(s) in respect of such Claim.

11. TAXES

The parties will use all reasonable endeavours to mitigate or avoid any Taxes which arise as a result of the sale of the Aircraft by (or otherwise procured by) the Seller to the Buyer in accordance with this Agreement and the Seller and the Buyer shall each co-operate with the other in good faith and take such steps as are reasonably practicable in respect thereof; provided that, the cost of any such mitigation or avoidance action shall be borne by the party requesting the same and that any such steps contemplated above shall not result in any of the rights or obligations of the non-requesting party under this Agreement being adversely affected.

12. LIABILITY INSURANCE

The Buyer shall maintain or procure that liability insurance is maintained in respect of the Aircraft during the period commencing on the Delivery Date and ending on the earlier of: (i) the completion of the next zonal/structural inspection (due at either 6 years or 12 years); and (ii) the second anniversary of the Delivery Date. On the Delivery Date and on the occasion of each renewal of such liability insurance, the Buyer shall provide (or procure that the then current operator provides) a certificate issued by the insurance broker of the then current operator which includes the following:

(a) the Seller, the Owner (if applicable) (and their respective directors, officers, employees and agents) as additional named assureds on the passenger, third party, cargo, baggage and mail liability policies which shall have a combined single limit of liability of not less than the lesser of: (a) the level of coverage maintained by the Seller as at the Delivery Date; and (b) the level of coverage maintained by prudent operators of single-aisle aircraft in the region within which such next operator of the Aircraft operates;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

(b) an appropriate cross liabilities clause and breach of warranty protection in favour of such additional named assureds;

(c) a provision confirming that the hull insurers waive any subrogation rights against such additional named assureds; and

(d) a provision confirming that the Seller is to be given at least thirty (30) days (or such lesser period as may be stipulated by the insurers of such subsequent operator in respect of war risks coverage) notice of cancellation, termination or material alteration,

provided always that; requirements set out in sub-Clauses (a) through (d) are not inconsistent with the prevailing practice in the London international aviation insurance market as at the Delivery Date or on the occasion of each renewal. If there is a inconsistency between the requirements of any of sub-Clauses (a) through (d) above and such prevailing practice, then the provision of a certificate complying with such prevailing practice shall satisfy the Buyer’s obligations set out in this Clause 12.

13. MANUFACTURER’S WARRANTIES

The Seller hereby agrees to: (i) assign to the Buyer any warranties of any manufacturer or vendor of any part of the Aircraft; and (ii) procure (at no cost to the Seller) that the Buyer receives the benefit of any non-assignable warranties of any manufacturer or vendor of any part of the Aircraft which may exist as at Delivery in respect of any claim arising under any such warranties.

14. BENEFIT OF AGREEMENT

Neither party shall assign, transfer, novate or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of the other party.

15. WAIVER

15.1 The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option herein provided, or to require at any time performance by the other party of any of the provisions herein, shall in no way be construed to be a present or future waiver of such provision nor in any way affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision.

15.2 The express waiver (whether made one (1) or several times) by any party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

15.3 The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by applicable law.

16. NOTICES

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee, provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 16 shall also be sent by e-mail to the addresses set out below.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

The Buyer’s address for notices is:

Airbus Financial Services

5^th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland

Attention:	Managing Director
E-mail:	afscontracts@airbus.com

The Seller’s address for notices is:

LAN Airlines S.A.

Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile

Attention:	Fleet Management Director
E-mail:	oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

17. LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with English law.

17.2 The Buyer and the Seller each hereby agrees that the courts of England shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection with this Agreement.

17.3 As a foreign company that has, pursuant to the Overseas Companies Regulations 2009 (the “Overseas Regulations”) (registration number FC029342), registered in the United Kingdom as having a “UK establishment”, in accordance with the Companies Act 2006 and the Overseas Regulations the Seller irrevocably appoints as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement the person from time to time appointed by the Seller as its agent for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being as of the date of this Agreement Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If, for any reason, Mr. Gonzalo Garcia (or any replacement to Mr. Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Seller to receive service process, the Seller shall promptly appoint another agent and advise the Buyer thereof.

17.4 The Buyer appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement and the other Buyback Documents.

18. MISCELLANEOUS

18.1 Severability

If a provision of this Agreement or any of the other Buyback Documents is or becomes illegal, invalid or unenforceable in any jurisdiction that will not affect:

18.1.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or the relevant Buyback Document; or

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

18.1.2 the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement or the relevant Buyback Document.

18.2 Expenses

As between the Buyer and the Seller (and the Owner, if applicable), each of them will pay for its own respective costs, fees (including legal and documentation fees) and other expenses incurred in connection with the preparation and execution of the documentation relating to, and the implementation of, the transactions contemplated by this Agreement and any documents related thereto.

18.3 Sole and Entire Agreement

This Agreement (together with any relevant Buyback Document related hereto) contains the entire agreement between the Buyer and the Seller in relation to the matters referred to herein and supersedes any previous understandings, commitments or representations whatsoever oral or written. No provision of this Agreement may be changed, waived or discharged except by an instrument in writing signed by the both parties hereto (or by their duly authorised representatives or agents). In the event that any term or condition of this Agreement conflicts with any term and condition set out in the Buyback Support Agreement, the Buyer and the Seller agree that the provisions of this Agreement shall, to the extent of any such conflict, prevail.

18.4 Language

All notices to be given under this Agreement will be in English. All documents delivered pursuant to this Agreement will be in English.

18.5 Counterparts

This Agreement may be executed in counterparts, each of which will constitute one and the same document.

18.6 Further Assurances

The Buyer and the Seller each agree from time to time and at the requesting party’s cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by the other party to establish, maintain and protect the rights and remedies of such party and to carry out and effect the intent and purpose of this Agreement.

18.7 Third Party Rights

The parties do not intend that any term of this Agreement shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by the Owner or any other person who is not a party to this Agreement. The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

18.8 No Brokers

The Buyer and the Seller each represent and warrant to the other that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with this Agreement or the other Buyback Documents or any of the

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

transactions contemplated hereby or thereby. Each party agrees to indemnify and hold the other harmless from and against any and all claims, suits, damages, costs and expenses (including reasonable legal fees) asserted by any agent, broker or third party appointed by the indemnifying party in respect of any commission or compensation of any nature whatsoever based upon the Aircraft, this Agreement, the other Buyback Documents or any of the transactions contemplated hereby or thereby.

18.9 Default Interest

If any payment due from either party under this Agreement is not received on the due date, without prejudice to the receiving party’s other rights under this Agreement and at law, the receiving party shall be entitled to interest for late payment calculated on the amount due from and including the due date of payment up to and including the date when the payment is received by such party at a rate equal to one (1) month US Dollar LIBOR plus three per cent. (3%) per year (part year to be prorated). All such interest shall be compounded monthly and calculated on the basis of the actual number of days elapsed in the month assuming a thirty (30) day month and a three hundred and sixty (360) day year.

19. CONFIDENTIALITY

19.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

19.2 The Buyer and the Seller agree that the provisions of this Agreement are personal to it and will not without the prior written consent of the other party disclose such information to any other party. However, the parties may disclose any confidential information to: (i) any governmental authority to which it is obliged to disclose such information; (ii) its legal advisers, auditors and insurers (provided that such parties are bound by a professional or a legal duty of confidentiality); (iii) any parties entitled pursuant to an order or relevant request of any court, legal or regulatory body having jurisdiction over the disclosing party; (iv) or otherwise in accordance with any obligation to disclose imposed by any applicable law.

IN WITNESS whereof this Agreement has been signed on the day and year first above written.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

SCHEDULE 1

DEFINITIONS

In this Agreement, capitalised words and expressions have the following meanings:

Acceptance Certificate means the certificate of acceptance regarding the Aircraft substantially in the form set out in Schedule 7.

Agreement means this agreement made between the Seller and the Buyer as it may from time to time be amended, varied, or supplemented in accordance with the terms hereof, and the Recitals and the Schedules hereto shall form an integral part of this Agreement.

Aircraft means the Airframe together with the Aircraft Documents, Engines and parts.

Aircraft Documents shall have the meaning given in Schedule 9, paragraph 7(a).

Airframe means the Airbus A318-100 airframe with manufacturer’s serial number 3062.

Bill of Sale means the bill of sale in respect of the Aircraft substantially in the form set out in Part A of Schedule 6.

Business Day means any day other than a Saturday or Sunday on which business of the nature contemplated by this Agreement is carried out in Santiago de Chile, Dublin and Toulouse and, where used in relation to payments, any day on which commercial banks are open for business in New York.

Buyback Documents means this Agreement, the Bill of Sale, the Deed of Covenant, the Acceptance Certificate, the Buyback Support Agreement and any agreement amending or supplementing any of the foregoing documents.

Buyback Support Agreement means the buyback support agreement entered into between Airbus S.A.S. and the Seller on December 23, 2009 as such has been amended by Amendment No.1 to the Buyback Support Agreement entered into between Airbus S.A.S. and the Seller on 23 December 2010.

Buyer Conditions Precedent means the documents, evidence and conditions specified in Schedule 5 each in a form and substance satisfactory to the Buyer.

Conditions Precedent means, collectively, the Buyer Conditions Precedent and the Seller Conditions Precedent.

Deed of Covenant means the deed of covenant in respect of the Aircraft substantially in the form set out in Part B of Schedule 6.

Delivery means the delivery of, sale and transfer of title to the Aircraft in accordance with Clause 7.

Delivery Date means the date (being a Business Day) on which Delivery of the Aircraft occurs.

Delivery Location means an airport in Santiago de Chile or such other location agreed between the Buyer and the Seller each acting reasonably.

Engines means the two (2) Pratt & Whitney PW6000 engines, bearing manufacturer’s serial numbers P318135 and P318116.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

14

Indemnitees means the Buyer (and its shareholders directors, officers, servants, agents and employees).

LIBOR means the London Interbank Offer Rate, as quoted on the Reuters 01 page (or equivalent Reuters page) from time to time.

Lien means any mortgage, charge, assignment, pledge, lien, statutory right in rem, right of possession, attachment or detention, title retention arrangement, encumbrance or any other arrangement which has the effect of giving another person any security claim or interest.

Owner means Conure Leasing Limited a company incorporated under the laws of the Cayman Islands and domiciled at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Previous Security Documents means any mortgages, charges, pledges, assignments, leases or other such documents, agreements, deeds or arrangements pursuant to which any of the Previous Financiers had the benefit of any form of Lien over the Aircraft or any part thereof.

Previous Financier means any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

Release means any deed of release or any other form of written confirmation received by the Seller or the Owner pursuant to which any Previous Financier has irrevocably confirmed that any right, title or interest of any nature whatsoever held by any such Previous Financier in or to the Aircraft or any part thereof prior to Delivery has been fully and unconditionally released.

Scheduled Delivery Date means 18 May 2011 or such other date designated by the terms of the Buyback Support Agreement as the “Scheduled Buyback Date” or, subject to an agreement in writing between the Buyer and the Seller, any such other date as may be agreed from time to time.

Seller Conditions Precedent means the documents, evidence and conditions specified in Schedule 4, each in a form and substance satisfactory to the Seller.

US Dollars and US$ shall mean the lawful currency of the United States.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

15

SCHEDULE 2

SELLER REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer that:

(a) Status: the Seller is a company duly incorporated under the laws of Chile.

(b) Power and authority: the Seller has the power to: (i) enter into and perform and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is a party; (ii) to own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitute, or when entered into will constitute, the Seller’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Seller is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Seller or any of its assets is bound or affected.

(e) No immunity:

(i) the Seller is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which the Seller is party; and

(ii) neither the Seller nor any of its assets is entitled to any right of immunity, and the entry into and performance of this Agreement and the other Buyback Documents to which it is party by the Seller constitute private and commercial acts.

(f) No Liens:

At Delivery the Aircraft shall be free and clear of all Liens.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

16

SCHEDULE 3

BUYER REPRESENTATIONS AND WARRANTIES

The Buyer represents and warrants to the Seller that:

(a) Status: the Buyer is a company duly incorporated under the laws of Ireland.

(b) Power and authority: the Buyer has the power to (i) enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is party; (ii) own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitutes, or when entered into will constitute, the Buyer’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Buyer is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Buyer or any of its assets are bound or affected.

(e) No immunity:

(i) the Buyer is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which it is a party; and

(ii) neither the Buyer nor any of its assets is entitled to any right of immunity, and the entry into and performance by the Buyer of this Agreement and the other Buyback Documents to which it is a party constitute private and commercial acts.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

17

SCHEDULE 4

SELLER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Seller to sell and deliver the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Seller:

A Documents

(a) Insurance: receipt by the Seller of an insurance certificate procured by the Buyer in respect of the Aircraft which reflects the requirements set out in Clause 12 of this Agreement;

(b) Licences, Consents and Registrations: receipt by the Seller of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Seller have been made for the effectiveness of the same within any applicable time limit); and

(c) Opinions: the receipt by the Seller of legal and tax opinions, in form and substance satisfactory to the Seller, acting reasonably, from independent counsel of the Seller’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery.

B Other Conditions Precedent

(a) No Default: no default on the part of the Buyer shall have occurred and be continuing under this Agreement, any other Buyback Document or any Manufacturer Agreement;

(b) Representations: the representations and warranties of the Buyer contained in Clause 3.2 shall be true and accurate in all material respects as though made on and as of the dates set out therein

(c) No Litigation: no action or proceeding shall have been instituted against the Buyer in any particular case where, if a finding were to be made against the Buyer that finding or the result of that finding would prevent the Buyer from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Buyer; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or government entity, in each case, to set aside, restrain, enjoin or prevent the Buyer’s completion and consummation of the Buyback Documents to which it is a party;

(d) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

(e) Taxes: the Seller shall be satisfied that the Delivery Location and the arrangements described in Clause 7 do not give rise to any Taxes;

(f) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

18

(g) Net Purchase Price: the Seller shall have received the Net Purchase Price.

The conditions precedent set out in paragraphs A(a), A(b), A(c), B(a), B(b), B(c), B(d) and B(e) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(g) above, shall be subject to a grace period of five (5) Business Days commencing on the Scheduled Delivery Date.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

19

SCHEDULE 5

BUYER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Buyer to purchase the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Buyer:

A Documents

(a) Opinions: the receipt by the Buyer of legal and tax opinions, in form and substance satisfactory to the Buyer, acting reasonably, from independent counsel of the Buyer’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery;

(b) Licences, Consents and Registrations: receipt by the Buyer of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Buyer have been made for the effectiveness of the same within any applicable time limit);

(c) Customer Due Diligence: receipt by the Buyer of the “customer due diligence” information from both the Seller and the Owner in form and substance satisfactory to the Buyer; and

(d) Title History: receipt by the Buyer of certified true copies of each bill of sale (or, if applicable, any such other document evidencing the transfer of the legal and beneficial title) evidencing the back-to-birth title history of the Airframe and each Engine.

B Other Conditions Precedent

(i) No Default: no default on the part of the Seller shall have occurred and be continuing under this Agreement, any other Buyback Document or under any Manufacturer Agreement;

(ii) Representations: the representations and warranties of the Seller contained in Clause 3.1 shall be true and accurate in all material respects as though made on and as of the dates set out therein;

(iii) No Litigation: no action or proceeding shall have been instituted against the Seller in any particular case where, if a finding were to be made against the Seller that finding or the result of that finding would prevent the Seller from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Seller; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or Government Entity, in each case, to set aside, restrain, enjoin or prevent the Seller’s completion and consummation of the Buyback Documents to which it is a party;

(iv) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

20

(v) Taxes: the Buyer shall be satisfied that the Delivery Location, and that the arrangements described in Clause 7, do not give rise to any Taxes;

(vi) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date;

(vii) Delivery Condition: the Aircraft complies in all respects with the Delivery Conditions; and

(viii) Delivery of Reference Aircraft: the Reference Aircraft corresponding to the Aircraft (construed in accordance with Clause 1.2.1(n) of the Buyback Support Agreement) has been delivered to the Seller in accordance with the terms and conditions set out in the Purchase Agreement.

The conditions precedent set out in paragraphs A(a), A(b), B(i), B(ii), B(iii), B(iv) and B(v) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(vii) above, shall, with regard to any non-fulfilment of such condition precedent which results solely from a Third Party Event, be subject to a grace period of one hundred twenty (120) days and, in any other circumstances, sixty (60) days, but in either case commencing on the Scheduled Delivery Date.

C Buyer Conditions Subsequent

Release Documentation: the Seller shall forward (or procure that its legal advisors forward) by e-mail to the Buyer electronic copies (in pdf format) of:

(i) no later than three (3) Business Days after Delivery, each of the duly executed Releases received by the Seller or, as the case may be, the Owner from each of the Previous Financiers; and

(ii) within three (3) Business Days of receipt by the Seller or the Owner, any notifications or confirmations of any description received from any applicable registry or authority with which any of the Previous Security Documents were registered, recorded or otherwise filed confirming that any such registrations, recordings or filings have been fully and unconditionally released,

with certified copies of each of the documents referred to in both (i) and (ii) above to be received by the Buyer no later than sixty (60) days after Delivery.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

21

SCHEDULE 6

Part A

FORM OF BILL OF SALE

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Conure Leasing Limited (the “Owner”), being the owner of the aircraft described below (hereinafter referred to as the “Aircraft”):

1. one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3062;

2. two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318135 and P318116;

3. all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

4. the documents, data and records relating to the Aircraft,

does hereby sell, grant, transfer and deliver all of the Owner’s rights, title and interest in and to the Aircraft to Airbus Financial Services (the “Buyer”), and its successors and assigns, to have and hold forever.

The Owner makes no representations or warranties of any kind, any implied warranties are expressly excluded and the Owner shall have no liability to the Buyer pursuant to this Bill of Sale and all recourse to the Seller hereunder is waived.

This Bill of Sale is governed by and shall be construed in accordance with English law.

IN WITNESS whereof, this Bill of Sale is hereby executed at              (CET) this      day of                      2011.

SIGNED by		)
		)
For and on behalf of	)
CONURE LEASING LIMITED		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

22

Part B

FORM OF DEED OF COVENANT

DEED OF COVENANT

(the Deed)

From:	LAN Airlines S.A. (LAN)
	Avenida Presidente Riesco 5711
	19th Floor, Las Condes
	Santiago
	Chile

To:	Airbus Financial Services (AFS)
	5th Floor, 6 George’s Dock
	IFSC, Dublin 1
	Ireland

                     2011

WHEREAS

A. LAN and AFS have entered into a buyback agreement dated — 2011 pursuant to which, amongst other things, LAN has agreed to procure the sale of one (1) Airbus A318-100 aircraft bearing manufacturer’s serial number 3062 to AFS on the terms and conditions set out therein (the Buyback Agreement).

B. In accordance with the terms and conditions set out in the Buyback Agreement, the Seller shall procure that the Owner passes title to the Aircraft to AFS by delivering the Bill of Sale to AFS and the Seller shall, pursuant to and in accordance with the terms and conditions set out in this Deed, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens

Capitalised terms and expressions used in this Deed (including the recitals) shall, unless otherwise defined in this Deed, have the meanings given to such terms and expressions in the Buyback Agreement. In this Deed, the following terms shall have the following meanings:

Beneficiary shall mean AFS (and its successors and assigns) or, pursuant to paragraph 3 below, any party to which AFS (or any of its successors and assigns) sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s (or any of its successors’ and assigns’) interest in the Aircraft may, from time to time, be financed or refinanced.

Previous Financier shall mean any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

23

LAN HEREBY COVENANTS AS FOLLOWS:

1. In consideration of the payment by AFS of the Net Purchase Price in accordance with the Buyback Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by LAN, with regard to the aircraft described below (hereinafter referred to as the Aircraft):

(i) one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3062;

(ii) two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318135 and P318116;

(iii) all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

(iv) the documents, data and records relating to the Aircraft,

LAN hereby represents, warrants and covenants to AFS and its successors and assigns and each Beneficiary that:

(a) neither LAN, the Owner or any Previous Financier (nor any person affiliated or otherwise associated with the Owner, LAN or any Previous Financier or any person claiming through any such person) has any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof;

(b) the Aircraft is free and clear of all Liens; and

(c) the full legal and beneficial title to the Aircraft, with full title guarantee, free and clear of all Liens has been conveyed to AFS to have and hold forever and LAN hereby covenants that it shall warrant and defend such title forever against all claims and demands whatsoever.

2. LAN agrees to indemnify and hold each Beneficiary harmless against any Losses or Taxes suffered or incurred by any Beneficiary as a result of: (a) any of LAN’s representations or warranties set out in this Deed being incorrect, inaccurate or in any way misleading; or (b) LAN’s failure to perform any of its obligations or otherwise comply with any of its covenants set out in this Deed.

3. AFS and any Beneficiary shall be entitled to assign or otherwise transfer the benefit of this Deed to any person to which AFS or any such Beneficiary sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s or any such Beneficiary’s interest in the Aircraft may, from time to time, be financed or refinanced. LAN shall, at its own cost, promptly execute all documents requested by AFS or, as the case may be, any Beneficiary to effect, perfect, record or implement any such assignment or transfer, and will promptly comply with any other requests of AFS or any Beneficiary (or any of their respective successors and assigns) in respect of any such assignment or transfer.

4. LAN agrees from time to time and at its cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by AFS or any Beneficiary to establish, maintain and protect the rights and remedies of AFS or any Beneficiary and to carry out and effect the intent and purpose of this Deed.

5. This Deed shall be governed by and construed in accordance with English law.

IN WITNESS whereof, this Deed is hereby executed as a deed as of      am / pm this      day of                      2011.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

24

SIGNED by		)
		)
For and on behalf of	)
LAN AIRLINES S.A.		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

25

SCHEDULE 7

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE RELATING TO ONE (1) A318-100 AIRCRAFT,

MANUFACTURER’S SERIAL NUMBER 3062 AND HAVING TWO (2) PRATT &

WHITNEY PW6000 ENGINES BEARING MANUFACTURER’S SERIAL NUMBERS

P318135 AND P318116

(THE AIRCRAFT)

Airbus Financial Services (the Buyer) hereby certifies that pursuant to the buyback agreement dated                      20— between LAN Airlines S.A. (the Seller) and the Buyer (the Buyback Agreement):

(a) the Buyer has inspected the Aircraft, found it to be complete and satisfactory to it and that the Aircraft conforms with the description and is in the condition and equipped as required by the Buyback Agreement;

(b) the Buyer has accepted delivery of the Aircraft, as is where is;

(c) the Buyer has inspected, found to be complete and satisfactory to it and has received all of the documents, data and records relating to the Aircraft (the Aircraft Documents); and

(d) the Buyer acknowledges that it has no rights or claims whatsoever against Seller or the Owner in respect of: (i) the condition of the Aircraft or the Aircraft Documents; or (ii) any of the other matters referred to in Clause 9 of the Buyback Agreement.

Capitalised terms and expressions used in this Acceptance Certificate shall have the meanings given in the Buyback Agreement.

This Acceptance Certificate is governed by and shall be construed in accordance with English law.

Date:                      20—

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

26

SCHEDULE 8

INSPECTION PROCEDURE

All references to Airbus in this Schedule 8, are made in relation to its capacity as the authorised representative of the Buyer.

All references to “Seller” in this Schedule 8 shall be deemed to refer to LAN Airlines S.A. (even if LAN Airlines S.A. is not the seller).

Airbus shall cover the costs of its personnel during the Pre-Recovery Inspection and the Delivery Inspection.

1. Pre-Recovery Inspection by Airbus

a) The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives, at the inspection location, no later than six (6) months before the Scheduled Buyback Date (the Pre-Recovery Inspection).

b) The Pre-Recovery Inspection will not disrupt the commercial operation or maintenance of the Aircraft.

c) After the Pre-Recovery Inspection has been performed, Airbus will deliver to the Seller within thirty (30) calendar days following the last day of the Pre-Recovery Inspection a list of all the inspected items (including areas, components and Aircraft Documents), indicating any discrepancies found and specifying the remedial works required in order to comply with the Delivery Conditions. The list of discrepancies provided to the Seller following the Pre-Recovery Inspection will be an exhaustive list of discrepancies identified at the occasion of the Pre-Recovery Inspection and such list shall be updated as required during the Delivery Inspection.

2. Delivery Inspection by Airbus

In order to verify that the Aircraft is in compliance with the requirements of this Agreement, Airbus is entitled but is not obliged to conduct each of the following during the delivery inspection (the Delivery Inspection):

2.1. Ground Inspection

The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives at the inspection location. Such inspection shall be scheduled early enough to allow sufficient time to verify compliance with all the requirements set out in Schedule 9. The Seller shall provide opening and access to all necessary areas as reasonably required to perform the checks described in this Schedule 8 and shall allow Airbus or their authorised representatives, to accomplish their inspection in order to determine if the Aircraft is in compliance with the Delivery Conditions. During such checks, Airbus or its representatives may make reasonable requests that adjacent additional panels or areas of the Aircraft be opened in order to allow further inspection of suspect areas, provided reasonable grounds exist for such request. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

27

2.2. Operational Ground Check

Promptly after completion of all (if any) corrections required under paragraph 2.1 above, the Seller shall conduct an operational ground check in accordance with Part 1, Chapter 1 of the Airbus In Service Aircraft Test Manual (ISATM) for the purpose of demonstrating in the presence of an Airbus ground test inspector, the satisfactory operations of all systems. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

2.3. Engine Performance Check

Compliance with full rated performances as defined in the Aircraft flight manual will be demonstrated (i) by an on-wing static inspection, (ii) by testing any system of the powerplants (engines, nacelles and accessories) and (iii) by performing an engine power assurance run in accordance with Part 1, Chapter 2 of the ISATM. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such powerplant tests so as to comply with the Delivery Conditions.

2.4. Acceptance Flight

a) Promptly after completion of the inspections, checks and all (if any) corrections required under paragraphs 2.1, 2.2 and 2.3 above, the Aircraft shall be test flown by the Seller for not more than three hours in the vicinity of the Delivery Location in accordance with Part 2 of the ISATM. Airbus shall have the right to have, during such acceptance flight, and subject to applicable law, (i) one of its test pilots participate as a member of the flight crew (but not as pilot in command) and (ii) one of its flight test engineers seated on the flight deck’s third occupant seat and (iii) one of its cabin engineers for participating in the flight in order to observe the testing of the cabin systems. In addition, upon reasonable request from Airbus and subject to applicable law, the Seller shall authorize a representative of the Aircraft’s prospective lessee or purchaser to participate, preferably as a flight deck observer, in such acceptance flight (provided always that the Seller shall not be obliged to repeat, for the benefit of any of such representative, any flight manoeuvres previously performed in the course of the flight test).

b) All flights pursuant to paragraph 2.4 (a) above shall be carried out at the Seller’s expense, including, but not limited to, costs for fuel, oil, airport fees, insurance, takeoff/landing fees, airway communication fees and ground handling fees.

2.5. Acceptance Criteria

a) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall be conducted using Airbus’ ISATM.

b) Upon completion of such acceptance flight or testing, the representative of Airbus participating in such flight or testing shall indicate in writing to the Seller any discrepancies in the Aircraft required to be corrected by the Seller in order to comply with the provisions of the Delivery Conditions. In case an alleged discrepancy is disputed, Airbus and the Seller will jointly select and appoint a suitably qualified and independent third party to assess such discrepancy and the cost of that third party will be shared equally between Airbus and the Seller. If Airbus and the Seller cannot agree on the selection of such third party in a timely manner, Avitas Inc shall be appointed to select such third party. If following such third party determination, the discrepancy is confirmed, the Seller shall promptly correct any such discrepancy and if required, another test flight will be conducted (to the extent necessary to verify the correction of the discrepancy) at Seller’s cost.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

28

c) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall establish that all equipment is functioning in accordance with the relevant limits specified in the AMM, Flight Manual, Flight Crew Operating Manual or any other relevant manual and meet the Delivery Conditions.

3. Ferry Flight

Subject to reasonable written notice, Airbus may request the Seller to fly the Aircraft to a destination not further than 6,000 nautical miles away from the Delivery Location. Such flight, if reasonably practicable for the Seller (subject to, inter alia, crew availability) shall be completed at Airbus’ cost and risk.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

29

SCHEDULE 9

DELIVERY CONDITIONS

[***].

1. Maintenance

[***].

2. Condition of Aircraft

[***].

3. Certificate of Airworthiness Matters, Export and Deregistration

[***].

4. Condition of Airframe

[***].

5. Condition of Engines

[***].

6. Condition of APU

[***].

7. Aircraft Documents

[***].

8. Ground Lock Safety Pins and covers

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

30

APPENDIX 1

AIRCRAFT RECORDS REQUIREMENT

1. OPERATIONAL & TECHNICAL MANUALS

[***].

2. TECHNICAL RECORDS

[***].

2.1. General - Aircraft records

[***].

2.2. Engines records

[***].

2.3. APU records

[***].

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

31

APPENDIX 2

LIST OF PMA PARTS IN USE BY LAN

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

32

APPENDIX 3

FLY AWAY KIT

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

33

EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3062)

SIGNED by	)
for and on behalf of		)
AIRBUS FINANCIAL SERVICES		)

SIGNED by	)
for and on behalf of		)
LAN AIRLINES S.A.		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

34

EX-4.24

Exhibit 4.24

DATED                     

LAN AIRLINES S.A.

as the Seller

and

AIRBUS FINANCIAL SERVICES

as the Buyer

BUYBACK AGREEMENT

relating to

ONE (1) AIRBUS A318-100 AIRCRAFT MSN 3214

CONTENTS

Clause	Page
1.      Definitions		1
2.      Interpretation		1
3.      Representations And Warranties		1
4.      Agreement To Sell And Purchase		2
5.      Conditions Precedent		2
6.      Payments		3
7.      Delivery Procedure And Acceptance		4
8.      Total Loss		5
9.      Condition Of Aircraft		6
10.    Operational Indemnities		7
11.    Taxes		9
12.    Liability Insurance		9
13.    Manufacturer’s Warranties		10
14.    Benefit Of Agreement		10
15.    Waiver		10
16.    Notices		10
17.    Law And Jurisdiction		11
18.    Miscellaneous		11
19.    Confidentiality		13
Schedule 1		14
Definitions		14
Schedule 2		16
Seller Representations And Warranties		16
Schedule 3		17
Buyer Representations And Warranties		17
Schedule 4		18
Seller Conditions Precedent		18
Schedule 5		20
Buyer Conditions Precedent		20
Schedule 6		22
Bill Of Sale		22
Deed Of Covenant		23

Schedule 7	26
Schedule 8	27
Schedule 9	30
EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3214)	35

This BUYBACK AGREEMENT is made on      day of              2011

BETWEEN:

1. LAN AIRLINES S.A., a sociedad anónima existing under the laws of Chile, having its registered office at Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile (the Seller); and

2. AIRBUS FINANCIAL SERVICES, a company incorporated under the laws of Ireland whose registered office is at 5th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland (the Buyer).

WHEREAS:

The Seller has agreed to sell or, as the case may be, procure that the Owner sells the Aircraft to the Buyer and the Buyer has agreed to purchase the Aircraft from the Seller or, as the case may be, the Owner on the terms and conditions set out herein.

IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement, capitalised words and expressions have the meanings given to them in Schedule 1 except as otherwise provided for herein. Capitalised terms and expressions used in this Agreement and not specifically defined herein shall have the meanings given to such terms and expressions in the Buyback Support Agreement.

2. INTERPRETATION

In this Agreement, unless the contrary intention is stated, a reference to:

2.1 each of the Seller, the Owner and the Buyer or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor, assignee or transferee;

2.2 words importing the plural shall include the singular and vice versa;

2.3 any document shall include that document as amended, novated, assigned or supplemented;

2.4 a clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

2.5 any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted.

2.6 Clause or schedule headings are for ease of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement.

3. REPRESENTATIONS AND WARRANTIES

3.1 Seller Representations and Warranties

The Seller represents and warrants to the Buyer on the terms set out in Schedule 2. The representations and warranties in Schedule 2 will survive the execution of this Agreement and will be deemed to be repeated by the Seller on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1

3.2 Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller on the terms set out in Schedule 3. The representations and warranties in Schedule 3 will survive the execution of this Agreement and will be deemed to be repeated by the Buyer on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

3.3 No Prejudice

The rights of the Buyer and the Seller in relation to any misrepresentation or breach of warranty by the Buyer or, as the case may be, the Seller shall not be prejudiced by any investigation by or on behalf of the Buyer or, as the case may be, the Seller into the affairs of such other party.

4. AGREEMENT TO SELL AND PURCHASE

Subject to the provisions of this Agreement, the Seller agrees to procure that the Owner sells the Aircraft to the Buyer and the Buyer agrees to purchase the Aircraft from the Owner in an as is, where is condition in its actual state and without any warranty as to condition from the Seller or the Owner.

5. CONDITIONS PRECEDENT

5.1 Seller Conditions Precedent

5.1.1 The obligation of the Seller to sell or, as the case may be, to procure that the Owner sells the Aircraft shall be subject to fulfilment of the Seller Conditions Precedent set out in Schedule 4, on or prior to the date for fulfilment of such Seller Conditions Precedent (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

5.1.2 The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

5.2 Buyer Conditions Precedent

5.2.1 The obligation of the Buyer to purchase the Aircraft shall be subject to fulfilment of the Buyer Conditions Precedent set out in Schedule 5, on or prior to the date for fulfilment of such Buyer Conditions Precedent (except to the extent that the Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

5.2.2 The Buyer Conditions Precedent have been inserted for the benefit of the Buyer and may be waived in writing, in whole or in part and with or without conditions, by the Buyer without prejudicing the right of the Buyer to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

5.3 Non-fulfilment of Conditions Precedent

Subject to the grace periods set out in Schedule 4 and Schedule 5, if any of the Conditions Precedent remain outstanding as at the Scheduled Delivery Date (subject to the expiration of any applicable grace periods set out in such Schedules) and are not either satisfied or irrevocably waived or deferred in writing by the Seller or, as the case may be, the Buyer, the Seller (in the case of the non-fulfilment of a Seller Condition Precedent) or the Buyer (in the case of the non-fulfilment of a Buyer Condition Precedent) shall by notice to the other party be entitled to terminate its obligation to sell or, as the case may be, purchase the Aircraft. The Buyer and the Seller acknowledge that, pursuant to and in accordance with the terms set out in the Buyback Support Agreement, an Aircraft may be replaced with a Substitute Aircraft (as defined in the Buyback Support Agreement) and, if any such substitution were to occur, the abovementioned Conditions Precedent shall be deemed to apply to the Substitute Aircraft in place of the Aircraft.

5.4 Effective Time

The Buyer and the Seller each agree that neither party shall have any obligation to perform any of its respective obligations under this Agreement unless and until each of the following conditions are satisfied to the Buyer’s satisfaction:

5.4.1 the Aircraft is physically located outside of Chile;

5.4.2 the Seller has deregistered the Aircraft from the Chilean aviation authority’s (the DGAC) register of civil aircraft and the Buyer has received a copy of the de-registration telex to be sent by the DGAC to the Brazilian aviation authority confirming that the Aircraft has been de-registered; and

5.4.3 the Seller has provided to the Buyer a certified copy of the letter provided by the Seller to the relevant Chilean customs authority (attaching a copy of the de-registration telex referred to above) duly stamped by such relevant Chilean customs authority in confirmation of its acceptance of the terms set out therein.

Upon the satisfaction of each of the above, the Buyer shall confirm the same to the Seller and thereafter the acceptance, delivery and transfer of title to the Aircraft shall thereafter take place in accordance with the terms and conditions set out in Clause 7 below.

6. PAYMENTS

6.1 Purchase Price

The gross purchase price for the Aircraft shall be [***] (the Gross Purchase Price). The Gross Purchase Price less the Aggregate Reduction (if any) shall be the Net Purchase Price.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

6.2 Delivery Date Payment

Subject to the satisfaction of the Buyer Conditions Precedent and the terms of this Agreement, the Buyer shall pay the Net Purchase Price to the Seller in accordance with the provisions of Clause 6.3.

6.3 Payment of Net Purchase Price

Notwithstanding any other provision of this Agreement or any other Buyback Document, the Seller hereby directs the Buyer to pay the Net Purchase Price not to the Seller but, instead, to its subsidiary LAN Cargo S.A. and, in accordance with such direction but subject always to the provisions of Clause 6.4, the Buyer agrees that it shall pay the Net Purchase Price in US Dollars for value on or before the Delivery Date and in immediately available funds by wire transfer to the following account of LAN Cargo S.A.:

Beneficiary:	LAN Cargo S.A.
Account Number:	36132267
Bank:	Citibank N.A.
Address:	Wall Street - New York, NY 10043
ABA Code:	021000089
SWIFT:	CITIUS33

No payment shall be considered made until it is credited to the above account.

6.4 Payment Account Direction

The Seller covenants with the Buyer that:

6.4.1 the payment by the Buyer of the Net Purchase Price to the abovementioned account of LAN Cargo S.A. in accordance with the direction of the Seller set out in Clause 6.3 above shall be in full and final settlement of the obligation of the Buyer to pay the Net Purchase Price to the Seller under this Agreement; and

6.4.2 the Seller shall indemnify and hold the Buyer harmless on an after-tax basis in respect of any and all Losses or Taxes imposed on, incurred by or asserted against the Buyer (regardless of when the same are incurred) in any way arising out of or connected in any way with the Buyer’s payment of the Net Purchase Price to LAN Cargo S.A. but only to the extent that any such Loss or Tax (or any increase in any such Loss or Tax) would not have been imposed upon, incurred by or asserted against the Buyer had the payment of the Net Purchase Price been made by the Buyer to an account of the Seller.

7. DELIVERY PROCEDURE AND ACCEPTANCE

7.1 Delivery Conditions

The Buyer’s obligation to purchase the Aircraft is conditional upon, amongst other things, the Aircraft complying on the Delivery Date with the Delivery Conditions set out in Schedule 9.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

7.2 Inspection and Delivery Procedures

The Buyer (and its designated representatives) shall be entitled to inspect the Aircraft and the Aircraft Documents for the purposes of confirming that the Aircraft meets the Delivery Conditions (the Inspection). The Inspection and Delivery procedures are set out in Schedule 8.

7.3 Delivery

The Seller shall, subject to the satisfaction of the Seller Conditions Precedent, tender the Aircraft (or procure that the Aircraft is tendered) for Delivery to the Buyer in the Delivery Condition but otherwise in an as is, where is condition in its actual state and without any warranty at the Delivery Location on the Delivery Date. The Buyer shall, subject to the satisfaction of the Buyer Conditions Precedent, be obligated to accept delivery of the Aircraft when tendered for delivery in accordance with the terms of this Agreement.

7.4 Acceptance

Subject to the satisfaction (or waiver by the Buyer) of the Buyer Conditions Precedent set out in Schedule 5, the Buyer shall on the Delivery Date accept delivery of the Aircraft by executing and delivering the Acceptance Certificate to the Seller, which shall be conclusive evidence of the matters stated therein.

7.5 Transfer of Title

Upon:

(a) delivery to the Seller of the Acceptance Certificate duly executed by the Buyer; and

(b) receipt or waiver by the Seller of the Seller Conditions Precedent set out in Schedule 4,

the Seller shall procure that the Owner passes title to the Aircraft to the Buyer by delivering the Bill of Sale to the Buyer and the Seller shall, pursuant to and in accordance with the terms and conditions set out in the Deed of Covenant, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens.

7.6 Risk Passing

Risk of loss or destruction of the Aircraft or damage to the Aircraft shall pass to the Buyer upon Delivery.

8. TOTAL LOSS

8.1 If before the Scheduled Delivery Date the Aircraft suffers a Total Loss the Seller shall, upon being notified of the Total Loss, notify the Buyer in writing thereof as soon as is reasonably practicable thereafter and, with effect from the date such Total Loss is notified to the Buyer, this Agreement shall terminate and thereafter neither party shall have any further obligation or liability to the other under this Agreement and the rights and obligations of the parties hereunder shall cease and be discharged without further liability on the part of the Seller or the Buyer.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

8.2 Without prejudice to the obligation of the Seller to tender the Aircraft in the Delivery Condition on the Scheduled Delivery Date in accordance with the terms set out herein (subject to the grace period set out in Schedule 5), if on or before the Scheduled Delivery Date: (i) any of the events described in paragraph (d) of the definition of Total Loss shall have occurred; or (ii) an event or circumstance shall have occurred which could be reasonably be expected to result in a constructive, compromised or arranged total loss as contemplated by paragraph (a) of the definition of Total Loss and, the event referred to in part (i) or the event or circumstance referred to in part (ii) is or may be continuing on the Scheduled Delivery Date, then the Seller shall notify the Buyer in writing accordingly as soon as reasonably practicable, and:

8.2.1 in relation to part (i) above, upon the first to occur after the Scheduled Delivery Date of: (x) the cessation of the event in question; and (y) the Aircraft becoming a Total Loss, then, with regard to the case described in (x), the Scheduled Delivery Date shall be deferred until sixty (60) days after such cessation or, with regard to the case described in (y), Clause 8.1 will apply; and

8.2.2 in relation to part (ii) above, upon the first to occur after the Scheduled Delivery Date of: (x) a declaration by insurers that the Aircraft is not a Total Loss; (y) the expiration of sixty (60) days after the occurrence of any such event or circumstance (provided that, under no circumstances shall any such period extend beyond the sixty (60) day or, as the case may be, one hundred twenty (120) day grace period extended with respect to the Aircraft’s compliance with the Delivery Conditions set out in Schedule 5); and (z) the Aircraft becoming a Total Loss, then, if either of the cases described in (x) or (y) is the first to occur, Clause 6.1.1(a) of the Buyback Support Agreement shall apply or, if the case described in (z) is the first to occur, Clause 8.1 will apply.

8.3 In the event that Clause 8.2.1(x) applies, the Seller shall be entitled to exercise the LAN Substitution Right (pursuant to and in accordance with Clause 14 of the Buyback Support Agreement) within ten (10) days after the Scheduled Delivery Date, provided that, at the time of such exercise, no more than twenty (20) days shall have elapsed since the occurrence of the events or circumstances described in paragraph (d) of the definition of Total Loss.

9. CONDITION OF AIRCRAFT

9.1 Disclaimers

SUBJECT ALWAYS TO THE TERMS AND CONDITIONS SET OUT IN THIS AGREEMENT, THE BUYER AGREES THAT AS BETWEEN THE BUYER AND THE SELLER THE AIRCRAFT AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE HAS BEEN GIVEN BY THE SELLER OR ITS AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE TECHNICAL RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS,

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

9.2 Waiver

THE BUYER HEREBY WAIVES, AS BETWEEN ITSELF (ON THE ONE HAND) AND THE SELLER (ON THE OTHER HAND), ALL OF ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED STATUTORY OR OTHERWISE, ON THE PART OF THE SELLER AND ALL CLAIMS AGAINST THE SELLER HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE OF THE AIRCRAFT, THIS AGREEMENT OR THE OTHER BUYBACK DOCUMENTS, PROVIDED ALWAYS THAT THIS WAIVER SHALL NOT APPLY TO THE EXPRESS WARRANTIES AND REPRESENTATIONS GIVEN BY THE SELLER TO THE BUYER IN ANY OF THE BUYBACK DOCUMENTS.

10. OPERATIONAL INDEMNITIES

10.1 The Seller will indemnify and hold harmless on an after-tax basis each of the Indemnitees in respect of any and all Losses imposed on, incurred by or asserted against any such Indemnitees (regardless of when the same are incurred) in any way arising out of or connected in any way with the purchase, ownership, possession, registration, de-registration, transportation, management, sale, control, inspection, use or operation, condition, delivery, acceptance, maintenance, repair, service, modification, overhaul, removal of the Aircraft, or any loss of or damage to the Aircraft or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters or any Losses which constitute Taxes (regardless of when imposed) which arise out of any act, omission, event or circumstance occurring in relation to the Aircraft prior to Delivery; other than:

(i) Losses resulting from the gross negligence or wilful misconduct of such Indemnitees; or

(ii) to the extent that such Losses arise out of any act, omission, event or circumstance occurring after Delivery; or

(iii) any Losses which constitute Taxes which arise as the result of, or are imposed in respect of, the sale of the Aircraft by the Seller to the Buyer in accordance with this Agreement; or

(iv) Losses which represent an operating or internal overhead expense except to the extent that the same arise as a consequence of a breach by the Seller of any of its obligations under the Buyback Documents; or

(v) Losses which are the result of a breach by the Buyer of its obligations under the Buyback Documents or, as the case may be, by Airbus S.A.S. of its obligations under the Buyback Support Agreement; or

(vi) any costs or expenses which the Buyer (or any Indemnitee) has expressly agreed to assume pursuant to this Agreement or any applicable Buyback Document; or

(vii) Losses which arise out of any product liability claim.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

10.2 The Buyer agrees to use its reasonable efforts to obtain the subsequent operator of the Aircraft’s agreement to indemnify and hold the Indemnitees harmless in respect of any Losses imposed on, incurred by or asserted against any such Indemnitees in any way arising out of or connected in any way with the acts, omissions events or circumstances referred to in Clause 10.1 above in any operational indemnity given to the Buyer by any such subsequent operator and, if the agreement of the subsequent operator is so obtained, the indemnity in Clause 10.1 shall, to the extent of such operator’s indemnity, cease to apply.

10.3 The Buyer agrees to notify the Seller in writing reasonably promptly upon becoming aware of a claim by an Indemnitee for indemnification from the Seller pursuant to Clause 10.1 (a Claim); provided that, the Seller shall not be required to indemnify any Indemnitee in respect of any increase in any Claim to the extent that any such increase arises solely and directly as a result of the Buyer’s failure to give the Seller reasonably prompt written notice of any such Claim.

10.4 Without prejudice to the underlying obligation of the Seller to indemnify any such Indemnitee(s) in accordance with Clause 10.1 in respect of any such Claim, the Buyer agrees that:

10.4.1 commencing on the date the Claim is notified to the Seller, the Seller’s obligation to pay to the relevant Indemnitee(s) the full amount of the Claim shall be stayed for a period of ten (10) Business Days (or such longer period as the relevant Indemnitee(s) may agree, acting reasonably) (a Standstill Period) in order to allow the Seller the opportunity to evaluate the Claim and to decide whether or not it wishes to contest its validity or, as the case may be, the amount claimed thereunder (a Contest) and so that the Seller and the Buyer (acting on behalf of any relevant Indemnitee(s)) may consult with each other in order to determine what action (if any) may be reasonably be taken in order to avoid or mitigate such Claim;

10.4.2 if the Buyer and the Seller cannot agree on a course of action as regards any such Contest, the Seller shall be entitled (acting at all times reasonably and in good faith) to procure a legal opinion (or, as the case may be, an opinion of another relevant expert having regard to the nature of the Claim) from a suitably qualified expert with a view to confirming that a reasonable basis exists for any such Contest and the actions recommended to be undertaken in order to properly conduct any such Contest. If the opinion of the relevant expert confirms that there does not exist a reasonable basis for any such Contest, the Seller shall promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1;

10.4.3 if the Seller’s appointed expert has confirmed in its opinion that it is necessary for the Seller to take action in the name of the relevant Indemnitee(s), the Buyer (acting on the instructions of such Indemnitee(s)) shall be entitled to request that the Buyer and the Seller instruct an independent expert (the costs thereof to be shared equally between the Buyer and the Seller) to evaluate the Contest’s prospects of success and/or actions recommended to be undertaken in the name of the relevant Indemnitee(s) in order to properly conduct any such Contest. If the independent expert confirms that: (i) there does not exist a reasonable basis for any such Contest; and/or (ii) that it is necessary that any action be taken in the name of any Indemnitee, the Seller shall, with regard to (i), promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1 or, with regard to (ii), proceed to take any action in the name of the relevant Indemnitee as recommended by such independent expert;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

10.4.4 following the receipt of any positive opinion of the Seller’s expert pursuant to Clause 10.4.2 or, as the case may be, of the independent expert appointed pursuant to Clause 10.4.3 above, the Seller may proceed to take, at its sole cost and expense, any action(s) as may have been recommended thereunder; provided that:

(a) no Termination Event has occurred and is continuing; and/or

(b) the relevant Indemnitee(s) shall have received the full amount to be indemnified pursuant to Clause 10.1 or, if agreed by such Indemnitee(s), adequate reserves, satisfactory to such Indemnitee(s), shall have been made in respect of the Claim and the costs thereof; and/or

(c) taking of any such action (or, as the case may be, the entitlement to continue to take any such action) would not be deemed by the relevant Indemnitee(s) to be prejudicial to the relevant Indemnitee(s) position as regards the Claim or otherwise would not be likely to have any adverse effect upon the relevant Indemnitee(s)’s reputation, business, operations or financial condition (other than any minor costs and expenses of an administrative nature).

10.5 Subject to the relevant Indemnitee(s) having received from the Seller the full amount required to indemnify and hold such Indemnitee(s) harmless with regards to any Claim, the Buyer agrees to procure that the relevant Indemnitee(s) take(s) such steps (at no cost to the Buyer or to such Indemnitee(s)) as may be reasonably requested by the Seller so as to enable the Seller to be subrogated to the rights of such relevant Indemnitee(s) in respect of such Claim.

11. TAXES

The parties will use all reasonable endeavours to mitigate or avoid any Taxes which arise as a result of the sale of the Aircraft by (or otherwise procured by) the Seller to the Buyer in accordance with this Agreement and the Seller and the Buyer shall each co-operate with the other in good faith and take such steps as are reasonably practicable in respect thereof; provided that, the cost of any such mitigation or avoidance action shall be borne by the party requesting the same and that any such steps contemplated above shall not result in any of the rights or obligations of the non-requesting party under this Agreement being adversely affected.

12. LIABILITY INSURANCE

The Buyer shall maintain or procure that liability insurance is maintained in respect of the Aircraft during the period commencing on the Delivery Date and ending on the earlier of: (i) the completion of the next zonal/structural inspection (due at either 6 years or 12 years); and (ii) the second anniversary of the Delivery Date. On the Delivery Date and on the occasion of each renewal of such liability insurance, the Buyer shall provide (or procure that the then current operator provides) a certificate issued by the insurance broker of the then current operator which includes the following:

(a) the Seller, the Owner (if applicable) (and their respective directors, officers, employees and agents) as additional named assureds on the passenger, third party, cargo, baggage and mail liability policies which shall have a combined single limit of liability of not less than the lesser of: (a) the level of coverage maintained by the Seller as at the Delivery Date; and (b) the level of coverage maintained by prudent operators of single-aisle aircraft in the region within which such next operator of the Aircraft operates;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

(b) an appropriate cross liabilities clause and breach of warranty protection in favour of such additional named assureds;

(c) a provision confirming that the hull insurers waive any subrogation rights against such additional named assureds; and

(d) a provision confirming that the Seller is to be given at least thirty (30) days (or such lesser period as may be stipulated by the insurers of such subsequent operator in respect of war risks coverage) notice of cancellation, termination or material alteration,

provided always that; requirements set out in sub-Clauses (a) through (d) are not inconsistent with the prevailing practice in the London international aviation insurance market as at the Delivery Date or on the occasion of each renewal. If there is a inconsistency between the requirements of any of sub-Clauses (a) through (d) above and such prevailing practice, then the provision of a certificate complying with such prevailing practice shall satisfy the Buyer’s obligations set out in this Clause 12.

13. MANUFACTURER’S WARRANTIES

The Seller hereby agrees to: (i) assign to the Buyer any warranties of any manufacturer or vendor of any part of the Aircraft; and (ii) procure (at no cost to the Seller) that the Buyer receives the benefit of any non-assignable warranties of any manufacturer or vendor of any part of the Aircraft which may exist as at Delivery in respect of any claim arising under any such warranties.

14. BENEFIT OF AGREEMENT

Neither party shall assign, transfer, novate or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of the other party.

15. WAIVER

15.1 The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option herein provided, or to require at any time performance by the other party of any of the provisions herein, shall in no way be construed to be a present or future waiver of such provision nor in any way affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision.

15.2 The express waiver (whether made one (1) or several times) by any party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

15.3 The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by applicable law.

16. NOTICES

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee, provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 16 shall also be sent by e-mail to the addresses set out below.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

The Buyer’s address for notices is:

Airbus Financial Services

5^th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland

Attention:	Managing Director
E-mail:	afscontracts@airbus.com

The Seller’s address for notices is:

LAN Airlines S.A.

Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile

Attention:	Fleet Management Director
E-mail:	oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

17. LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with English law.

17.2 The Buyer and the Seller each hereby agrees that the courts of England shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection with this Agreement.

17.3 As a foreign company that has, pursuant to the Overseas Companies Regulations 2009 (the “Overseas Regulations”) (registration number FC029342), registered in the United Kingdom as having a “UK establishment”, in accordance with the Companies Act 2006 and the Overseas Regulations the Seller irrevocably appoints as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement the person from time to time appointed by the Seller as its agent for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being as of the date of this Agreement Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If, for any reason, Mr. Gonzalo Garcia (or any replacement to Mr. Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Seller to receive service process, the Seller shall promptly appoint another agent and advise the Buyer thereof.

17.4 The Buyer appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement and the other Buyback Documents.

18. MISCELLANEOUS

18.1 Severability

If a provision of this Agreement or any of the other Buyback Documents is or becomes illegal, invalid or unenforceable in any jurisdiction that will not affect:

18.1.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or the relevant Buyback Document; or

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

18.1.2 the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement or the relevant Buyback Document.

18.2 Expenses

As between the Buyer and the Seller (and the Owner, if applicable), each of them will pay for its own respective costs, fees (including legal and documentation fees) and other expenses incurred in connection with the preparation and execution of the documentation relating to, and the implementation of, the transactions contemplated by this Agreement and any documents related thereto.

18.3 Sole and Entire Agreement

This Agreement (together with any relevant Buyback Document related hereto) contains the entire agreement between the Buyer and the Seller in relation to the matters referred to herein and supersedes any previous understandings, commitments or representations whatsoever oral or written. No provision of this Agreement may be changed, waived or discharged except by an instrument in writing signed by the both parties hereto (or by their duly authorised representatives or agents). In the event that any term or condition of this Agreement conflicts with any term and condition set out in the Buyback Support Agreement, the Buyer and the Seller agree that the provisions of this Agreement shall, to the extent of any such conflict, prevail.

18.4 Language

All notices to be given under this Agreement will be in English. All documents delivered pursuant to this Agreement will be in English.

18.5 Counterparts

This Agreement may be executed in counterparts, each of which will constitute one and the same document.

18.6 Further Assurances

The Buyer and the Seller each agree from time to time and at the requesting party’s cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by the other party to establish, maintain and protect the rights and remedies of such party and to carry out and effect the intent and purpose of this Agreement.

18.7 Third Party Rights

The parties do not intend that any term of this Agreement shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by the Owner or any other person who is not a party to this Agreement. The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

18.8 No Brokers

The Buyer and the Seller each represent and warrant to the other that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with this Agreement or the other Buyback Documents or any of the

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

transactions contemplated hereby or thereby. Each party agrees to indemnify and hold the other harmless from and against any and all claims, suits, damages, costs and expenses (including reasonable legal fees) asserted by any agent, broker or third party appointed by the indemnifying party in respect of any commission or compensation of any nature whatsoever based upon the Aircraft, this Agreement, the other Buyback Documents or any of the transactions contemplated hereby or thereby.

18.9 Default Interest

If any payment due from either party under this Agreement is not received on the due date, without prejudice to the receiving party’s other rights under this Agreement and at law, the receiving party shall be entitled to interest for late payment calculated on the amount due from and including the due date of payment up to and including the date when the payment is received by such party at a rate equal to one (1) month US Dollar LIBOR plus three per cent. (3%) per year (part year to be prorated). All such interest shall be compounded monthly and calculated on the basis of the actual number of days elapsed in the month assuming a thirty (30) day month and a three hundred and sixty (360) day year.

19. CONFIDENTIALITY

19.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

19.2 The Buyer and the Seller agree that the provisions of this Agreement are personal to it and will not without the prior written consent of the other party disclose such information to any other party. However, the parties may disclose any confidential information to: (i) any governmental authority to which it is obliged to disclose such information; (ii) its legal advisers, auditors and insurers (provided that such parties are bound by a professional or a legal duty of confidentiality); (iii) any parties entitled pursuant to an order or relevant request of any court, legal or regulatory body having jurisdiction over the disclosing party; (iv) or otherwise in accordance with any obligation to disclose imposed by any applicable law.

IN WITNESS whereof this Agreement has been signed on the day and year first above written.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

SCHEDULE 1

DEFINITIONS

In this Agreement, capitalised words and expressions have the following meanings:

Acceptance Certificate means the certificate of acceptance regarding the Aircraft substantially in the form set out in Schedule 7.

Agreement means this agreement made between the Seller and the Buyer as it may from time to time be amended, varied, or supplemented in accordance with the terms hereof, and the Recitals and the Schedules hereto shall form an integral part of this Agreement.

Aircraft means the Airframe together with the Aircraft Documents, Engines and parts.

Aircraft Documents shall have the meaning given in Schedule 9, paragraph 7(a).

Airframe means the Airbus A318-100 airframe with manufacturer’s serial number 3214.

Bill of Sale means the bill of sale in respect of the Aircraft substantially in the form set out in Part A of Schedule 6.

Business Day means any day other than a Saturday or Sunday on which business of the nature contemplated by this Agreement is carried out in Santiago de Chile, Dublin and Toulouse and, where used in relation to payments, any day on which commercial banks are open for business in New York.

Buyback Documents means this Agreement, the Bill of Sale, the Deed of Covenant, the Acceptance Certificate, the Buyback Support Agreement and any agreement amending or supplementing any of the foregoing documents.

Buyback Support Agreement means the buyback support agreement entered into between Airbus S.A.S. and the Seller on December 23, 2009 as such has been amended by Amendment No.1 to the Buyback Support Agreement entered into between Airbus S.A.S. and the Seller on 23 December 2010.

Buyer Conditions Precedent means the documents, evidence and conditions specified in Schedule 5 each in a form and substance satisfactory to the Buyer.

Conditions Precedent means, collectively, the Buyer Conditions Precedent and the Seller Conditions Precedent.

Deed of Covenant means the deed of covenant in respect of the Aircraft substantially in the form set out in Part B of Schedule 6.

Delivery means the delivery of, sale and transfer of title to the Aircraft in accordance with Clause 7.

Delivery Date means the date (being a Business Day) on which Delivery of the Aircraft occurs.

Delivery Location means an airport in Santiago de Chile or such other location agreed between the Buyer and the Seller each acting reasonably.

Engines means the two (2) Pratt & Whitney PW6000 engines, bearing manufacturer’s serial numbers P318130 and P318131.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

14

Indemnitees means the Buyer (and its shareholders directors, officers, servants, agents and employees).

LIBOR means the London Interbank Offer Rate, as quoted on the Reuters 01 page (or equivalent Reuters page) from time to time.

Lien means any mortgage, charge, assignment, pledge, lien, statutory right in rem, right of possession, attachment or detention, title retention arrangement, encumbrance or any other arrangement which has the effect of giving another person any security claim or interest.

Owner means Conure Leasing Limited a company incorporated under the laws of the Cayman Islands and domiciled at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Previous Security Documents means any mortgages, charges, pledges, assignments, leases or other such documents, agreements, deeds or arrangements pursuant to which any of the Previous Financiers had the benefit of any form of Lien over the Aircraft or any part thereof.

Previous Financier means any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

Release means any deed of release or any other form of written confirmation received by the Seller or the Owner pursuant to which any Previous Financier has irrevocably confirmed that any right, title or interest of any nature whatsoever held by any such Previous Financier in or to the Aircraft or any part thereof prior to Delivery has been fully and unconditionally released.

Scheduled Delivery Date means 10 May 2011 or such other date designated by the terms of the Buyback Support Agreement as the “Scheduled Buyback Date” or, subject to an agreement in writing between the Buyer and the Seller, any such other date as may be agreed from time to time.

Seller Conditions Precedent means the documents, evidence and conditions specified in Schedule 4, each in a form and substance satisfactory to the Seller.

US Dollars and US$ shall mean the lawful currency of the United States.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

15

SCHEDULE 2

SELLER REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer that:

(a) Status: the Seller is a company duly incorporated under the laws of Chile.

(b) Power and authority: the Seller has the power to: (i) enter into and perform and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is a party; (ii) to own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitute, or when entered into will constitute, the Seller’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Seller is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Seller or any of its assets is bound or affected.

(e) No immunity:

(i) the Seller is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which the Seller is party; and

(ii) neither the Seller nor any of its assets is entitled to any right of immunity, and the entry into and performance of this Agreement and the other Buyback Documents to which it is party by the Seller constitute private and commercial acts.

(f) No Liens:

At Delivery the Aircraft shall be free and clear of all Liens.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

16

SCHEDULE 3

BUYER REPRESENTATIONS AND WARRANTIES

The Buyer represents and warrants to the Seller that:

(a) Status: the Buyer is a company duly incorporated under the laws of Ireland.

(b) Power and authority: the Buyer has the power to (i) enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is party; (ii) own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitutes, or when entered into will constitute, the Buyer’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Buyer is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Buyer or any of its assets are bound or affected.

(e) No immunity:

(i) the Buyer is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which it is a party; and

(ii) neither the Buyer nor any of its assets is entitled to any right of immunity, and the entry into and performance by the Buyer of this Agreement and the other Buyback Documents to which it is a party constitute private and commercial acts.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

17

SCHEDULE 4

SELLER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Seller to sell and deliver the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Seller:

A Documents

(a) Insurance: receipt by the Seller of an insurance certificate procured by the Buyer in respect of the Aircraft which reflects the requirements set out in Clause 12 of this Agreement;

(b) Licences, Consents and Registrations: receipt by the Seller of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Seller have been made for the effectiveness of the same within any applicable time limit); and

(c) Opinions: the receipt by the Seller of legal and tax opinions, in form and substance satisfactory to the Seller, acting reasonably, from independent counsel of the Seller’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery.

B Other Conditions Precedent

(a) No Default: no default on the part of the Buyer shall have occurred and be continuing under this Agreement, any other Buyback Document or any Manufacturer Agreement;

(b) Representations: the representations and warranties of the Buyer contained in Clause 3.2 shall be true and accurate in all material respects as though made on and as of the dates set out therein

(c) No Litigation: no action or proceeding shall have been instituted against the Buyer in any particular case where, if a finding were to be made against the Buyer that finding or the result of that finding would prevent the Buyer from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Buyer; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or government entity, in each case, to set aside, restrain, enjoin or prevent the Buyer’s completion and consummation of the Buyback Documents to which it is a party;

(d) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

(e) Taxes: the Seller shall be satisfied that the Delivery Location and the arrangements described in Clause 7 do not give rise to any Taxes;

(f) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

18

(g) Net Purchase Price: the Seller shall have received the Net Purchase Price.

The conditions precedent set out in paragraphs A(a), A(b), A(c), B(a), B(b), B(c), B(d) and B(e) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(g) above, shall be subject to a grace period of five (5) Business Days commencing on the Scheduled Delivery Date.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

19

SCHEDULE 5

BUYER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Buyer to purchase the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Buyer:

A Documents

(a) Opinions: the receipt by the Buyer of legal and tax opinions, in form and substance satisfactory to the Buyer, acting reasonably, from independent counsel of the Buyer’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery;

(b) Licences, Consents and Registrations: receipt by the Buyer of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Buyer have been made for the effectiveness of the same within any applicable time limit);

(c) Customer Due Diligence: receipt by the Buyer of the “customer due diligence” information from both the Seller and the Owner in form and substance satisfactory to the Buyer; and

(d) Title History: receipt by the Buyer of certified true copies of each bill of sale (or, if applicable, any such other document evidencing the transfer of the legal and beneficial title) evidencing the back-to-birth title history of the Airframe and each Engine.

B Other Conditions Precedent

(i) No Default: no default on the part of the Seller shall have occurred and be continuing under this Agreement, any other Buyback Document or under any Manufacturer Agreement;

(ii) Representations: the representations and warranties of the Seller contained in Clause 3.1 shall be true and accurate in all material respects as though made on and as of the dates set out therein;

(iii) No Litigation: no action or proceeding shall have been instituted against the Seller in any particular case where, if a finding were to be made against the Seller that finding or the result of that finding would prevent the Seller from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Seller; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or Government Entity, in each case, to set aside, restrain, enjoin or prevent the Seller’s completion and consummation of the Buyback Documents to which it is a party;

(iv) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

20

(v) Taxes: the Buyer shall be satisfied that the Delivery Location, and that the arrangements described in Clause 7, do not give rise to any Taxes;

(vi) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date;

(vii) Delivery Condition: the Aircraft complies in all respects with the Delivery Conditions; and

(viii) Delivery of Reference Aircraft: the Reference Aircraft corresponding to the Aircraft (construed in accordance with Clause 1.2.1(n) of the Buyback Support Agreement) has been delivered to the Seller in accordance with the terms and conditions set out in the Purchase Agreement.

The conditions precedent set out in paragraphs A(a), A(b), B(i), B(ii), B(iii), B(iv) and B(v) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(vii) above, shall, with regard to any non-fulfilment of such condition precedent which results solely from a Third Party Event, be subject to a grace period of one hundred twenty (120) days and, in any other circumstances, sixty (60) days, but in either case commencing on the Scheduled Delivery Date.

C Buyer Conditions Subsequent

Release Documentation: the Seller shall forward (or procure that its legal advisors forward) by e-mail to the Buyer electronic copies (in pdf format) of:

(i) no later than three (3) Business Days after Delivery, each of the duly executed Releases received by the Seller or, as the case may be, the Owner from each of the Previous Financiers; and

(ii) within three (3) Business Days of receipt by the Seller or the Owner, any notifications or confirmations of any description received from any applicable registry or authority with which any of the Previous Security Documents were registered, recorded or otherwise filed confirming that any such registrations, recordings or filings have been fully and unconditionally released,

with certified copies of each of the documents referred to in both (i) and (ii) above to be received by the Buyer no later than sixty (60) days after Delivery.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

21

SCHEDULE 6

Part A

FORM OF BILL OF SALE

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Conure Leasing Limited (the “Owner”), being the owner of the aircraft described below (hereinafter referred to as the “Aircraft”):

1. one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3214;

2. two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318130 and P318131;

3. all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

4. the documents, data and records relating to the Aircraft,

does hereby sell, grant, transfer and deliver all of the Owner’s rights, title and interest in and to the Aircraft to Airbus Financial Services (the “Buyer”), and its successors and assigns, to have and hold forever.

The Owner makes no representations or warranties of any kind, any implied warranties are expressly excluded and the Owner shall have no liability to the Buyer pursuant to this Bill of Sale and all recourse to the Seller hereunder is waived.

This Bill of Sale is governed by and shall be construed in accordance with English law.

IN WITNESS whereof, this Bill of Sale is hereby executed at              (CET) this      day of                      2011.

SIGNED by		)
		)
For and on behalf of	)
CONURE LEASING LIMITED		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

22

Part B

FORM OF DEED OF COVENANT

DEED OF COVENANT

(the Deed)

From: LAN Airlines S.A. (LAN)

Avenida Presidente Riesco 5711

19th Floor, Las Condes

Santiago

Chile

To: Airbus Financial Services (AFS)

5th Floor, 6 George’s Dock

IFSC, Dublin 1

Ireland

                     2011

WHEREAS

A. LAN and AFS have entered into a buyback agreement dated — 2011 pursuant to which, amongst other things, LAN has agreed to procure the sale of one (1) Airbus A318-100 aircraft bearing manufacturer’s serial number 3214 to AFS on the terms and conditions set out therein (the Buyback Agreement).

B. In accordance with the terms and conditions set out in the Buyback Agreement, the Seller shall procure that the Owner passes title to the Aircraft to AFS by delivering the Bill of Sale to AFS and the Seller shall, pursuant to and in accordance with the terms and conditions set out in this Deed, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens

Capitalised terms and expressions used in this Deed (including the recitals) shall, unless otherwise defined in this Deed, have the meanings given to such terms and expressions in the Buyback Agreement. In this Deed, the following terms shall have the following meanings:

Beneficiary shall mean AFS (and its successors and assigns) or, pursuant to paragraph 3 below, any party to which AFS (or any of its successors and assigns) sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s (or any of its successors’ and assigns’) interest in the Aircraft may, from time to time, be financed or refinanced.

Previous Financier shall mean any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

23

LAN HEREBY COVENANTS AS FOLLOWS:

1. In consideration of the payment by AFS of the Net Purchase Price in accordance with the Buyback Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by LAN, with regard to the aircraft described below (hereinafter referred to as the Aircraft):

(i) one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3214;

(ii) two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318130 and P318131;

(iii) all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

(iv) the documents, data and records relating to the Aircraft,

LAN hereby represents, warrants and covenants to AFS and its successors and assigns and each Beneficiary that:

(a) neither LAN, the Owner or any Previous Financier (nor any person affiliated or otherwise associated with the Owner, LAN or any Previous Financier or any person claiming through any such person) has any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof;

(b) the Aircraft is free and clear of all Liens; and

(c) the full legal and beneficial title to the Aircraft, with full title guarantee, free and clear of all Liens has been conveyed to AFS to have and hold forever and LAN hereby covenants that it shall warrant and defend such title forever against all claims and demands whatsoever.

2. LAN agrees to indemnify and hold each Beneficiary harmless against any Losses or Taxes suffered or incurred by any Beneficiary as a result of: (a) any of LAN’s representations or warranties set out in this Deed being incorrect, inaccurate or in any way misleading; or (b) LAN’s failure to perform any of its obligations or otherwise comply with any of its covenants set out in this Deed.

3. AFS and any Beneficiary shall be entitled to assign or otherwise transfer the benefit of this Deed to any person to which AFS or any such Beneficiary sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s or any such Beneficiary’s interest in the Aircraft may, from time to time, be financed or refinanced. LAN shall, at its own cost, promptly execute all documents requested by AFS or, as the case may be, any Beneficiary to effect, perfect, record or implement any such assignment or transfer, and will promptly comply with any other requests of AFS or any Beneficiary (or any of their respective successors and assigns) in respect of any such assignment or transfer.

4. LAN agrees from time to time and at its cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by AFS or any Beneficiary to establish, maintain and protect the rights and remedies of AFS or any Beneficiary and to carry out and effect the intent and purpose of this Deed.

5. This Deed shall be governed by and construed in accordance with English law.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

24

IN WITNESS whereof, this Deed is hereby executed as a deed as of              am / pm this      day of                      2011.

SIGNED by		)
		)
For and on behalf of	)
LAN AIRLINES S.A.		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

25

SCHEDULE 7

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE RELATING TO ONE (1) A318-100 AIRCRAFT,

MANUFACTURER’S SERIAL NUMBER 3214 AND HAVING TWO (2) PRATT &

WHITNEY PW6000 ENGINES BEARING MANUFACTURER’S SERIAL NUMBERS

P318130 AND P318131

(THE AIRCRAFT)

Airbus Financial Services (the Buyer) hereby certifies that pursuant to the buyback agreement dated                      20— between LAN Airlines S.A. (the Seller) and the Buyer (the Buyback Agreement):

(a) the Buyer has inspected the Aircraft, found it to be complete and satisfactory to it and that the Aircraft conforms with the description and is in the condition and equipped as required by the Buyback Agreement;

(b) the Buyer has accepted delivery of the Aircraft, as is where is;

(c) the Buyer has inspected, found to be complete and satisfactory to it and has received all of the documents, data and records relating to the Aircraft (the Aircraft Documents); and

(d) the Buyer acknowledges that it has no rights or claims whatsoever against Seller or the Owner in respect of: (i) the condition of the Aircraft or the Aircraft Documents; or (ii) any of the other matters referred to in Clause 9 of the Buyback Agreement.

Capitalised terms and expressions used in this Acceptance Certificate shall have the meanings given in the Buyback Agreement.

This Acceptance Certificate is governed by and shall be construed in accordance with English law.

Date:                     20—

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

26

SCHEDULE 8

INSPECTION PROCEDURE

All references to Airbus in this Schedule 8, are made in relation to its capacity as the authorised representative of the Buyer.

All references to “Seller” in this Schedule 8 shall be deemed to refer to LAN Airlines S.A. (even if LAN Airlines S.A. is not the seller).

Airbus shall cover the costs of its personnel during the Pre-Recovery Inspection and the Delivery Inspection.

1. Pre-Recovery Inspection by Airbus

a) The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives, at the inspection location, no later than six (6) months before the Scheduled Buyback Date (the Pre-Recovery Inspection).

b) The Pre-Recovery Inspection will not disrupt the commercial operation or maintenance of the Aircraft.

c) After the Pre-Recovery Inspection has been performed, Airbus will deliver to the Seller within thirty (30) calendar days following the last day of the Pre-Recovery Inspection a list of all the inspected items (including areas, components and Aircraft Documents), indicating any discrepancies found and specifying the remedial works required in order to comply with the Delivery Conditions. The list of discrepancies provided to the Seller following the Pre-Recovery Inspection will be an exhaustive list of discrepancies identified at the occasion of the Pre-Recovery Inspection and such list shall be updated as required during the Delivery Inspection.

2. Delivery Inspection by Airbus

In order to verify that the Aircraft is in compliance with the requirements of this Agreement, Airbus is entitled but is not obliged to conduct each of the following during the delivery inspection (the Delivery Inspection):

2.1. Ground Inspection

The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives at the inspection location. Such inspection shall be scheduled early enough to allow sufficient time to verify compliance with all the requirements set out in Schedule 9. The Seller shall provide opening and access to all necessary areas as reasonably required to perform the checks described in this Schedule 8 and shall allow Airbus or their authorised representatives, to accomplish their inspection in order to determine if the Aircraft is in compliance with the Delivery Conditions. During such checks, Airbus or its representatives may make reasonable requests that adjacent additional panels or areas of the Aircraft be opened in order to allow further inspection of suspect areas, provided reasonable grounds exist for such request. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

27

2.2. Operational Ground Check

Promptly after completion of all (if any) corrections required under paragraph 2.1 above, the Seller shall conduct an operational ground check in accordance with Part 1, Chapter 1 of the Airbus In Service Aircraft Test Manual (ISATM) for the purpose of demonstrating in the presence of an Airbus ground test inspector, the satisfactory operations of all systems. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

2.3. Engine Performance Check

Compliance with full rated performances as defined in the Aircraft flight manual will be demonstrated (i) by an on-wing static inspection, (ii) by testing any system of the powerplants (engines, nacelles and accessories) and (iii) by performing an engine power assurance run in accordance with Part 1, Chapter 2 of the ISATM. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such powerplant tests so as to comply with the Delivery Conditions.

2.4. Acceptance Flight

a) Promptly after completion of the inspections, checks and all (if any) corrections required under paragraphs 2.1, 2.2 and 2.3 above, the Aircraft shall be test flown by the Seller for not more than three hours in the vicinity of the Delivery Location in accordance with Part 2 of the ISATM. Airbus shall have the right to have, during such acceptance flight, and subject to applicable law, (i) one of its test pilots participate as a member of the flight crew (but not as pilot in command) and (ii) one of its flight test engineers seated on the flight deck’s third occupant seat and (iii) one of its cabin engineers for participating in the flight in order to observe the testing of the cabin systems. In addition, upon reasonable request from Airbus and subject to applicable law, the Seller shall authorize a representative of the Aircraft’s prospective lessee or purchaser to participate, preferably as a flight deck observer, in such acceptance flight (provided always that the Seller shall not be obliged to repeat, for the benefit of any of such representative, any flight manoeuvres previously performed in the course of the flight test).

b) All flights pursuant to paragraph 2.4 (a) above shall be carried out at the Seller’s expense, including, but not limited to, costs for fuel, oil, airport fees, insurance, takeoff/landing fees, airway communication fees and ground handling fees.

2.5. Acceptance Criteria

a) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall be conducted using Airbus’ ISATM.

b) Upon completion of such acceptance flight or testing, the representative of Airbus participating in such flight or testing shall indicate in writing to the Seller any discrepancies in the Aircraft required to be corrected by the Seller in order to comply with the provisions of the Delivery Conditions. In case an alleged discrepancy is disputed, Airbus and the Seller will jointly select and appoint a suitably qualified and independent third party to assess such discrepancy and the cost of that third party will be shared equally between Airbus and the Seller. If Airbus and the Seller cannot agree on the selection of such third party in a timely manner, Avitas Inc shall be appointed to select such third party. If following such third party determination, the discrepancy is confirmed, the Seller shall promptly correct any such discrepancy and if required, another test flight will be conducted (to the extent necessary to verify the correction of the discrepancy) at Seller’s cost.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

28

c) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall establish that all equipment is functioning in accordance with the relevant limits specified in the AMM, Flight Manual, Flight Crew Operating Manual or any other relevant manual and meet the Delivery Conditions.

3. Ferry Flight

Subject to reasonable written notice, Airbus may request the Seller to fly the Aircraft to a destination not further than 6,000 nautical miles away from the Delivery Location. Such flight, if reasonably practicable for the Seller (subject to, inter alia, crew availability) shall be completed at Airbus’ cost and risk.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

29

SCHEDULE 9

DELIVERY CONDITIONS

[***].

1. Maintenance

[***].

2. Condition of Aircraft

[***].

3. Certificate of Airworthiness Matters, Export and Deregistration

[***].

4. Condition of Airframe

[***].

5. Condition of Engines

[***].

6. Condition of APU

[***].

7. Aircraft Documents

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

30

8. Ground Lock Safety Pins and covers

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

31

APPENDIX 1

AIRCRAFT RECORDS REQUIREMENT

1. OPERATIONAL & TECHNICAL MANUALS

[***].

2. TECHNICAL RECORDS

[***].

2.1. General - Aircraft records

[***].

2.2. Engines records

[***].

2.3. APU records

1- [***].

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

32

APPENDIX 2

LIST OF PMA PARTS IN USE BY LAN

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

33

APPENDIX 3

FLY AWAY KIT

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

34

EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3214)

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)
SIGNED by	)
for and on behalf of	)
LAN AIRLINES S.A.	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

35

EX-4.25

Exhibit 4.25

DATED                 

LAN AIRLINES S.A.

as the Seller

and

AIRBUS FINANCIAL SERVICES

as the Buyer

BUYBACK AGREEMENT

relating to

ONE (1) AIRBUS A318-100 AIRCRAFT MSN 3216

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

CONTENTS

Clause		Page
1.	Definitions		1
2.	Interpretation		1
3.	Representations And Warranties		1
4.	Agreement To Sell And Purchase		2
5.	Conditions Precedent		2
6.	Payments		3
7.	Delivery Procedure And Acceptance		5
8.	Total Loss		6
9.	Condition Of Aircraft		7
10.	Operational Indemnities		7
11.	Taxes		10
12.	Liability Insurance		10
13.	Manufacturer’s Warranties		10
14.	Benefit Of Agreement		11
15.	Waiver		11
16.	Notices		11
17.	Law And Jurisdiction		11
18.	Miscellaneous		12
19.	Confidentiality		13
Schedule 1			15
Definitions			15
Schedule 2			17
Seller Representations And Warranties			17
Schedule 3			18
Buyer Representations And Warranties			18
Schedule 4			19
Seller Conditions Precedent			19
Schedule 5			21
Buyer Conditions Precedent			21
Schedule 6			23
Bill Of Sale			23
Deed Of Covenant			24

Schedule 7	27
Schedule 8	28
Schedule 9	31
EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3216)	36

This BUYBACK AGREEMENT is made on      day of                      2011

BETWEEN:

1. LAN AIRLINES S.A., a sociedad anónima existing under the laws of Chile, having its registered office at Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile (the Seller); and

2. AIRBUS FINANCIAL SERVICES, a company incorporated under the laws of Ireland whose registered office is at 5th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland (the Buyer).

WHEREAS:

The Seller has agreed to sell or, as the case may be, procure that the Owner sells the Aircraft to the Buyer and the Buyer has agreed to purchase the Aircraft from the Seller or, as the case may be, the Owner on the terms and conditions set out herein.

IT IS AGREED as follows:

1. DEFINITIONS

In this Agreement, capitalised words and expressions have the meanings given to them in Schedule 1 except as otherwise provided for herein. Capitalised terms and expressions used in this Agreement and not specifically defined herein shall have the meanings given to such terms and expressions in the Buyback Support Agreement.

2. INTERPRETATION

In this Agreement, unless the contrary intention is stated, a reference to:

2.1 each of the Seller, the Owner and the Buyer or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor, assignee or transferee;

2.2 words importing the plural shall include the singular and vice versa;

2.3 any document shall include that document as amended, novated, assigned or supplemented;

2.4 a clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

2.5 any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted.

2.6 Clause or schedule headings are for ease of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement.

3. REPRESENTATIONS AND WARRANTIES

3.1 Seller Representations and Warranties

The Seller represents and warrants to the Buyer on the terms set out in Schedule 2. The representations and warranties in Schedule 2 will survive the execution of this Agreement and will be deemed to be repeated by the Seller on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

1

3.2 Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller on the terms set out in Schedule 3. The representations and warranties in Schedule 3 will survive the execution of this Agreement and will be deemed to be repeated by the Buyer on the date hereof and on the Delivery Date with reference to the facts and circumstances then existing.

3.3 No Prejudice

The rights of the Buyer and the Seller in relation to any misrepresentation or breach of warranty by the Buyer or, as the case may be, the Seller shall not be prejudiced by any investigation by or on behalf of the Buyer or, as the case may be, the Seller into the affairs of such other party.

4. AGREEMENT TO SELL AND PURCHASE

Subject to the provisions of this Agreement, the Seller agrees to procure that the Owner sells the Aircraft to the Buyer and the Buyer agrees to purchase the Aircraft from the Owner in an as is, where is condition in its actual state and without any warranty as to condition from the Seller or the Owner.

5. CONDITIONS PRECEDENT

5.1 Seller Conditions Precedent

5.1.1 The obligation of the Seller to sell or, as the case may be, to procure that the Owner sells the Aircraft shall be subject to fulfilment of the Seller Conditions Precedent set out in Schedule 4, on or prior to the date for fulfilment of such Seller Conditions Precedent (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

5.1.2 The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

5.2 Buyer Conditions Precedent

5.2.1 The obligation of the Buyer to purchase the Aircraft shall be subject to fulfilment of the Buyer Conditions Precedent set out in Schedule 5, on or prior to the date for fulfilment of such Buyer Conditions Precedent (except to the extent that the Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

5.2.2 The Buyer Conditions Precedent have been inserted for the benefit of the Buyer and may be waived in writing, in whole or in part and with or without conditions, by the Buyer without prejudicing the right of the Buyer to receive fulfilment of such conditions, in whole or in part, at any time thereafter.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

2

5.3 Non-fulfilment of Conditions Precedent

Subject to the grace periods set out in Schedule 4 and Schedule 5, if any of the Conditions Precedent remain outstanding as at the Scheduled Delivery Date (subject to the expiration of any applicable grace periods set out in such Schedules) and are not either satisfied or irrevocably waived or deferred in writing by the Seller or, as the case may be, the Buyer, the Seller (in the case of the non-fulfilment of a Seller Condition Precedent) or the Buyer (in the case of the non-fulfilment of a Buyer Condition Precedent) shall by notice to the other party be entitled to terminate its obligation to sell or, as the case may be, purchase the Aircraft. The Buyer and the Seller acknowledge that, pursuant to and in accordance with the terms set out in the Buyback Support Agreement, an Aircraft may be replaced with a Substitute Aircraft (as defined in the Buyback Support Agreement) and, if any such substitution were to occur, the abovementioned Conditions Precedent shall be deemed to apply to the Substitute Aircraft in place of the Aircraft.

5.4 Effective Time

The Buyer and the Seller each agree that neither party shall have any obligation to perform any of its respective obligations under this Agreement unless and until each of the following conditions are satisfied to the Buyer’s satisfaction:

5.4.1 the Aircraft is physically located outside of Chile;

5.4.2 the Seller has deregistered the Aircraft from the Chilean aviation authority’s (the DGAC) register of civil aircraft and the Buyer has received a copy of the de-registration telex to be sent by the DGAC to the Brazilian aviation authority confirming that the Aircraft has been de-registered; and

5.4.3 the Seller has provided to the Buyer a certified copy of the letter provided by the Seller to the relevant Chilean customs authority (attaching a copy of the de-registration telex referred to above) duly stamped by such relevant Chilean customs authority in confirmation of its acceptance of the terms set out therein.

Upon the satisfaction of each of the above, the Buyer shall confirm the same to the Seller and thereafter the acceptance, delivery and transfer of title to the Aircraft shall thereafter take place in accordance with the terms and conditions set out in Clause 7 below.

6. PAYMENTS

6.1 Purchase Price

The gross purchase price for the Aircraft shall be [***]) (the Gross Purchase Price). The Gross Purchase Price less the Aggregate Reduction (if any) shall be the Net Purchase Price.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

3

6.2 Delivery Date Payment

Subject to the satisfaction of the Buyer Conditions Precedent and the terms of this Agreement, the Buyer shall pay the Net Purchase Price to the Seller in accordance with the provisions of Clause 6.3.

6.3 Payment of Net Purchase Price

6.3.1 The Buyer shall pay in immediately available funds by wire transfer:

(a) an initial payment equal to the aggregate of: (i) thirteen million US Dollars (US$13,000,000); less (ii) an amount equal to fifty per cent. (50%) of the Aggregate Reduction, for value on or before the Delivery Date;

(b) on the date falling one (1) year after the Delivery Date, a balancing payment equal to the aggregate of: (i) ten million US Dollars (US$10,000,000); less (ii) an amount equal to fifty per cent. (50%) of the Aggregate Reduction; and

(c) on the date falling one (1) year after the Delivery Date, interest (in recognition of the payment terms) on the aggregate amount set out in (b) above calculated at a rate of one (1) year US Dollar LIBOR plus two percent 2% per annum.

6.3.2 The payment due under Clause 6.3.1(a) shall be made (and shall not be considered to have been made) until it is credited to the following account:

Beneficiary:	LAN Cargo S.A.
Account Number:	36132267
Bank:	Citibank N.A.
Address:	Wall Street - New York, NY 10043
ABA Code:	021000089
SWIFT:	CITIUS33

The payments due under Clauses 6.3.1(b) and 6.3.1(c) shall be made to an account to be notified by the Seller to the Buyer no later than the date falling eleven (11) months after the Delivery Date; provided that, any such account designated by the Seller shall not give rise to any obligation on the Buyer to make any withholding or deduction (or, as the case may be, any other Tax liability) in respect of such payments.

6.3.3 Without prejudice to provisions of Clause 6.3.2 above, the payments due under Clauses 6.3.1(b) and 6.3.1(c) shall be equal to the full amounts expressed to be due thereunder and shall be made in full without any deduction or withholding in respect of Taxes. In the event that any such payments becomes subject to a withholding (or any other such applicable deduction), Airbus and LAN will consult with each other and cooperate in good faith in order to restructure such payments or make any such modifications to the transactions described in this Agreement or the relevant Buyback Documents which would mitigate the effect of or eliminate such withholding or deduction; provided that any such restructuring or modifications shall be at no cost to the Seller nor result in any of its rights or obligations under this Agreement being adversely affected. If the Buyer is compelled by law to make any such deduction or withholding, the Buyer shall pay such additional amounts as may be necessary in order that the net amount received by the Seller after such deduction or withholding shall equal the amounts which would have been received in the absence of such deduction or withholding.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

4

6.4 Payment Account Direction

The Seller covenants with the Buyer that:

6.4.1 the payment by the Buyer of the Net Purchase Price to the abovementioned account of LAN Cargo S.A. in accordance with the direction of the Seller set out in Clause 6.3 above shall be in full and final settlement of the obligation of the Buyer to pay the Net Purchase Price to the Seller under this Agreement; and

6.4.2 the Seller shall indemnify and hold the Buyer harmless on an after-tax basis in respect of any and all Losses or Taxes imposed on, incurred by or asserted against the Buyer (regardless of when the same are incurred) in any way arising out of or connected in any way with the Buyer’s payment of the Net Purchase Price to LAN Cargo S.A. but only to the extent that any such Loss or Tax (or any increase in any such Loss or Tax) would not have been imposed upon, incurred by or asserted against the Buyer had the payment of the Net Purchase Price been made by the Buyer to an account of the Seller.

7. DELIVERY PROCEDURE AND ACCEPTANCE

7.1 Delivery Conditions

The Buyer’s obligation to purchase the Aircraft is conditional upon, amongst other things, the Aircraft complying on the Delivery Date with the Delivery Conditions set out in Schedule 9.

7.2 Inspection and Delivery Procedures

The Buyer (and its designated representatives) shall be entitled to inspect the Aircraft and the Aircraft Documents for the purposes of confirming that the Aircraft meets the Delivery Conditions (the Inspection). The Inspection and Delivery procedures are set out in Schedule 8.

7.3 Delivery

The Seller shall, subject to the satisfaction of the Seller Conditions Precedent, tender the Aircraft (or procure that the Aircraft is tendered) for Delivery to the Buyer in the Delivery Condition but otherwise in an as is, where is condition in its actual state and without any warranty at the Delivery Location on the Delivery Date. The Buyer shall, subject to the satisfaction of the Buyer Conditions Precedent, be obligated to accept delivery of the Aircraft when tendered for delivery in accordance with the terms of this Agreement.

7.4 Acceptance

Subject to the satisfaction (or waiver by the Buyer) of the Buyer Conditions Precedent set out in Schedule 5, the Buyer shall on the Delivery Date accept delivery of the Aircraft by executing and delivering the Acceptance Certificate to the Seller, which shall be conclusive evidence of the matters stated therein.

7.5 Transfer of Title

Upon:

(a) delivery to the Seller of the Acceptance Certificate duly executed by the Buyer; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

5

(b) receipt or waiver by the Seller of the Seller Conditions Precedent set out in Schedule 4,

the Seller shall procure that the Owner passes title to the Aircraft to the Buyer by delivering the Bill of Sale to the Buyer and the Seller shall, pursuant to and in accordance with the terms and conditions set out in the Deed of Covenant, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens.

7.6 Risk Passing

Risk of loss or destruction of the Aircraft or damage to the Aircraft shall pass to the Buyer upon Delivery.

8. TOTAL LOSS

8.1 If before the Scheduled Delivery Date the Aircraft suffers a Total Loss the Seller shall, upon being notified of the Total Loss, notify the Buyer in writing thereof as soon as is reasonably practicable thereafter and, with effect from the date such Total Loss is notified to the Buyer, this Agreement shall terminate and thereafter neither party shall have any further obligation or liability to the other under this Agreement and the rights and obligations of the parties hereunder shall cease and be discharged without further liability on the part of the Seller or the Buyer.

8.2 Without prejudice to the obligation of the Seller to tender the Aircraft in the Delivery Condition on the Scheduled Delivery Date in accordance with the terms set out herein (subject to the grace period set out in Schedule 5), if on or before the Scheduled Delivery Date: (i) any of the events described in paragraph (d) of the definition of Total Loss shall have occurred; or (ii) an event or circumstance shall have occurred which could be reasonably be expected to result in a constructive, compromised or arranged total loss as contemplated by paragraph (a) of the definition of Total Loss and, the event referred to in part (i) or the event or circumstance referred to in part (ii) is or may be continuing on the Scheduled Delivery Date, then the Seller shall notify the Buyer in writing accordingly as soon as reasonably practicable, and:

8.2.1 in relation to part (i) above, upon the first to occur after the Scheduled Delivery Date of: (x) the cessation of the event in question; and (y) the Aircraft becoming a Total Loss, then, with regard to the case described in (x), the Scheduled Delivery Date shall be deferred until sixty (60) days after such cessation or, with regard to the case described in (y), Clause 8.1 will apply; and

8.2.2 in relation to part (ii) above, upon the first to occur after the Scheduled Delivery Date of: (x) a declaration by insurers that the Aircraft is not a Total Loss; (y) the expiration of sixty (60) days after the occurrence of any such event or circumstance (provided that, under no circumstances shall any such period extend beyond the sixty (60) day or, as the case may be, one hundred twenty (120) day grace period extended with respect to the Aircraft’s compliance with the Delivery Conditions set out in Schedule 5); and (z) the Aircraft becoming a Total Loss, then, if either of the cases described in (x) or (y) is the first to occur, Clause 6.1.1(a) of the Buyback Support Agreement shall apply or, if the case described in (z) is the first to occur, Clause 8.1 will apply.

8.3 In the event that Clause 8.2.1(x) applies, the Seller shall be entitled to exercise the LAN Substitution Right (pursuant to and in accordance with Clause 14 of the Buyback Support Agreement) within ten (10) days after the Scheduled Delivery Date, provided

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

6

that, at the time of such exercise, no more than twenty (20) days shall have elapsed since the occurrence of the events or circumstances described in paragraph (d) of the definition of Total Loss.

9. CONDITION OF AIRCRAFT

9.1 Disclaimers

SUBJECT ALWAYS TO THE TERMS AND CONDITIONS SET OUT IN THIS AGREEMENT, THE BUYER AGREES THAT AS BETWEEN THE BUYER AND THE SELLER THE AIRCRAFT AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE HAS BEEN GIVEN BY THE SELLER OR ITS AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE TECHNICAL RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND, EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT AND THE OTHER BUYBACK DOCUMENTS, ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

9.2 Waiver

THE BUYER HEREBY WAIVES, AS BETWEEN ITSELF (ON THE ONE HAND) AND THE SELLER (ON THE OTHER HAND), ALL OF ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED STATUTORY OR OTHERWISE, ON THE PART OF THE SELLER AND ALL CLAIMS AGAINST THE SELLER HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE OF THE AIRCRAFT, THIS AGREEMENT OR THE OTHER BUYBACK DOCUMENTS, PROVIDED ALWAYS THAT THIS WAIVER SHALL NOT APPLY TO THE EXPRESS WARRANTIES AND REPRESENTATIONS GIVEN BY THE SELLER TO THE BUYER IN ANY OF THE BUYBACK DOCUMENTS.

10. OPERATIONAL INDEMNITIES

10.1 The Seller will indemnify and hold harmless on an after-tax basis each of the Indemnitees in respect of any and all Losses imposed on, incurred by or asserted against any such Indemnitees (regardless of when the same are incurred) in any way arising out of or connected in any way with the purchase, ownership, possession, registration, de-registration, transportation, management, sale, control, inspection, use or operation, condition, delivery, acceptance, maintenance, repair, service, modification, overhaul, removal of the Aircraft, or any loss of or damage to the Aircraft or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters or any Losses which constitute Taxes (regardless of when imposed) which arise out of any act, omission, event or circumstance occurring in relation to the Aircraft prior to Delivery; other than:

(i) Losses resulting from the gross negligence or wilful misconduct of such Indemnitees; or

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

7

(ii) to the extent that such Losses arise out of any act, omission, event or circumstance occurring after Delivery; or

(iii) any Losses which constitute Taxes which arise as the result of, or are imposed in respect of, the sale of the Aircraft by the Seller to the Buyer in accordance with this Agreement; or

(iv) Losses which represent an operating or internal overhead expense except to the extent that the same arise as a consequence of a breach by the Seller of any of its obligations under the Buyback Documents; or

(v) Losses which are the result of a breach by the Buyer of its obligations under the Buyback Documents or, as the case may be, by Airbus S.A.S. of its obligations under the Buyback Support Agreement; or

(vi) any costs or expenses which the Buyer (or any Indemnitee) has expressly agreed to assume pursuant to this Agreement or any applicable Buyback Document; or

(vii) Losses which arise out of any product liability claim.

10.2 The Buyer agrees to use its reasonable efforts to obtain the subsequent operator of the Aircraft’s agreement to indemnify and hold the Indemnitees harmless in respect of any Losses imposed on, incurred by or asserted against any such Indemnitees in any way arising out of or connected in any way with the acts, omissions events or circumstances referred to in Clause 10.1 above in any operational indemnity given to the Buyer by any such subsequent operator and, if the agreement of the subsequent operator is so obtained, the indemnity in Clause 10.1 shall, to the extent of such operator’s indemnity, cease to apply.

10.3 The Buyer agrees to notify the Seller in writing reasonably promptly upon becoming aware of a claim by an Indemnitee for indemnification from the Seller pursuant to Clause 10.1 (a Claim); provided that, the Seller shall not be required to indemnify any Indemnitee in respect of any increase in any Claim to the extent that any such increase arises solely and directly as a result of the Buyer’s failure to give the Seller reasonably prompt written notice of any such Claim.

10.4 Without prejudice to the underlying obligation of the Seller to indemnify any such Indemnitee(s) in accordance with Clause 10.1 in respect of any such Claim, the Buyer agrees that:

10.4.1 commencing on the date the Claim is notified to the Seller, the Seller’s obligation to pay to the relevant Indemnitee(s) the full amount of the Claim shall be stayed for a period of ten (10) Business Days (or such longer period as the relevant Indemnitee(s) may agree, acting reasonably) (a Standstill Period) in order to allow the Seller the opportunity to evaluate the Claim and to decide whether or not it wishes to contest its validity or, as the case may be, the amount claimed thereunder (a Contest) and so that the Seller and the Buyer (acting on behalf of any relevant Indemnitee(s)) may consult with each other in order to determine what action (if any) may be reasonably be taken in order to avoid or mitigate such Claim;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

8

10.4.2 if the Buyer and the Seller cannot agree on a course of action as regards any such Contest, the Seller shall be entitled (acting at all times reasonably and in good faith) to procure a legal opinion (or, as the case may be, an opinion of another relevant expert having regard to the nature of the Claim) from a suitably qualified expert with a view to confirming that a reasonable basis exists for any such Contest and the actions recommended to be undertaken in order to properly conduct any such Contest. If the opinion of the relevant expert confirms that there does not exist a reasonable basis for any such Contest, the Seller shall promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1;

10.4.3 if the Seller’s appointed expert has confirmed in its opinion that it is necessary for the Seller to take action in the name of the relevant Indemnitee(s), the Buyer (acting on the instructions of such Indemnitee(s)) shall be entitled to request that the Buyer and the Seller instruct an independent expert (the costs thereof to be shared equally between the Buyer and the Seller) to evaluate the Contest’s prospects of success and/or actions recommended to be undertaken in the name of the relevant Indemnitee(s) in order to properly conduct any such Contest. If the independent expert confirms that: (i) there does not exist a reasonable basis for any such Contest; and/or (ii) that it is necessary that any action be taken in the name of any Indemnitee, the Seller shall, with regard to (i), promptly pay to the relevant Indemnitee(s) the full amount owed by the Seller pursuant to Clause 10.1 or, with regard to (ii), proceed to take any action in the name of the relevant Indemnitee as recommended by such independent expert;

10.4.4 following the receipt of any positive opinion of the Seller’s expert pursuant to Clause 10.4.2 or, as the case may be, of the independent expert appointed pursuant to Clause 10.4.3 above, the Seller may proceed to take, at its sole cost and expense, any action(s) as may have been recommended thereunder; provided that:

(a) no Termination Event has occurred and is continuing; and/or

(b) the relevant Indemnitee(s) shall have received the full amount to be indemnified pursuant to Clause 10.1 or, if agreed by such Indemnitee(s), adequate reserves, satisfactory to such Indemnitee(s), shall have been made in respect of the Claim and the costs thereof; and/or

(c) taking of any such action (or, as the case may be, the entitlement to continue to take any such action) would not be deemed by the relevant Indemnitee(s) to be prejudicial to the relevant Indemnitee(s) position as regards the Claim or otherwise would not be likely to have any adverse effect upon the relevant Indemnitee(s)’s reputation, business, operations or financial condition (other than any minor costs and expenses of an administrative nature).

10.5 Subject to the relevant Indemnitee(s) having received from the Seller the full amount required to indemnify and hold such Indemnitee(s) harmless with regards to any Claim, the Buyer agrees to procure that the relevant Indemnitee(s) take(s) such steps (at no cost to the Buyer or to such Indemnitee(s)) as may be reasonably requested by the Seller so as to enable the Seller to be subrogated to the rights of such relevant Indemnitee(s) in respect of such Claim.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

9

11. TAXES

The parties will use all reasonable endeavours to mitigate or avoid any Taxes which arise as a result of the sale of the Aircraft by (or otherwise procured by) the Seller to the Buyer in accordance with this Agreement and the Seller and the Buyer shall each co-operate with the other in good faith and take such steps as are reasonably practicable in respect thereof; provided that, the cost of any such mitigation or avoidance action shall be borne by the party requesting the same and that any such steps contemplated above shall not result in any of the rights or obligations of the non-requesting party under this Agreement being adversely affected.

12. LIABILITY INSURANCE

The Buyer shall maintain or procure that liability insurance is maintained in respect of the Aircraft during the period commencing on the Delivery Date and ending on the earlier of: (i) the completion of the next zonal/structural inspection (due at either 6 years or 12 years); and (ii) the second anniversary of the Delivery Date. On the Delivery Date and on the occasion of each renewal of such liability insurance, the Buyer shall provide (or procure that the then current operator provides) a certificate issued by the insurance broker of the then current operator which includes the following:

(a) the Seller, the Owner (if applicable) (and their respective directors, officers, employees and agents) as additional named assureds on the passenger, third party, cargo, baggage and mail liability policies which shall have a combined single limit of liability of not less than the lesser of: (a) the level of coverage maintained by the Seller as at the Delivery Date; and (b) the level of coverage maintained by prudent operators of single-aisle aircraft in the region within which such next operator of the Aircraft operates;

(b) an appropriate cross liabilities clause and breach of warranty protection in favour of such additional named assureds;

(c) a provision confirming that the hull insurers waive any subrogation rights against such additional named assureds; and

(d) a provision confirming that the Seller is to be given at least thirty (30) days (or such lesser period as may be stipulated by the insurers of such subsequent operator in respect of war risks coverage) notice of cancellation, termination or material alteration,

provided always that; requirements set out in sub-Clauses (a) through (d) are not inconsistent with the prevailing practice in the London international aviation insurance market as at the Delivery Date or on the occasion of each renewal. If there is a inconsistency between the requirements of any of sub-Clauses (a) through (d) above and such prevailing practice, then the provision of a certificate complying with such prevailing practice shall satisfy the Buyer’s obligations set out in this Clause 12.

13. MANUFACTURER’S WARRANTIES

The Seller hereby agrees to: (i) assign to the Buyer any warranties of any manufacturer or vendor of any part of the Aircraft; and (ii) procure (at no cost to the Seller) that the Buyer receives the benefit of any non-assignable warranties of any manufacturer or vendor of any part of the Aircraft which may exist as at Delivery in respect of any claim arising under any such warranties.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

10

14. BENEFIT OF AGREEMENT

Neither party shall assign, transfer, novate or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of the other party.

15. WAIVER

15.1 The failure of either party to enforce at any time any of the provisions of this Agreement, or to exercise any option herein provided, or to require at any time performance by the other party of any of the provisions herein, shall in no way be construed to be a present or future waiver of such provision nor in any way affect the validity of this Agreement or any part thereof or the right of the other party thereafter to enforce each and every such provision.

15.2 The express waiver (whether made one (1) or several times) by any party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

15.3 The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by applicable law.

16. NOTICES

All notices and requests required or authorized hereunder shall be given in writing either by personal delivery to an authorized representative of the party to whom the same is given or by registered mail (return receipt requested) and the date upon which any such notice or request is so personally delivered or if such notice or request is given by registered mail, the date upon which it is received by the addressee, provided that if such date of receipt is not a Business Day notice shall be deemed to have been received on the first following Business Day, shall be deemed to be the effective date of such notice or request. A copy of any notice issued by either party pursuant to this Clause 16 shall also be sent by e-mail to the addresses set out below.

The Buyer’s address for notices is:

Airbus Financial Services

5^th Floor, 6 George’s Dock, IFSC, Dublin 1, Ireland

Attention:	Managing Director
E-mail:	afscontracts@airbus.com

The Seller’s address for notices is:

LAN Airlines S.A.

Avenida Presidente Riesco 5711, 19th Floor, Las Condes, Santiago, Chile

Attention:	Fleet Management Director
E-mail:	oscar.aguayo@lan.com

or such other address or such other person as the party receiving the notice or request may reasonably designate from time to time.

17. LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with English law.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

11

17.2 The Buyer and the Seller each hereby agrees that the courts of England shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection with this Agreement.

17.3 As a foreign company that has, pursuant to the Overseas Companies Regulations 2009 (the “Overseas Regulations”) (registration number FC029342), registered in the United Kingdom as having a “UK establishment”, in accordance with the Companies Act 2006 and the Overseas Regulations the Seller irrevocably appoints as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement the person from time to time appointed by the Seller as its agent for service of process in the United Kingdom pursuant to the Companies Act 2006 (such agent being as of the date of this Agreement Mr. Gonzalo Garcia of Iberia House, 10 Hammersmith Broadway, London W6 7AL). If, for any reason, Mr. Gonzalo Garcia (or any replacement to Mr. Gonzalo Garcia duly appointed from time to time) no longer serves as agent of the Seller to receive service process, the Seller shall promptly appoint another agent and advise the Buyer thereof.

17.4 The Buyer appoints Airbus Operations Limited currently of New Filton House, Filton, Bristol, BS99 7AR as its agent for service of process relating to any proceedings before the English courts in connection with this Agreement and the other Buyback Documents.

18. MISCELLANEOUS

18.1 Severability

If a provision of this Agreement or any of the other Buyback Documents is or becomes illegal, invalid or unenforceable in any jurisdiction that will not affect:

18.1.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or the relevant Buyback Document; or

18.1.2 the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement or the relevant Buyback Document.

18.2 Expenses

As between the Buyer and the Seller (and the Owner, if applicable), each of them will pay for its own respective costs, fees (including legal and documentation fees) and other expenses incurred in connection with the preparation and execution of the documentation relating to, and the implementation of, the transactions contemplated by this Agreement and any documents related thereto.

18.3 Sole and Entire Agreement

This Agreement (together with any relevant Buyback Document related hereto) contains the entire agreement between the Buyer and the Seller in relation to the matters referred to herein and supersedes any previous understandings, commitments or representations whatsoever oral or written. No provision of this Agreement may be changed, waived or discharged except by an instrument in writing signed by the both parties hereto (or by their duly authorised representatives or agents). In the event that any term or condition of this Agreement conflicts with any term and condition set out in the Buyback Support Agreement, the Buyer and the Seller agree that the provisions of this Agreement shall, to the extent of any such conflict, prevail.

18.4 Language

All notices to be given under this Agreement will be in English. All documents delivered pursuant to this Agreement will be in English.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

12

18.5 Counterparts

This Agreement may be executed in counterparts, each of which will constitute one and the same document.

18.6 Further Assurances

The Buyer and the Seller each agree from time to time and at the requesting party’s cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by the other party to establish, maintain and protect the rights and remedies of such party and to carry out and effect the intent and purpose of this Agreement.

18.7 Third Party Rights

The parties do not intend that any term of this Agreement shall be enforceable solely by virtue of the Contracts (Rights of Third Parties) Act 1999 by the Owner or any other person who is not a party to this Agreement. The parties may rescind, vary, waive, release, assign, novate or otherwise dispose of all or any of their respective rights or obligations under this Agreement in accordance with the terms hereof without the consent of any person who is not a party to this Agreement.

18.8 No Brokers

The Buyer and the Seller each represent and warrant to the other that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with this Agreement or the other Buyback Documents or any of the transactions contemplated hereby or thereby. Each party agrees to indemnify and hold the other harmless from and against any and all claims, suits, damages, costs and expenses (including reasonable legal fees) asserted by any agent, broker or third party appointed by the indemnifying party in respect of any commission or compensation of any nature whatsoever based upon the Aircraft, this Agreement, the other Buyback Documents or any of the transactions contemplated hereby or thereby.

18.9 Default Interest

If any payment due from either party under this Agreement is not received on the due date, without prejudice to the receiving party’s other rights under this Agreement and at law, the receiving party shall be entitled to interest for late payment calculated on the amount due from and including the due date of payment up to and including the date when the payment is received by such party at a rate equal to one (1) month US Dollar LIBOR plus three per cent. (3%) per year (part year to be prorated). All such interest shall be compounded monthly and calculated on the basis of the actual number of days elapsed in the month assuming a thirty (30) day month and a three hundred and sixty (360) day year.

19. CONFIDENTIALITY

19.1 The Buyer and the Seller acknowledge that the terms and conditions set out in this Agreement have been agreed in the context of the special relationship between the parties and is therefore considered by each of the parties as commercially sensitive and as constituting confidential information.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

13

19.2 The Buyer and the Seller agree that the provisions of this Agreement are personal to it and will not without the prior written consent of the other party disclose such information to any other party. However, the parties may disclose any confidential information to: (i) any governmental authority to which it is obliged to disclose such information; (ii) its legal advisers, auditors and insurers (provided that such parties are bound by a professional or a legal duty of confidentiality); (iii) any parties entitled pursuant to an order or relevant request of any court, legal or regulatory body having jurisdiction over the disclosing party; (iv) or otherwise in accordance with any obligation to disclose imposed by any applicable law.

IN WITNESS whereof this Agreement has been signed on the day and year first above written.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

14

SCHEDULE 1

DEFINITIONS

In this Agreement, capitalised words and expressions have the following meanings:

Acceptance Certificate means the certificate of acceptance regarding the Aircraft substantially in the form set out in Schedule 7.

Agreement means this agreement made between the Seller and the Buyer as it may from time to time be amended, varied, or supplemented in accordance with the terms hereof, and the Recitals and the Schedules hereto shall form an integral part of this Agreement.

Aircraft means the Airframe together with the Aircraft Documents, Engines and parts.

Aircraft Documents shall have the meaning given in Schedule 9, paragraph 7(a).

Airframe means the Airbus A318-100 airframe with manufacturer’s serial number 3216.

Bill of Sale means the bill of sale in respect of the Aircraft substantially in the form set out in Part A of Schedule 6.

Business Day means any day other than a Saturday or Sunday on which business of the nature contemplated by this Agreement is carried out in Santiago de Chile, Dublin and Toulouse and, where used in relation to payments, any day on which commercial banks are open for business in New York.

Buyback Documents means this Agreement, the Bill of Sale, the Deed of Covenant, the Acceptance Certificate, the Buyback Support Agreement and any agreement amending or supplementing any of the foregoing documents.

Buyback Support Agreement means the buyback support agreement entered into between Airbus S.A.S. and the Seller on December 23, 2009 as such has been amended by Amendment No.1 to the Buyback Support Agreement entered into between Airbus S.A.S. and the Seller on 23 December 2010.

Buyer Conditions Precedent means the documents, evidence and conditions specified in Schedule 5 each in a form and substance satisfactory to the Buyer.

Conditions Precedent means, collectively, the Buyer Conditions Precedent and the Seller Conditions Precedent.

Deed of Covenant means the deed of covenant in respect of the Aircraft substantially in the form set out in Part B of Schedule 6.

Delivery means the delivery of, sale and transfer of title to the Aircraft in accordance with Clause 7.

Delivery Date means the date (being a Business Day) on which Delivery of the Aircraft occurs.

Delivery Location means an airport in Santiago de Chile or such other location agreed between the Buyer and the Seller each acting reasonably.

Engines means the two (2) Pratt & Whitney PW6000 engines, bearing manufacturer’s serial numbers P318127 and P318123.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

15

Indemnitees means the Buyer (and its shareholders directors, officers, servants, agents and employees).

LIBOR means the London Interbank Offer Rate, as quoted on the Reuters 01 page (or equivalent Reuters page) from time to time.

Lien means any mortgage, charge, assignment, pledge, lien, statutory right in rem, right of possession, attachment or detention, title retention arrangement, encumbrance or any other arrangement which has the effect of giving another person any security claim or interest.

Owner means Conure Leasing Limited a company incorporated under the laws of the Cayman Islands and domiciled at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Previous Security Documents means any mortgages, charges, pledges, assignments, leases or other such documents, agreements, deeds or arrangements pursuant to which any of the Previous Financiers had the benefit of any form of Lien over the Aircraft or any part thereof.

Previous Financier means any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

Release means any deed of release or any other form of written confirmation received by the Seller or the Owner pursuant to which any Previous Financier has irrevocably confirmed that any right, title or interest of any nature whatsoever held by any such Previous Financier in or to the Aircraft or any part thereof prior to Delivery has been fully and unconditionally released.

Scheduled Delivery Date means 15 June 2011 or such other date designated by the terms of the Buyback Support Agreement as the “Scheduled Buyback Date” or, subject to an agreement in writing between the Buyer and the Seller, any such other date as may be agreed from time to time.

Seller Conditions Precedent means the documents, evidence and conditions specified in Schedule 4, each in a form and substance satisfactory to the Seller.

US Dollars and US$ shall mean the lawful currency of the United States.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

16

SCHEDULE 2

SELLER REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer that:

(a) Status: the Seller is a company duly incorporated under the laws of Chile.

(b) Power and authority: the Seller has the power to: (i) enter into and perform and has taken all necessary action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is a party; (ii) to own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitute, or when entered into will constitute, the Seller’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Seller is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Seller or any of its assets is bound or affected.

(e) No immunity:

(i) the Seller is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which the Seller is party; and

(ii) neither the Seller nor any of its assets is entitled to any right of immunity, and the entry into and performance of this Agreement and the other Buyback Documents to which it is party by the Seller constitute private and commercial acts.

(f) No Liens:

At Delivery the Aircraft shall be free and clear of all Liens.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

17

SCHEDULE 3

BUYER REPRESENTATIONS AND WARRANTIES

The Buyer represents and warrants to the Seller that:

(a) Status: the Buyer is a company duly incorporated under the laws of Ireland.

(b) Power and authority: the Buyer has the power to (i) enter into and perform, and has taken all necessary corporate action to authorise the entry into, performance and delivery of this Agreement and the other Buyback Documents to which it is party; (ii) own its assets; and (iii) carry on its business as it is being conducted.

(c) Legal validity: this Agreement and the other Buyback Documents to which it is a party constitutes, or when entered into will constitute, the Buyer’s legal, valid and binding obligation.

(d) Non-conflict: neither the execution and delivery of this Agreement or any of the other Buyback Documents to which the Buyer is party, nor the performance of any of the obligations contained herein or therein will contravene any law, judgement or order by which the Buyer or any of its assets are bound or affected.

(e) No immunity:

(i) the Buyer is subject to civil commercial law with respect to its obligations under this Agreement and the other Buyback Documents to which it is a party; and

(ii) neither the Buyer nor any of its assets is entitled to any right of immunity, and the entry into and performance by the Buyer of this Agreement and the other Buyback Documents to which it is a party constitute private and commercial acts.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

18

SCHEDULE 4

SELLER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Seller to sell and deliver the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Seller:

A Documents

(a) Insurance: receipt by the Seller of an insurance certificate procured by the Buyer in respect of the Aircraft which reflects the requirements set out in Clause 12 of this Agreement;

(b) Licences, Consents and Registrations: receipt by the Seller of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Seller have been made for the effectiveness of the same within any applicable time limit); and

(c) Opinions: the receipt by the Seller of legal and tax opinions, in form and substance satisfactory to the Seller, acting reasonably, from independent counsel of the Seller’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery.

B Other Conditions Precedent

(a) No Default: no default on the part of the Buyer shall have occurred and be continuing under this Agreement, any other Buyback Document or any Manufacturer Agreement;

(b) Representations: the representations and warranties of the Buyer contained in Clause 3.2 shall be true and accurate in all material respects as though made on and as of the dates set out therein

(c) No Litigation: no action or proceeding shall have been instituted against the Buyer in any particular case where, if a finding were to be made against the Buyer that finding or the result of that finding would prevent the Buyer from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Buyer; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or government entity, in each case, to set aside, restrain, enjoin or prevent the Buyer’s completion and consummation of the Buyback Documents to which it is a party;

(d) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

(e) Taxes: the Seller shall be satisfied that the Delivery Location and the arrangements described in Clause 7 do not give rise to any Taxes;

(f) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date; and

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

19

(g) Net Purchase Price: the Seller shall have received the initial payment set out in Clause 6.3.1(a).

The conditions precedent set out in paragraphs A(a), A(b), A(c), B(a), B(b), B(c), B(d) and B(e) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(g) above, shall be subject to a grace period of five (5) Business Days commencing on the Scheduled Delivery Date.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

20

SCHEDULE 5

BUYER CONDITIONS PRECEDENT

Subject to the expiry of the applicable grace periods set out below, the obligation of the Buyer to purchase the Aircraft on the terms and conditions set out in this Agreement is conditional upon satisfaction in full, on the Delivery Date, of the following conditions, each in form and substance satisfactory to the Buyer:

A Documents

(a) Opinions: the receipt by the Buyer of legal and tax opinions, in form and substance satisfactory to the Buyer, acting reasonably, from independent counsel of the Buyer’s choosing in respect of, without limitation, valid transfer of title to the Aircraft and the lex situs of Delivery;

(b) Licences, Consents and Registrations: receipt by the Buyer of evidence that all governmental and other licences, approvals, exemptions, consents, registrations and filings necessary for the legality, validity, enforceability, admissibility in evidence or priority of this Agreement have been obtained or effected on an unconditional basis and remain in full force and effect (or that arrangements satisfactory to the Buyer have been made for the effectiveness of the same within any applicable time limit);

(c) Customer Due Diligence: receipt by the Buyer of the “customer due diligence” information from both the Seller and the Owner in form and substance satisfactory to the Buyer; and

(d) Title History: receipt by the Buyer of certified true copies of each bill of sale (or, if applicable, any such other document evidencing the transfer of the legal and beneficial title) evidencing the back-to-birth title history of the Airframe and each Engine.

B Other Conditions Precedent

(i) No Default: no default on the part of the Seller shall have occurred and be continuing under this Agreement, any other Buyback Document or under any Manufacturer Agreement;

(ii) Representations: the representations and warranties of the Seller contained in Clause 3.1 shall be true and accurate in all material respects as though made on and as of the dates set out therein;

(iii) No Litigation: no action or proceeding shall have been instituted against the Seller in any particular case where, if a finding were to be made against the Seller that finding or the result of that finding would prevent the Seller from performing its obligations as set out in the Buyback Documents, or completing and consummating the transactions contemplated by the Buyback Documents nor shall: (i) any action be threatened before any court or governmental agency against the Seller; or (ii) any order, judgement or decree have been issued or proposed to be issued by any court or Government Entity, in each case, to set aside, restrain, enjoin or prevent the Seller’s completion and consummation of the Buyback Documents to which it is a party;

(iv) Legality: it shall not be illegal for the Seller or the Buyer to consummate any of the Buyback Documents to which they are a party or to perform any of their obligations hereunder or thereunder;

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

21

(v) Taxes: the Buyer shall be satisfied that the Delivery Location, and that the arrangements described in Clause 7, do not give rise to any Taxes;

(vi) No Total Loss: the Aircraft shall not have suffered a Total Loss at any time prior to or on the relevant Delivery Date;

(vii) Delivery Condition: the Aircraft complies in all respects with the Delivery Conditions; and

(viii) Delivery of Reference Aircraft: the Reference Aircraft corresponding to the Aircraft (construed in accordance with Clause 1.2.1(n) of the Buyback Support Agreement) has been delivered to the Seller in accordance with the terms and conditions set out in the Purchase Agreement.

The conditions precedent set out in paragraphs A(a), A(b), B(i), B(ii), B(iii), B(iv) and B(v) shall each be subject a grace period of fifteen (15) Business Days commencing on the Scheduled Delivery Date. The condition precedent set out in paragraph B(vii) above, shall, with regard to any non-fulfilment of such condition precedent which results solely from a Third Party Event, be subject to a grace period of one hundred twenty (120) days and, in any other circumstances, sixty (60) days, but in either case commencing on the Scheduled Delivery Date.

C Buyer Conditions Subsequent

Release Documentation: the Seller shall forward (or procure that its legal advisors forward) by e-mail to the Buyer electronic copies (in pdf format) of:

(i) no later than three (3) Business Days after Delivery, each of the duly executed Releases received by the Seller or, as the case may be, the Owner from each of the Previous Financiers; and

(ii) within three (3) Business Days of receipt by the Seller or the Owner, any notifications or confirmations of any description received from any applicable registry or authority with which any of the Previous Security Documents were registered, recorded or otherwise filed confirming that any such registrations, recordings or filings have been fully and unconditionally released,

with certified copies of each of the documents referred to in both (i) and (ii) above to be received by the Buyer no later than sixty (60) days after Delivery.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

22

SCHEDULE 6

Part A

FORM OF BILL OF SALE

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Conure Leasing Limited (the “Owner”), being the owner of the aircraft described below (hereinafter referred to as the “Aircraft”):

1. one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3216;

2. two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318127 and P318123;

3. all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

4. the documents, data and records relating to the Aircraft,

does hereby sell, grant, transfer and deliver all of the Owner’s rights, title and interest in and to the Aircraft to Airbus Financial Services (the “Buyer”), and its successors and assigns, to have and hold forever.

The Owner makes no representations or warranties of any kind, any implied warranties are expressly excluded and the Owner shall have no liability to the Buyer pursuant to this Bill of Sale and all recourse to the Seller hereunder is waived.

This Bill of Sale is governed by and shall be construed in accordance with English law.

IN WITNESS whereof, this Bill of Sale is hereby executed at              (CET) this      day of                      2011.

SIGNED by		)
		)
For and on behalf of	)
CONURE LEASING LIMITED		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

23

Part B

FORM OF DEED OF COVENANT

DEED OF COVENANT

(the Deed)

From:	LAN Airlines S.A. (LAN)
	Avenida Presidente Riesco 5711
	19th Floor, Las Condes
	Santiago
	Chile
To:	Airbus Financial Services (AFS)
	5th Floor, 6 George’s Dock
	IFSC, Dublin 1
	Ireland

                     2011

WHEREAS

A. LAN and AFS have entered into a buyback agreement dated — 2011 pursuant to which, amongst other things, LAN has agreed to procure the sale of one (1) Airbus A318-100 aircraft bearing manufacturer’s serial number 3216 to AFS on the terms and conditions set out therein (the Buyback Agreement).

B. In accordance with the terms and conditions set out in the Buyback Agreement, the Seller shall procure that the Owner passes title to the Aircraft to AFS by delivering the Bill of Sale to AFS and the Seller shall, pursuant to and in accordance with the terms and conditions set out in this Deed, represent, warrant and covenant to the Buyer that, amongst other things, the full legal and beneficial title to the Aircraft, with full title guarantee, has been conveyed to the Buyer free and clear of all Liens

Capitalised terms and expressions used in this Deed (including the recitals) shall, unless otherwise defined in this Deed, have the meanings given to such terms and expressions in the Buyback Agreement. In this Deed, the following terms shall have the following meanings:

Beneficiary shall mean AFS (and its successors and assigns) or, pursuant to paragraph 3 below, any party to which AFS (or any of its successors and assigns) sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s (or any of its successors’ and assigns’) interest in the Aircraft may, from time to time, be financed or refinanced.

Previous Financier shall mean any bank, financial institution or any other entity which has had any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

24

LAN HEREBY COVENANTS AS FOLLOWS:

1. In consideration of the payment by AFS of the Net Purchase Price in accordance with the Buyback Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by LAN, with regard to the aircraft described below (hereinafter referred to as the Aircraft):

(i) one (1) Airbus A318-100 airframe bearing manufacturer’s serial number 3216;

(ii) two (2) Pratt & Whitney PW6000 engines bearing manufacturer’s serial numbers P318127 and P318123;

(iii) all equipment, accessories and parts belonging to, installed in or appurtenant to such Aircraft; and

(iv) the documents, data and records relating to the Aircraft,

LAN hereby represents, warrants and covenants to AFS and its successors and assigns and each Beneficiary that:

(a) neither LAN, the Owner or any Previous Financier (nor any person affiliated or otherwise associated with the Owner, LAN or any Previous Financier or any person claiming through any such person) has any right, title or interest of any nature whatsoever in or to the Aircraft or any part thereof;

(b) the Aircraft is free and clear of all Liens; and

(c) the full legal and beneficial title to the Aircraft, with full title guarantee, free and clear of all Liens has been conveyed to AFS to have and hold forever and LAN hereby covenants that it shall warrant and defend such title forever against all claims and demands whatsoever.

2. LAN agrees to indemnify and hold each Beneficiary harmless against any Losses or Taxes suffered or incurred by any Beneficiary as a result of: (a) any of LAN’s representations or warranties set out in this Deed being incorrect, inaccurate or in any way misleading; or (b) LAN’s failure to perform any of its obligations or otherwise comply with any of its covenants set out in this Deed.

3. AFS and any Beneficiary shall be entitled to assign or otherwise transfer the benefit of this Deed to any person to which AFS or any such Beneficiary sells or otherwise transfers any of its right, title or interest in or to the Aircraft or to any person through which AFS’s or any such Beneficiary’s interest in the Aircraft may, from time to time, be financed or refinanced. LAN shall, at its own cost, promptly execute all documents requested by AFS or, as the case may be, any Beneficiary to effect, perfect, record or implement any such assignment or transfer, and will promptly comply with any other requests of AFS or any Beneficiary (or any of their respective successors and assigns) in respect of any such assignment or transfer.

4. LAN agrees from time to time and at its cost to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or requested by AFS or any Beneficiary to establish, maintain and protect the rights and remedies of AFS or any Beneficiary and to carry out and effect the intent and purpose of this Deed.

5. This Deed shall be governed by and construed in accordance with English law.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

25

IN WITNESS whereof, this Deed is hereby executed as a deed as of              am / pm this      day of                      2011.

SIGNED by		)
		)
For and on behalf of	)
LAN AIRLINES S.A.		)
in the presence of:		)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

26

SCHEDULE 7

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE RELATING TO ONE (1) A318-100 AIRCRAFT, MANUFACTURER’S SERIAL NUMBER 3216 AND HAVING TWO (2) PRATT & WHITNEY PW6000 ENGINES BEARING MANUFACTURER’S SERIAL NUMBERS P318127 AND P318123

(THE AIRCRAFT)

Airbus Financial Services (the Buyer) hereby certifies that pursuant to the buyback agreement dated                      20— between LAN Airlines S.A. (the Seller) and the Buyer (the Buyback Agreement):

(a) the Buyer has inspected the Aircraft, found it to be complete and satisfactory to it and that the Aircraft conforms with the description and is in the condition and equipped as required by the Buyback Agreement;

(b) the Buyer has accepted delivery of the Aircraft, as is where is;

(c) the Buyer has inspected, found to be complete and satisfactory to it and has received all of the documents, data and records relating to the Aircraft (the Aircraft Documents); and

(d) the Buyer acknowledges that it has no rights or claims whatsoever against Seller or the Owner in respect of: (i) the condition of the Aircraft or the Aircraft Documents; or (ii) any of the other matters referred to in Clause 9 of the Buyback Agreement.

Capitalised terms and expressions used in this Acceptance Certificate shall have the meanings given in the Buyback Agreement.

This Acceptance Certificate is governed by and shall be construed in accordance with English law.

Date:                      20—

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

27

SCHEDULE 8

INSPECTION PROCEDURE

All references to Airbus in this Schedule 8, are made in relation to its capacity as the authorised representative of the Buyer.

All references to “Seller” in this Schedule 8 shall be deemed to refer to LAN Airlines S.A. (even if LAN Airlines S.A. is not the seller).

Airbus shall cover the costs of its personnel during the Pre-Recovery Inspection and the Delivery Inspection.

1. Pre-Recovery Inspection by Airbus

a) The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives, at the inspection location, no later than six (6) months before the Scheduled Buyback Date (the Pre-Recovery Inspection).

b) The Pre-Recovery Inspection will not disrupt the commercial operation or maintenance of the Aircraft.

c) After the Pre-Recovery Inspection has been performed, Airbus will deliver to the Seller within thirty (30) calendar days following the last day of the Pre-Recovery Inspection a list of all the inspected items (including areas, components and Aircraft Documents), indicating any discrepancies found and specifying the remedial works required in order to comply with the Delivery Conditions. The list of discrepancies provided to the Seller following the Pre-Recovery Inspection will be an exhaustive list of discrepancies identified at the occasion of the Pre-Recovery Inspection and such list shall be updated as required during the Delivery Inspection.

2. Delivery Inspection by Airbus

In order to verify that the Aircraft is in compliance with the requirements of this Agreement, Airbus is entitled but is not obliged to conduct each of the following during the delivery inspection (the Delivery Inspection):

2.1. Ground Inspection

The Aircraft (together with the Aircraft Documents) shall be made available to Airbus for ground inspection by Airbus or their authorised representatives at the inspection location. Such inspection shall be scheduled early enough to allow sufficient time to verify compliance with all the requirements set out in Schedule 9. The Seller shall provide opening and access to all necessary areas as reasonably required to perform the checks described in this Schedule 8 and shall allow Airbus or their authorised representatives, to accomplish their inspection in order to determine if the Aircraft is in compliance with the Delivery Conditions. During such checks, Airbus or its representatives may make reasonable requests that adjacent additional panels or areas of the Aircraft be opened in order to allow further inspection of suspect areas, provided reasonable grounds exist for such request. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

28

2.2. Operational Ground Check

Promptly after completion of all (if any) corrections required under paragraph 2.1 above, the Seller shall conduct an operational ground check in accordance with Part 1, Chapter 1 of the Airbus In Service Aircraft Test Manual (ISATM) for the purpose of demonstrating in the presence of an Airbus ground test inspector, the satisfactory operations of all systems. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such ground inspection so as to comply with the Delivery Conditions.

2.3. Engine Performance Check

Compliance with full rated performances as defined in the Aircraft flight manual will be demonstrated (i) by an on-wing static inspection, (ii) by testing any system of the powerplants (engines, nacelles and accessories) and (iii) by performing an engine power assurance run in accordance with Part 1, Chapter 2 of the ISATM. The Seller shall promptly correct, in accordance with the AMM, any discrepancies found in the course of the performance of such powerplant tests so as to comply with the Delivery Conditions.

2.4. Acceptance Flight

a) Promptly after completion of the inspections, checks and all (if any) corrections required under paragraphs 2.1, 2.2 and 2.3 above, the Aircraft shall be test flown by the Seller for not more than three hours in the vicinity of the Delivery Location in accordance with Part 2 of the ISATM. Airbus shall have the right to have, during such acceptance flight, and subject to applicable law, (i) one of its test pilots participate as a member of the flight crew (but not as pilot in command) and (ii) one of its flight test engineers seated on the flight deck’s third occupant seat and (iii) one of its cabin engineers for participating in the flight in order to observe the testing of the cabin systems. In addition, upon reasonable request from Airbus and subject to applicable law, the Seller shall authorize a representative of the Aircraft’s prospective lessee or purchaser to participate, preferably as a flight deck observer, in such acceptance flight (provided always that the Seller shall not be obliged to repeat, for the benefit of any of such representative, any flight manoeuvres previously performed in the course of the flight test).

b) All flights pursuant to paragraph 2.4 (a) above shall be carried out at the Seller’s expense, including, but not limited to, costs for fuel, oil, airport fees, insurance, takeoff/landing fees, airway communication fees and ground handling fees.

2.5. Acceptance Criteria

a) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall be conducted using Airbus’ ISATM.

b) Upon completion of such acceptance flight or testing, the representative of Airbus participating in such flight or testing shall indicate in writing to the Seller any discrepancies in the Aircraft required to be corrected by the Seller in order to comply with the provisions of the Delivery Conditions. In case an alleged discrepancy is disputed, Airbus and the Seller will jointly select and appoint a suitably qualified and independent third party to assess such discrepancy and the cost of that third party will be shared equally between Airbus and the Seller. If Airbus and the Seller cannot agree on the selection of such third party in a timely manner, Avitas Inc shall be appointed to select such third party. If following such third party determination, the discrepancy is confirmed, the Seller shall promptly correct any such discrepancy and if required, another test flight will be conducted (to the extent necessary to verify the correction of the discrepancy) at Seller’s cost.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

29

c) The operational ground check, the engine performance check and the acceptance flight contemplated in clause 2.2, 2.3 and 2.4 shall establish that all equipment is functioning in accordance with the relevant limits specified in the AMM, Flight Manual, Flight Crew Operating Manual or any other relevant manual and meet the Delivery Conditions.

3. Ferry Flight

Subject to reasonable written notice, Airbus may request the Seller to fly the Aircraft to a destination not further than 6,000 nautical miles away from the Delivery Location. Such flight, if reasonably practicable for the Seller (subject to, inter alia, crew availability) shall be completed at Airbus’ cost and risk.

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

30

SCHEDULE 9

DELIVERY CONDITIONS

[***].

1. Maintenance

[***].

2. Condition of Aircraft

[***].

3. Certificate of Airworthiness Matters, Export and Deregistration

[***].

4. Condition of Airframe

[***].

5. Condition of Engines

[***].

6. Condition of APU

[***].

7. Aircraft Documents

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

31

8. Ground Lock Safety Pins and covers

[***].

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

32

APPENDIX 1

AIRCRAFT RECORDS REQUIREMENT

1. OPERATIONAL & TECHNICAL MANUALS

[***].

2. TECHNICAL RECORDS

[***].

2.1. General - Aircraft records

[***].

2.2. Engines records

[***].

2.3. APU records

[***].

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

33

APPENDIX 2

LIST OF PMA PARTS IN USE BY LAN

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

34

APPENDIX 3

FLY AWAY KIT

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

35

EXECUTION PAGE – A318 BUYBACK AGREEMENT (MSN 3216)

SIGNED by	)
for and on behalf of	)
AIRBUS FINANCIAL SERVICES	)
SIGNED by	)
for and on behalf of	)
LAN AIRLINES S.A.	)

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

36

EX-4.26

Exhibit 4.26

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LANCHILE S.A.

AGTA-LAN

TABLE OF CONTENTS

		PAGE NUMBER
ARTICLES
1.	Subject Matter of Sale		1
2.	Price, Taxes and Payment		1 SA 1
3.	Regulatory Requirements and Certificates		3
4.	Detail Specification; Changes		4
5.	Representatives, Inspection, Flight Tests, Test Data and Performance Guarantee Compliance		4
6.	Delivery		5
7.	Excusable Delay		5
8.	Risk Allocation/Insurance		6
9.	Assignment, Resale or Lease		8
10.	Termination for Certain Events		9
11.	Notices		10
12.	Miscellaneous		10
EXHIBITS
A	Buyer Furnished Equipment Provisions Document
B	Customer Support Document
C	Product Assurance Document
D	Escalation Adjustment
D-1	Escalation Adjustment		SA1
APPENDICES
I	Insurance Certificate
II	Purchase Agreement Assignment
III	Post-Delivery Sale Notice
IV	Post-Delivery Lease Notice
V	Purchaser’s/Lessee’s Agreement
VI	Owner Appointment of Agent - Warranties
VII	Contractor Confidentiality Agreement

AGTA-LAN i SA 1

AIRCRAFT GENERAL TERMS AGREEMENT NUMBER AGTA-LAN

between

The Boeing Company

and

LanChile S.A.

Relating to

BOEING AIRCRAFT

This Aircraft General Terms Agreement Number AGTA-LAN (AGTA) between The Boeing Company (Boeing) and LanChile S.A. (Customer) will apply to all Boeing aircraft contracted for purchase from Boeing by Customer after May 9, 1997.

Article 1. Subject Matter of Sale.

1.1 Aircraft. Boeing will manufacture and sell to Customer and Customer will purchase from Boeing aircraft under purchase agreements which incorporate the terms and conditions of this AGTA.

1.2 Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment Provisions Document to the AGTA, contains the obligations of Customer and Boeing with respect to equipment purchased and provided by Customer, which Boeing will receive, inspect, store and install in an aircraft before delivery to Customer. This equipment is defined as Buyer Furnished Equipment (BFE).

1.3 Customer Support. Exhibit B, Customer Support Document to the AGTA, contains the obligations of Boeing relating to Materials (as defined in Part 3 thereof), training, services and other things in support of aircraft.

1.4 Product Assurance. Exhibit C, Product Assurance Document to the AGTA, contains the obligations of Boeing and the suppliers of equipment installed in each aircraft at delivery relating to warranties, patent indemnities, software copyright indemnities and service life policies.

Article 2. Price, Taxes and Payment.

2.1 Price.

2.1.1 Airframe Price is defined as the price of the airframe for a specific model of aircraft described in a purchase agreement. (For Models 737-600, 737-700 and 737-800, the Airframe Price includes Engine Price.)

AGTA-LAN - 1 - SA 1

2.1.2 Optional Features Prices are defined as the prices for optional features selected by Customer for a specific model of aircraft described in a purchase agreement.

2.1.3 Engine Price is defined as the price set by the engine manufacturer for a specific engine to be installed on the model of aircraft described in a purchase agreement (not applicable to Models 737-600, 737-700 and 737-800).

2.1.4 Aircraft Basic Price is defined as the sum of the Airframe Price, Optional Features Prices and the Engine Price, if applicable.

2.1.5 Escalation Adjustment is defined as the price adjustment to the Airframe Price and the Optional Features Prices (and the Engine Price for Models 737-600, 737-700 and 737-800) resulting from the calculation using the economic price formula contained in Exhibit D, Escalation Adjustment to the AGTA, for aircraft delivering through December 1999, and Exhibit D-1, Escalation Adjustment to the AGTA, for aircraft delivering after December 1999. The price adjustment to the Engine Price for all other models of aircraft will be calculated using the economic price formula in the Engine Escalation Adjustment to the applicable purchase agreement.

2.1.6 Advance Payment Base Price is defined as the estimated price of an aircraft as of the date of signing a purchase agreement for the scheduled month of delivery of such aircraft using commercial forecasts of the Escalation Adjustment.

2.1.7 Aircraft Price is defined as the total amount Customer is to pay for an aircraft at the time of delivery, which is the sum of the Aircraft Basic Price, the Escalation Adjustment and other price adjustments made pursuant to the purchase agreement.

2.2 Taxes. Taxes are defined as all taxes, fees, charges or duties and any interest, penalties, fines or other additions to tax, including, but not limited to sales, use, value added, gross receipts, stamp, excise, transfer and similar taxes, imposed by any domestic or foreign taxing authority arising out of or in connection with the performance of the applicable purchase agreement or the sale, delivery, transfer or storage of any aircraft, BFE, or other things furnished under the applicable purchase agreement. Except for U.S. federal and U.S. States income taxes and Washington State business and occupation taxes imposed on Boeing or Boeing’s assignee, Customer will be responsible for filing all tax returns, reports and declarations and paying all Taxes.

2.3 Payment.

2.3.1 Advance Payment Schedule. Customer will make advance payments to Boeing for each aircraft in the amounts and on the dates indicated in the schedule set forth in the applicable purchase agreement.

2.3.2 Payment at Delivery. Customer will pay any unpaid balance of the Aircraft Price at the time of delivery of each aircraft.

AGTA-LAN - 2 - SA 1

2.3.3 Form of Payment. Customer will make all payments to Boeing by unconditional deposit of United States Dollars in a bank account in the United States designated by Boeing.

2.3.4 Monetary and Government Regulations. Customer is responsible for complying with all monetary control regulations and for obtaining necessary governmental authorizations which are applicable to payments made by Customer.

Article 3. Regulatory Requirements and Certificates.

3.1 Certificates. Boeing will manufacture each aircraft to conform to the appropriate Type Certificate issued by the United States Federal Aviation Administration (FAA) for the specific model of aircraft and will obtain from the FAA and furnish to Customer at delivery of each aircraft either a Standard Airworthiness Certificate or an Export Certificate of Airworthiness issued pursuant to Part 21 of the Federal Aviation Regulations whichever one is required by the Chilean DGAC.

3.2 FAA or Applicable Regulatory Authority Manufacturer Changes.

3.2.1 A Manufacturer Change is defined as any change to an aircraft, data relating to an aircraft, or testing of an aircraft required by the FAA to obtain a Standard Airworthiness Certificate or by the country of import and/or registration to obtain an Export Certificate of Airworthiness.

3.2.2 A Manufacturer Change will be incorporated at no charge to Customer unless:

(i) the FAA issues the requirement after the date of the applicable purchase agreement, and the scheduled delivery month of the affected aircraft is after the date of the Type Certificate for the model of aircraft, or more than 18 months after the date of the purchase agreement, whichever is later; or

(ii) the requirement is solely necessary to comply with a requirement of the country of import and/or registration.

3.2.3 Customer will pay Boeing’s charge for validation of an aircraft required by any governmental agency of the country of import and/or registration.

3.3 FAA Operator Changes.

3.3.1 An Operator Change is defined as a change in equipment that is required by Federal Aviation Regulations and which are in addition to those required for a Certificate of Airworthiness or Export Certificate of Airworthiness and which (i) is generally applicable to transport category aircraft to be used in United States certified air carriage and (ii) the required compliance date is on or before the scheduled delivery month of the aircraft.

AGTA-LAN - 3 - SA 1

3.3.2 Boeing will deliver each aircraft with Operator Changes incorporated or, at Boeing’s option, with suitable provisions for the incorporation of such equipment and Customer will pay Boeing’s applicable charges.

3.4 Export License. If an export license is required by United States law or regulation for any aircraft or any other things delivered under the purchase agreement, it is Customer’s obligation to obtain such license. If requested, Boeing will assist Customer in applying for any such export license. Customer will furnish any required supporting documents.

Article 4. Detail Specification; Changes.

4.1 Configuration Changes. The Detail Specification is defined as the Boeing document that describes the configuration of each aircraft purchased by Customer. The Detail Specification for each aircraft may be amended by (i) Boeing to reflect the incorporation of Manufacturer Changes and Operator Changes or (ii) by the agreement of the parties. In either case the amendment will describe the particular changes to be made and any effect on design, performance, weight, balance, scheduled delivery month, Aircraft Basic Price, Aircraft Price and Advance Payment Base Price.

4.2 Development Changes. Development Changes are defined as changes to aircraft that do not affect the Aircraft Price or scheduled delivery month, and do not adversely affect guaranteed weight, guaranteed performance or compliance with the interchangeability or replaceability requirements set forth in the applicable Detail Specification. Boeing may, at its option, incorporate Development Changes into the Detail Specification and into an aircraft prior to delivery to Customer.

4.3 Notices. Boeing will promptly notify Customer of any amendments to the Detail Specification.

Article 5. Representatives, Inspection, Demonstration Flights, Test Data and Performance Guarantee Compliance.

5.1 Office Space. Twelve months before delivery of the first aircraft purchased, and continuing until the delivery of the last aircraft on firm order, Boeing will furnish, free of charge, suitable office space and equipment for the accommodation of up to three representatives of Customer in or conveniently located near the assembly plant.

5.2 Inspection. Customer’s representatives may inspect each aircraft at any reasonable time provided such inspection does not interfere with Boeing’s performance.

5.3 Demonstration Flights. Prior to delivery, Boeing will fly each aircraft up to 4 hours each flight and at no additional charge to demonstrate to Customer the function of the aircraft and its equipment following Boeing’s production flight test procedures. Customer may designate up to five representatives to participate as observers.

5.4 Test Data; Performance Guarantee Compliance. Performance Guarantees are defined as the written guarantees in a purchase agreement regarding the

AGTA-LAN - 4 - SA 1

operational performance of an aircraft. Boeing will furnish to Customer flight test data obtained on an aircraft of the same model to evidence compliance with such Performance Guarantees. Performance Guarantees will be met if reasonable engineering interpretations and calculations based on the flight test data establish that the particular aircraft being delivered under the applicable purchase agreement would, if actually flown, comply with the guarantees.

5.5 Special Aircraft Test Requirements. Boeing may use an aircraft for flight and ground tests prior to delivery, without reduction in the Aircraft Price, if the tests are considered necessary by Boeing (i) to obtain or maintain the Type Certificate or Certificate of Airworthiness for the aircraft; or (ii) to evaluate potential improvements that may be offered for production or retrofit incorporation provided the tests do not adversely affect the structure of the Aircraft or in the aggregate require more than 5 hours flight testing.

Article 6. Delivery.

6.1 Notices of Delivery Dates. Boeing will notify Customer of the approximate delivery date of each aircraft at least 30 days before the scheduled month of delivery and at least 14 days before the scheduled delivery date.

6.2 Place of Delivery. Each aircraft will be delivered at a facility selected by Boeing in the State of Washington.

6.3 Bill of Sale. At delivery of an aircraft, Boeing will provide Customer a bill of sale conveying good title, free of encumbrances.

6.4 Delay. If Customer delays acceptance of an aircraft beyond the scheduled delivery date, Customer will reimburse Boeing for all reasonable costs directly incurred by Boeing as a result of the delay.

Article 7. Excusable Delay.

7.1 General. Boeing will not be liable for any delay in the scheduled delivery month of an aircraft or other performance under the applicable purchase agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii) government acts or priorities; (iv) fires, floods, or earthquakes; (v) strikes or labor troubles causing cessation, slowdown, or interruption of work; or (vi) any other cause to the extent such cause is beyond Boeing’s control and not occasioned by Boeing’s fault or negligence. A delay resulting from any such cause is defined as an Excusable Delay.

7.2 Notice. Boeing will give written notice to Customer (i) of a delay as soon as it concludes that an aircraft will be delayed beyond the scheduled delivery month due to an Excusable Delay; and (ii) of a revised delivery month based on Boeing’s appraisal of the facts.

AGTA-LAN - 5 - SA 1

7.3 Delay in Delivery of Twelve Months or Less. If the revised delivery month in such notice is 12 months or less after the scheduled delivery month, Customer will accept such aircraft when tendered for delivery, subject to the following:

7.3.1 The calculation of the Escalation Adjustment will be based on the previously scheduled delivery month.

7.3.2 The advance payment schedule will be adjusted to reflect the revised delivery month.

7.3.3 All other provisions of the applicable purchase agreement, including the BFE on dock dates for the delayed aircraft, are unaffected by an Excusable Delay.

7.4 Delay in Delivery of More Than Twelve Months. If the revised delivery month in such notice is more than 12 months after the scheduled delivery month, either party may terminate the applicable purchase agreement with respect to such aircraft within 30 days of the notice by giving written notice of the termination to the other party. If either party does not terminate the applicable purchase agreement with respect to such aircraft, all terms and conditions of the applicable purchase agreement will remain in effect.

7.5 Aircraft Damaged Beyond Repair. If an aircraft is destroyed or damaged beyond repair for any reason before delivery, Boeing will give written notice as soon as reasonable practicable to Customer specifying the earliest month possible, consistent with Boeing’s other contractual commitments and production capabilities, in which Boeing can deliver a replacement. Customer will have 30 days from receipt of notice to elect to have Boeing manufacture a replacement aircraft under the same terms and conditions of purchase, except that the calculation of the Escalation Adjustment will be based upon the original scheduled delivery month, or, failing such election, the applicable purchase agreement will terminate with respect to such aircraft. Boeing will not be obligated to manufacture a replacement aircraft if reactivation of the production line for the specific model of aircraft is required.

7.6 Termination. Termination under this Article will discharge all obligations and liabilities of Boeing and Customer with respect to any aircraft and all related undelivered Materials, training, services and other things terminated under the applicable purchase agreement, except that Boeing will return to Customer, without interest, an amount equal to all advance payments paid by Customer for the aircraft. If Customer terminates the applicable purchase agreement as to any aircraft, Boeing may elect, by written notice to Customer within 30 days, to purchase from Customer any BFE related to the aircraft at the invoice prices paid, or contracted to be paid, by Customer. Customer may elect to retain the BFE by sending written counter notice to Boeing within 30 days of such notice from Boeing.

7.7 Exclusive Rights. The termination rights in this Article are in substitution for all other rights of termination or any claim arising by operation of law due to delays in performance covered by this Article.

Article 8. Risk Allocation/Insurance.

8.1 Title and Risk with Boeing.

8.1.1 Boeing’s Indemnification of Customer. Until transfer of title to an aircraft to Customer, Boeing will indemnify and hold harmless Customer and Customer’s

AGTA-LAN - 6 - SA 1

observers from and against all claims and liabilities, including all expenses and attorneys’ fees incident thereto or incident to establishing the right to indemnification, for injury to or death of any person(s), including employees of Boeing but not employees of Customer, or for loss of or damage to any property, including an aircraft, arising out of or in any way related to the operation of an aircraft during all demonstration and test flights conducted under the provisions of the applicable purchase agreement, whether or not arising in tort or occasioned by the negligence of Customer or any of Customer’s observers.

8.1.2 Definition of Customer. For the purpose of this Article, “Customer” is defined as LanChile S.A., its divisions, subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents.

8.2 Insurance.

8.2.1 Insurance Requirements. The Customer will purchase and maintain insurance acceptable to Boeing and provide a certificate of such insurance that names Boeing as an additional insured for any and all claims and liabilities for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any property, including any aircraft, arising out of or in any way relating to Materials, Training, Services or other things provided under Exhibit B of the AGTA, which will be incorporated by reference into the applicable purchase agreement, whether or not arising in tort or occasioned by the negligence of Boeing, except with respect to legal liability to persons or parties other than Customer or Customer’s assignees arising out of an accident caused solely by a product defect in an aircraft. Customer will provide such certificate of insurance at least thirty (30) days prior to the scheduled delivery of the first aircraft under a purchase agreement. The insurance certificate will reference each aircraft delivered to Customer pursuant to each applicable purchase agreement. Annual renewal certificates will be submitted to Boeing before the expiration of the policy periods. The form of the insurance certificate, attached as Appendix I, states the terms, limits, provisions and coverages required by this Article 8.2.1. Each certificate provided by Customer pursuant to this Article shall be substantially in the form set out in Appendix I or such other form as is reasonably acceptable to Boeing. The failure of Boeing to demand compliance with this 8.2.1 in any year will not in any way relieve Customer of its obligations hereunder nor constitutes a waiver by Boeing of these obligations.

8.2.2 Noncompliance with Insurance Requirements. If Customer fails to comply with any of the insurance requirements of Article 8.2.1 or any of the insurers fails to pay a claim covered by the insurance or otherwise fails to meet any of insurer’s obligations required by Appendix I, Customer will provide the same protection to Boeing as that required by Article 8.2.1 above.

8.2.3 Definition of Boeing. For purposes of this article, “Boeing” is defined as The Boeing Company, its divisions, subsidiaries, affiliates, assignees of each and their respective directors, officers, employees and agents.

AGTA-LAN - 7 - SA 1

Article 9. Assignment, Resale or Lease.

9.1 Assignment. The applicable purchase agreement is for the benefit of the parties and their respective successors and assigns. No rights or duties of either party may be assigned or delegated, or contracted to be assigned or delegated, without the prior written consent of the other party, except:

9.1.1 Either party may assign its interest to a corporation that (i) results from any merger or reorganization of such party or (ii) acquires substantially all the assets of such party;

9.1.2 Boeing may assign its rights to receive money; and

9.1.3 Boeing may assign any of its rights and duties to any wholly-owned subsidiary of Boeing.

9.1.4 Boeing may assign any of its rights and duties with respect to Parts 1 and 3 of Exhibit B, Customer Support Document to the AGTA, to FlightSafety Boeing Training International L.L.C.

9.2 Transfer by Customer at Delivery. Boeing will take any requested action reasonably required for the purpose of causing an aircraft, at time of delivery, to be subject to an equipment trust, conditional sale, lien or other arrangement for Customer to finance the aircraft. However, no such action will require Boeing to divest itself of title to or possession of the aircraft until delivery of and payment for the aircraft. A sample form of assignment acceptable to Boeing is attached as Appendix II.

9.3 Sale or Lease by Customer After Delivery. If, following delivery of an aircraft, Customer sells or leases the aircraft (including any sale for financing purposes), all of Customer’s rights with respect to the aircraft under the applicable purchase agreement will inure to the benefit of the purchaser or lessee of such aircraft, effective upon Boeing’s receipt of the written agreement of the purchaser or lessee, in a form satisfactory to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement. Sample forms of agreement acceptable to Boeing are attached as Appendices III and IV.

9.4 Notice of Sale or Lease After Delivery. Customer will give notice to Boeing as soon as practicable of the sale or lease of an aircraft including in the notice the name of the entity with title and/or possession of such aircraft.

9.5 Exculpatory Clause in Post-Delivery Sale or Lease. If, following the delivery of an aircraft, Customer sells or leases such aircraft and obtains from the transferee any form of exculpatory clause protecting Customer from liability for loss of or damage to the aircraft, and/or related incidental or consequential damages, including without limitation loss of use, revenue or profit, Customer shall obtain for Boeing the purchaser’s or lessee’s written agreement to be bound by terms and conditions substantially as set forth in Appendix V. This Article 9.5 applies only if purchaser or lessee has not provided to Boeing the written agreement described in Article 9.3 above.

AGTA-LAN - 8 - SA 1

9.6 Appointment of Agent-Warranty Claims. If, following delivery of an aircraft, Customer appoints an agent to act directly with Boeing for the administration of claims relating to the warranties under the applicable purchase agreement, Boeing will deal with the agent for that purpose, effective upon Boeing’s receipt of the agent’s written agreement, in a form satisfactory to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement. A sample form of agreement acceptable to Boeing is attached as Appendix VI.

9.7 No Increase in Boeing Liability. No action taken by Customer or Boeing relating to the resale or lease of an aircraft or the assignment of Customer’s rights under the applicable purchase agreement will subject Boeing to any liability beyond that in the applicable purchase agreement or modify in any way Boeing’s obligations under the applicable purchase agreement.

Article 10. Termination for Certain Events.

10.1 Termination. If either party

(i) ceases doing business as a going concern, suspends all or substantially all its business operations, makes an assignment for the benefit of creditors, or generally does not pay its debts, or admits in writing its inability to pay its debts, or

(ii) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; commences any legal proceeding such as bankruptcy, reorganization, readjustment of debt, dissolution or liquidation available for the relief of financially distressed debtors; or becomes the object of any such proceeding, unless the proceeding is dismissed or stayed within a reasonable period, not to exceed 60 days,

the other party may terminate any purchase agreement with respect to any undelivered aircraft, Materials, training, services and other things by giving written notice of termination.

10.2 Repayment of Advance Payments. If Customer terminates the applicable purchase agreement under this Article, Boeing will repay to Customer, without interest, an amount equal to any advance payments received by Boeing from Customer with respect to undelivered aircraft.

AGTA-LAN - 9 - SA 1

Article 11. Notices.

All notices required by any applicable purchase agreement will be in English, will be effective on the date of receipt and may be transmitted by any customary means of written communication addressed as follows:

Customer:	LanChile S.A. Estado 10 Casilla 147D Santiago, Chile
	Attention:   Corporate Vice President - Technical
Boeing:	Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 U.S.A. Attention:  Vice President - Contracts                     Mail Stop 75-38

Article 12. Miscellaneous.

12.1 Government Approval. Boeing and Customer will assist each other in obtaining any governmental consents or approvals required to effect certification and sale of aircraft under the applicable purchase agreement.

12.2 Headings. Article and paragraph headings used in this AGTA and in any purchase agreement are for convenient reference only and are not intended to affect the interpretation of this AGTA or any purchase agreement.

12.3 GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE GOVERNED BY THE LAW OF THE STATE OF WASHINGTON, U.S.A., EXCLUSIVE OF WASHINGTON’S CONFLICTS OF LAWS PRINCIPLES.

12.4 Waiver/Severability. Failure by either party to enforce any provision of this AGTA or any purchase agreement will not be construed as a waiver. If any provision of this AGTA or any provision of any purchase agreement are held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the AGTA or the applicable purchase agreement will remain in effect.

AGTA-LAN - 10 - SA 1

12.5 Survival of Obligations. The Articles and Exhibits of this AGTA including but not limited to those relating to insurance, DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES will survive termination or cancellation of any purchase agreement or part thereof.

DATED AS OF July 28^th, 1999

LANCHILE S.A.		THE BOEING COMPANY
By		By
Its	S.V. P. Business Affairs	Its	Attorney-in-Fact
		By
		Its

AGTA-LAN - 11 - SA 1

EXHIBIT A

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LanChile S.A.

BUYER FURNISHED equipment provisions document

AGTA-LAN	A
	i

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

The parties acknowledge Boeing intends to implement a new Buyer Furnished Equipment Process for Buyer Furnished Equipment in 1997. New documentation reflecting the new process will be offered to Customers as soon as practicable. It is the intention of the parties to replace this Exhibit when the new process becomes available.

AGTA-LAN	A
	ii

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

1. General.

Certain equipment to be installed in the Aircraft is furnished to Boeing by Customer at Customer’s expense. This equipment is designated “Buyer Furnished Equipment” (BFE) and is listed in the Detail Specification. Boeing will provide to Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE Report which may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions relating to the in sequence installation of BFE as described in the applicable Supplemental Exhibit to this Exhibit A in a purchase agreement at the time of aircraft purchase.

2. Supplier Selection.

Customer will:

2.1 Select and notify Boeing of the suppliers of BFE items by those dates appearing in Supplemental Exhibit BFE1to the applicable purchase agreement at the time of aircraft purchase.

2.2 Meet with Boeing and such selected BFE suppliers promptly after such selection to:

2.2.1 complete BFE configuration design requirements for such BFE; and

2.2.2 confirm technical data submittal dates for BFE certification.

3. Customer’s Obligations.

Customer will:

3.1 comply with and cause the supplier to comply with the provisions of the BFE Document or BFE Report;

3.1.1 deliver technical data (in English) to Boeing as required to support installation and FAA certification in accordance with the schedule provided by Boeing or as mutually agreed upon during the BFE meeting referred to above;

3.1.2 deliver BFE including production and/or flight training spares to Boeing in accordance with the quantities and schedule provided therein; and

AGTA-LAN A-1

3.1.3 deliver appropriate quality assurance documentation to Boeing as required with each BFE part (D6-56586, “BFE Product Acceptance Requirements”);

3.2 authorize Boeing to discuss all details of the BFE directly with the BFE suppliers;

3.3 authorize Boeing to conduct or delegate to the supplier quality source inspection and supplier hardware acceptance of BFE at the supplier location;

3.3.1 require supplier’s contractual compliance to Boeing defined source inspection and supplier delegation programs, including availability of adequate facilities for Boeing resident personnel; and

3.3.2 assure that Boeing identified supplier’s quality systems be approved to Boeing document D1-9000;

3.4 provide necessary field service representation at Boeing’s facilities to support Boeing on all issues related to the installation and certification of BFE;

3.5 deal directly with all BFE suppliers to obtain overhaul data, provisioning data, related product support documentation and any warranty provisions applicable to the BFE;

3.6 work closely with Boeing and the BFE suppliers to resolve any difficulties, including defective equipment, that arise;

3.7 be responsible for modifying, adjusting and/or calibrating BFE as required for FAA approval and for all related expenses;

3.8 warrant that the BFE will meet the requirements of the Detail Specification or procure such warranty from the BFE supplier provided that the BFE supplier is pre-approved by Boeing ; and

3.9 be responsible for providing equipment which is FAA certifiable at time of Aircraft delivery, or for obtaining waivers from the applicable regulatory agency for non-FAA certifiable equipment.

4. Boeing’s Obligations.

Other than as set forth below, Boeing will provide for the installation of and install the BFE and obtain certification of the Aircraft with the BFE installed.

AGTA-LAN A-2

5. Nonperformance by Customer.

If Customer’s nonperformance of obligations in this Exhibit or in the BFE Document causes a delay in the delivery of the Aircraft or causes Boeing to perform out-of-sequence or additional work, Customer will reimburse Boeing for all reasonable expenses that directly result from such nonperformance and be deemed to have agreed to any such delay in Aircraft delivery. In addition Boeing will have the right to:

5.1 provide and install specified equipment or suitable alternate equipment and increase the price of the Aircraft accordingly; and/or

5.2 deliver the Aircraft to Customer without the BFE installed.

6. Return of Equipment.

BFE not installed in the Aircraft will be returned to Customer in accordance with Customer’s instructions and at Customer’s expense.

7. Title and Risk of Loss.

Title to and risk of loss of BFE will at all times remain with Customer or other owner. Boeing will have only such liability for BFE as a bailee for mutual benefit would have, but will not be liable for loss of use.

8. Indemnification of Boeing.

Customer hereby indemnifies and holds harmless Boeing from and against all claims and liabilities, including costs and expenses (including attorneys’ fees) incident thereto or incident to successfully establishing the right to indemnification, for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any property, including any Aircraft, arising out of or in any way connected with any nonconformance or defect in any BFE and whether or not arising in tort or occasioned by the negligence of Boeing. This indemnity will not apply with respect to any nonconformance or defect caused solely by Boeing’s installation of the BFE.

9. Patent Indemnity.

Customer hereby indemnifies and holds harmless Boeing from and against all claims, suits, actions, liabilities, damages and costs arising out of any actual or alleged infringement of any patent or other intellectual property rights by BFE or arising out of the installation, sale or use of BFE by Boeing. In relation to any sales by Boeing of BFE purchased by Boeing from Customer pursuant to Article 7.6 of the AGTA this Article will only apply in the event such BFE is not supported by suppliers indemnity which extends to Boeing.

AGTA-LAN A-3

10. Definitions.

For the purposes of the above indemnities, the term “Boeing” includes The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their directors, officers, employees and agents.

AGTA-LAN A-4

EXHIBIT B

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LanChile S.A.

CUSTOMER SUPPORT DOCUMENT

This document contains:

Part 1: Maintenance and Flight Training Programs; Operations

Engineering Support

Part 2: Field Services and Engineering Support

Services

Part 3: Technical Information and Materials

Part 4: Alleviation or Cessation of Performance

Part 5: Protection of Proprietary Information and

Proprietary Materials

AGTA-LAN	B
	i

CUSTOMER SUPPORT DOCUMENT

PART 1: BOEING MAINTENANCE AND FLIGHT TRAINING

PROGRAMS; OPERATIONS ENGINEERING SUPPORT

1. Boeing Training Programs.

1.1 Boeing will provide maintenance training and flight training programs to support the introduction of a specific model of aircraft into service. The training programs will consist of general and specialized courses and will be described in a Supplemental Exhibit to the applicable purchase agreement.

1.2 Boeing will conduct all training at Boeing’s training facility in the Seattle area unless otherwise agreed.

1.3 All training will be presented in the English language. If translation is required, Customer will provide interpreters.

1.4 Customer will be responsible for all living expenses of Customer’s personnel. Boeing will transport Customer’s personnel between their local lodging and Boeing’s training facility.

2. Training Planning Conferences.

Customer and Boeing will conduct planning conferences approximately 12 months before the scheduled delivery month of the first aircraft of a model to define and schedule the maintenance and flight training programs.

3. Operations Engineering Support.

3.1 As long as an aircraft purchased by Customer from Boeing is operated by Customer in scheduled revenue service, Boeing will provide operations engineering support. Such support will include:

3.1.1 assistance with the analysis and preparation of performance data to be used in establishing operating practices and policies for Customer’s operation of aircraft;

3.1.2 assistance with interpretation of the minimum equipment list, the definition of the configuration deviation list and the analysis of individual aircraft performance;

AGTA-LAN	B
	1-1

3.1.3 assistance with solving operational problems associated with delivery and route-proving flights;

3.1.4 information regarding significant service items relating to aircraft performance or flight operations; and

3.1.5 if requested by Customer, Boeing will provide operations engineering support during an aircraft ferry flight.

4. Training at a Facility Other Than Boeing’s.

If requested by Customer, Boeing will conduct the classroom portions of the maintenance and flight training (except for the Performance Engineer training courses) at a mutually acceptable alternate training site, subject to the following conditions:

4.1 Customer will provide acceptable classroom space, simulators (as necessary for flight training) and training equipment required to present the courses;

4.2 Customer will pay Boeing’s then-current per diem charge for each Boeing instructor for each day, or fraction thereof, that the instructor is away from the Seattle area, including travel time;

4.3 Customer will reimburse Boeing for the actual costs of round-trip transportation for Boeing’s instructors and the shipping costs of training Materials between the Seattle area and the alternate training site;

4.4 Customer will be responsible for all taxes, fees, duties, licenses, permits and similar expenses incurred by Boeing and its employees as a result of Boeing’s providing training at the alternate site or incurred as a result of Boeing providing revenue service training; and

4.5 Those portions of training that require the use of training devices not available at the alternate site will be conducted at Boeing’s facility or at the alternate site.

5. General Terms and Conditions.

5.1 Boeing flight instructor personnel will not be required to work more than 5 days per week, or more than 8 hours in any one 24-hour period, of which not more than 5 hours per 8-hour workday will be spent in actual flying. These foregoing restrictions will not apply to ferry assistance or revenue service training services, which will be governed by the applicable rules and regulations.

5.2 Normal Line Maintenance is defined as line maintenance that Boeing might reasonably be expected to furnish for flight crew training at Boeing’s facility, and will include ground support and aircraft storage in the open, but will not include provision

AGTA-LAN	B
	1-2

of spare parts. Boeing will provide Normal Line Maintenance services for any aircraft while the aircraft is used for flight crew training at Boeing’s facility. Customer will provide such services if flight crew training is conducted elsewhere. Regardless of the location of such training, Customer will be responsible for providing all maintenance items (other than those included in Normal Line Maintenance) required during the training, including, but not limited to, fuel, oil, landing fees and spare parts.

5.3 If the training is based at Boeing’s facility, and the aircraft is damaged during such training, Boeing will make all necessary repairs to the aircraft as promptly as possible. Customer will pay Boeing’s reasonable charge, including the price of parts and materials, for making the repairs. If Boeing’s estimated labor charge for the repair exceeds $25,000, Boeing and Customer will enter into an agreement for additional services before beginning the repair work.

5.4 If the flight training is based at Boeing’s facility, several airports in the states of Washington, Montana and Oregon, as well as the services of the fixed base operator at Grant County Airport at Moses Lake, Washington, may be used. Unless otherwise agreed in the flight training planning conference, it will be Customer’s responsibility to make arrangements for the use of such airports.

5.5 If Boeing agrees to make arrangements on behalf of Customer for the use of airports for flight training, Boeing will pay on Customer’s behalf any landing fees charged by any airport used in conjunction with the flight training. At least 30 days before flight training, Customer will provide Boeing an open purchase order against which Boeing will invoice Customer for any landing fees Boeing paid on Customer’s behalf. The invoice will be submitted to Customer approximately 60 days after flight training is completed, when all landing fee charges have been received and verified. Customer will pay to Boeing within 30 days of the date of the invoice.

5.6 If requested by Boeing, in order to provide the flight training or ferry flight assistance, Customer will make available to Boeing an aircraft after delivery to familiarize Boeing instructor or ferry flight crew personnel with such aircraft. If flight of the aircraft is required for any Boeing instructor or ferry flight crew member to maintain an FAA license for flight proficiency or landing currency, Boeing will be responsible for the costs of fuel, oil, landing fees and spare parts attributable to that portion of the flight. No such flight will be carried out solely for the purpose of enabling a Boeing instructor or ferry flight crew member to maintain their FAA license.

5.7 If any part of the training described in paragraph 1.1 of Part 1 of this Exhibit is not used by Customer within 12 months after the delivery of the last aircraft under the relevant purchase agreement, Boeing will not be obligated to provide such training.

AGTA-LAN	B
	1-3

CUSTOMER SUPPORT DOCUMENT

PART 2: FIELD AND ENGINEERING SUPPORT SERVICES

1. Field Service Representation.

Boeing will furnish field service representation to advise Customer with respect to the maintenance and operation of an aircraft (Field Service Representatives).

1.1 Field Service Representatives will be available at a facility designated by Customer beginning before the scheduled delivery month of the first aircraft and ending 12 months after delivery of the last aircraft covered by a specific purchase agreement.

1.2 Customer will provide, at no charge to Boeing, suitable furnished office space and office equipment at the location where Boeing is providing Field Service Representatives. As required, Customer will assist each Field Service Representative with visas, work permits, customs, mail handling, identification passes and formal introduction to local airport authorities.

1.3 Boeing Field Service Representatives are assigned to various airports around the world. Whenever Customer’s aircraft are operating through any such airport, the services of Boeing’s Field Service Representatives are available to Customer.

2. Engineering Support Services.

Boeing will, if requested by Customer, provide technical advisory assistance for any aircraft and Boeing Product (as defined in Part I of Exhibit C). Technical advisory assistance, provided from the Seattle area or at a base designated by Customer as appropriate, will include:

2.1 Operational Problem Support. If Customer experiences operational problems with an aircraft, Boeing will analyze the information provided by Customer to determine the probable nature and cause of the problem and to suggest possible solutions.

2.2 Schedule Reliability Support. If Customer is not satisfied with the schedule reliability of a specific model of aircraft, Boeing will analyze information provided by Customer to determine the nature and cause of the problem and to suggest possible solutions.

2.3 Maintenance Cost Reduction Support. If Customer is concerned that actual maintenance costs of a specific model of aircraft are excessive, Boeing will analyze information provided by Customer to determine the nature and cause of the problem and to suggest possible solutions.

AGTA-LAN	B
	2-1

2.4 Aircraft Structural Repair Support. If Customer is designing structural repairs and desires Boeing’s support, Boeing will analyze and comment on Customer’s engineering releases relating to structural repairs not covered by Boeing’s Structural Repair Manual.

2.5 Aircraft Modification Support. If Customer is designing aircraft modifications and requests Boeing’s support, Boeing will analyze and comment on Customer’s engineering proposals for changes in, or replacement of, systems, parts, accessories or equipment manufactured to Boeing’s detailed design. Boeing will not analyze or comment on any major structural change unless Customer’s request for such analysis and comment includes complete detailed drawings, substantiating information (including any information required by applicable government agencies), all stress or other appropriate analyses, and a specific statement from Customer of the substance of the review and the response requested.

2.6 Facilities, Ground Equipment and Maintenance Planning Support. Boeing will, at Customer’s request, evaluate Customer’s technical facilities, tools and equipment for servicing and maintaining aircraft, to recommend changes where necessary and to assist in the formulation of an overall maintenance plan.

2.7 Post-Delivery Service Support. Boeing will, at Customer’s request, perform work on an aircraft after delivery but prior to the initial departure flight or upon the return of the aircraft to Boeing’s facility prior to completion of that flight. In that event the following provisions will apply.

2.7.1 Boeing may rely upon the commitment authority of the Customer’s personnel requesting the work.

2.7.2 As title and risk of loss has passed to Customer, the insurance provisions of Article 8.2 of the AGTA apply.

2.7.3 The provisions of the Boeing Warranty in Part 2 of Exhibit C of this AGTA apply.

2.7.4 Customer will pay Boeing for requested work not covered by the Boeing Warranty, if any.

2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 12 of Part 2 of Exhibit C of this AGTA apply.

2.8 Additional Services. Boeing may, at Customer’s request, provide additional services for an aircraft after delivery, which may include retrofit kit changes (kits and/or information), training, maintenance and repair of aircraft. Such additional

AGTA-LAN	B
	2-2

services will be subject to a mutually acceptable price, schedule and scope of work. The DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 12 of Part 2 of Exhibit C of this AGTA and the insurance provisions in Article 8.2 of this AGTA will apply to any such work. Title to and risk of loss of any such aircraft will always remain with Customer.

AGTA-LAN	B
	2-3

CUSTOMER SUPPORT DOCUMENT

PART 3: TECHNICAL INFORMATION AND MATERIALS

1. General.

Materials are defined as any and all items that are created by Boeing or a third party, which are provided directly or indirectly from Boeing and serve primarily to contain, convey or embody information. Materials may include either tangible embodiments (for example, documents or drawings), or intangible embodiments (for example, software and other electronic forms) of information but excludes Aircraft Software. Aircraft Software is defined as software that is installed on and used in the operation of the aircraft.

Boeing will furnish to Customer certain Materials to support the maintenance and operation of the aircraft at no additional charge to Customer, except as otherwise provided herein. Such Materials will, if applicable, be prepared generally in accordance with Air Transport Association of America (ATA) Specification No. 100, entitled “Specification for Manufacturers’ Technical Data”. Materials will be in English and in the units of measure used by Boeing to manufacture an aircraft.

Digitally-produced Materials will, if applicable, be prepared generally in accordance with ATA Specification No. 2100, dated January 1994, “Digital Data Standards for Aircraft Support.”

2. Materials Planning Conferences.

Customer and Boeing will conduct planning conferences approximately 12 months before the scheduled delivery month of the first aircraft of a model in order to mutually determine the proper format and quantity of Materials to be furnished to Customer in support of the aircraft.

When available, Customer may select Boeing standard digital format as the delivery medium or, alternatively, Customer may select a reasonable quantity of printed and 16mm microfilm formats. When Boeing standard digital format is selected, Customer may also select up to 5 copies of printed or microfilm format copies, with the exception of the Illustrated Parts Catalog, which will be provided in one selected format only.

3. Information and Materials - Incremental Increase.

Until one year after the month of delivery of the last aircraft covered by a specific purchase agreement, Customer may annually request in writing a reasonable increase in the quantity of Materials with the exception of microfilm master copies, digital formats,

AGTA-LAN	B
	3-1

and others for which a specified number of copies are provided. Boeing will provide the additional quantity at no additional charge beginning with the next normal revision cycle. Customer may request a decrease in revision quantities at any time.

4. Advance Representative Copies.

All advance representative copies of Materials will be selected by Boeing from available sources. Such advance copies will be for advance planning purposes only.

5. Customized Materials.

All customized Materials will reflect the configuration of each aircraft as delivered.

6. Revisions.

6.1 Revision Service. Boeing will provide revisions free of charge to certain Materials to be identified in the planning conference conducted for a specific model of aircraft, reflecting changes developed by Boeing, as long as Customer operates an aircraft of that model.

6.2 Revisions Based on Boeing Service Bulletin Incorporation. If Boeing receives written notice that Customer intends to incorporate, or has incorporated, any Boeing service bulletin in an aircraft, Boeing will at no charge issue revisions to Materials with revision service reflecting the effects of such incorporation into such aircraft.

7. Computer Software Documentation for Boeing Manufactured Airborne Components and Equipment.

Boeing will provide to Customer a Computer Software Index containing a listing of (i) all programmed airborne avionics components and equipment manufactured by Boeing or a Boeing subsidiary, designed and developed in accordance with Radio Technical Commission for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A dated March 1985, or later as available, and installed by Boeing in aircraft covered by the applicable purchase agreement and (ii) specific software documents (Software Documentation) available to Customer from Boeing for the listed components and equipment.

Two copies of the Computer Software Index will be furnished to Customer with the first aircraft of a model. Revisions to the Computer Software Index applicable to such model of aircraft will be issued to Customer as revisions are developed by Boeing for so long as Customer operates the aircraft.

Software Documentation will be provided to Customer upon written request. The charge to Customer for Software Documentation will be Boeing’s price to reproduce the Software Documentation requested. Software Documentation will be prepared generally

AGTA-LAN	B
	3-2

in accordance with ATA Specification No. 102 revised April 20, 1983, “Specification for Computer Software Manual” but Software Documentation will not include, and Boeing will not be obligated to provide, any code (including, but not limited to, original source code, assembled source code, or object code) on computer sensible media.

8. Supplier Technical Data.

8.1 For supplier-manufactured programmed airborne avionics components and equipment classified as Seller Furnished Equipment (SFE) or Seller Purchased Equipment (SPE) which contain computer software designed and developed in accordance with Radio Technical Commission for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A dated March 1985, or later as available, Boeing will request that each supplier of the components and equipment make software documentation available to Customer in a manner similar to that described in Article 7 above.

8.2 The provisions of this Article will not be applicable to items of BFE.

8.3 Boeing will furnish to Customer a document identifying the terms and conditions of the product support agreements between Boeing and its suppliers requiring the suppliers to fulfill Customer’s requirements for information and services in support of the specific model of aircraft. Customer will be entitled to enforce any such suppliers obligations directly against the supplier and Boeing will provide such assistance in that regard as Customer might reasonable require.

9. Buyer Furnished Equipment Data.

Boeing will incorporate BFE information into the customized Materials providing Customer makes the information available to Boeing at least nine months prior to the scheduled delivery month of Customer’s first aircraft of a specific model. Customer agrees to furnish the information in Boeing standard digital format if Materials are to be delivered in Boeing standard digital format.

10. Materials Shipping Charges.

Boeing will pay the reasonable transportation costs of the Materials. Customer is responsible for any customs clearance charges, duties, and taxes.

11. Customer’s Shipping Address.

The Materials furnished to Customer hereunder are to be sent to a single address to be specified. Customer will promptly notify Boeing of any change to the address.

AGTA-LAN	B
	3-3

CUSTOMER SUPPORT DOCUMENT

PART 4: ALLEVIATION OR CESSATION OF PERFORMANCE

Boeing will not be required to provide any Materials, services, training or other things at a facility designated by Customer if and for as long as any of the following conditions exist:

1. a labor stoppage or dispute in progress involving Customer;

2. wars or warlike operations, riots or insurrections in the country where the facility is located;

3. any condition at the facility which, in the opinion of Boeing, is detrimental to the general health, welfare or safety of its personnel or their families;

4. the United States Government refuses permission to Boeing personnel or their families to enter into the country where the facility is located, or recommends that Boeing personnel or their families leave the country; or

5. the United States Government refuses permission to Boeing to deliver Materials, services, training or other things to the country where the facility is located.

After the location of Boeing personnel at the facility, Boeing further reserves the right, upon the occurrence of any of such events, to immediately and without prior notice to Customer relocate its personnel and their families.

AGTA-LAN	B
	4-1

CUSTOMER SUPPORT DOCUMENT

PART 5: PROTECTION OF PROPRIETARY INFORMATION

AND PROPRIETARY MATERIALS

1. General.

All Materials provided by Boeing to Customer and not covered by a Boeing CSGTA or other agreement between Boeing and Customer defining Customer’s right to use and disclose the Materials and included information will be covered by, and subject to the terms of this AGTA. Title to all Materials containing, conveying or embodying confidential, proprietary or trade secret information (Proprietary Information) belonging to Boeing or a third party (Proprietary Materials), will at all times remain with Boeing or such third party. Customer will treat all Proprietary Materials and all Proprietary Information in confidence and use and disclose the same only as specifically authorized in this AGTA.

2. License Grant.

Boeing grants to Customer a worldwide, non-exclusive, non-transferable (subject to Articles 9.2 and 9.3) license to use and disclose Proprietary Materials in accordance with the terms and conditions of this AGTA. Customer is authorized to make copies of Materials (except for Materials bearing the copyright legend of a third party), and all copies of Proprietary Materials will belong to Boeing and be treated as Proprietary Materials under this AGTA. Customer will preserve all proprietary legends, and all copyright notices on all Materials and insure the inclusion of those legends and notices on all copies.

3. Use of Proprietary Materials and Proprietary Information.

Customer is authorized to use Proprietary Materials and Proprietary Information for the purpose of: (a) operation, maintenance, repair, or modification of Customer’s aircraft for which the Proprietary Materials and Proprietary Information have been specified by Boeing and (b) development and manufacture of training devices for use by Customer.

4. Providing of Proprietary Materials to Contractors.

Customer is authorized to provide Proprietary Materials to Customer’s contractors for the sole purpose of maintenance, repair, or modification of Customer’s aircraft for which the Proprietary Materials have been specified by Boeing. In addition, Customer may provide Proprietary Materials to Customer’s contractors for the sole purpose of developing and manufacturing training devices for Customer’s use. Before providing

AGTA-LAN	B
	5-1

Proprietary Materials to its contractor, Customer will first obtain a written agreement from the contractor by which the contractor agrees (a) to use the Proprietary Materials only on behalf of Customer, (b) to be bound by all of the restrictions and limitations of this Part 5, and (c) that Boeing is a third party beneficiary under the written agreement. Customer agrees to provide copies of all such written agreements to Boeing upon request and be liable to Boeing for any breach of those agreements by a contractor. A sample agreement acceptable to Boeing is attached as Appendix VII.

5. Providing of Proprietary Materials and Proprietary Information to Regulatory Agencies.

When and to the extent required by a government regulatory agency having jurisdiction over Customer or an aircraft, Customer is authorized to provide Proprietary Materials and to disclose Proprietary Information to the agency for use in connection with Customer’s operation, maintenance, repair, or modification of such aircraft. Customer agrees to take all reasonable steps to prevent the agency from making any distribution, disclosure, or additional use of the Proprietary Materials and Proprietary Information provided or disclosed. Customer further agrees to notify Boeing immediately upon learning of any (a) distribution, disclosure, or additional use by the agency, (b) request to the agency for distribution, disclosure, or additional use, or (c) intention on the part of the agency to distribute, disclose, or make additional use of Proprietary Materials or Proprietary Information.

AGTA-LAN	B
	5-2

EXHIBIT C

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LANCHILE S.A.

PRODUCT ASSURANCE DOCUMENT

	This document contains:
Part 1:	Exhibit C Definitions
Part 2:	Boeing Warranty
Part 3:	Boeing Service Life Policy
Part 4:	Supplier Warranty Commitment
Part 5:	Boeing Interface Commitment
Part 6:	Boeing Indemnities against Patent and Copyright Infringement

AGTA-LAN	C
	iii

PRODUCT ASSURANCE DOCUMENT

PART 1: EXHIBIT C DEFINITIONS

Authorized Agent — Agent appointed by Customer to perform corrections and to administer warranties (see Appendix VI to the AGTA for a form acceptable to Boeing).

Average Direct Hourly Labor Rate — is the average hourly rate (excluding all fringe benefits, premium-time allowances, social charges, business taxes and the like) paid by Customer to its Direct Labor employees.

Boeing Product — any system, accessory, equipment, part or Aircraft Software that is manufactured by Boeing or manufactured to Boeing’s detailed design with Boeing’s authorization.

Correct — to repair, modify, provide modification kits or replace with a new product.

Correction — a repair, a modification, a modification kit or a new product.

Corrected Boeing Product — a Boeing Product which is free of defect as a result of a Correction.

Direct Labor — Labor spent by direct labor employees to remove, disassemble, modify, repair, inspect and bench test a defective Boeing Product, and to reassemble, final inspection and reinstall a Corrected Boeing Product.

Direct Materials — Items such as parts, gaskets, grease, sealant and adhesives, installed or consumed in performing a Correction, excluding allowances for administration, overhead, taxes, customs duties and the like.

Source Control Drawing (SCD) — a Boeing document defining specifications for certain Supplier Products.

Supplier — the manufacturer of a Supplier Product.

Supplier Product — any system, accessory, equipment, part or Aircraft Software that is not manufactured to Boeing’s detailed design. This includes but is not limited to parts manufactured to a SCD, all standards, and other parts obtained from non-Boeing sources.

Warranty Inspections — inspections of Boeing Products performed during the warranty period that are recommended by a service bulletin or service letter.

AGTA-LAN	C
	1-1

PRODUCT ASSURANCE DOCUMENT

PART 2: BOEING WARRANTY

1. Warranty Applicability.

This warranty applies to all Boeing Products. Warranties applicable to Supplier Products are in Part 4. Warranties applicable to engines will be provided by Supplemental Exhibits to individual purchase agreements.

2. Warranty.

2.1 Coverage. Boeing warrants that at the time of aircraft delivery:

(i) the aircraft will conform to the Detail Specification except for portions stated to be estimates, approximations or design objectives;

(ii) all Boeing Products in the aircraft will be free from defects in material and workmanship, including process of manufacture;

(iii) all Boeing Products in the aircraft will be free from defects in design, including selection of materials and the process of manufacture, in view of the state of the art at the time of design, and

(iv) the workmanship utilized to install Supplier Products, engines and BFE will be free from defects.

2.2 Exceptions. The following conditions do not constitute a defect under this warranty:

(i) conditions resulting from normal wear and tear;

(ii) conditions resulting from acts or omissions of Customer; and

(iii) conditions resulting from failure to properly service and maintain the aircraft.

3. Warranty Periods.

3.1 Warranty. The warranty period begins on the date of aircraft delivery and expires 48 months thereafter, except for the models of aircraft listed below, for which models the warranty period is 36 months.

36 months

737-300

737-400

737-500

757-200

757-300

767-200

767-300

767-400

747-400

AGTA-LAN	C
	2-1

3.2 Warranty on Corrected Boeing Products. The warranty period applicable to a Corrected Boeing Product, including the workmanship to Correct and install, resulting from a defect in material or workmanship is the remainder of the warranty period for the defective Boeing Product it replaced. The warranty period for a Corrected Boeing Product resulting from a defect in design is 18 months or the remainder of the initial warranty period, whichever is longer. The 18 month period begins on the date of delivery of the Corrected Boeing Product or date of delivery of the kit or kits furnished to Correct the Boeing Product.

3.3 Survival of Warranties. All warranty periods are stated above. The Performance Guarantees will not survive delivery of the aircraft.

4. Remedies.

4.1 Defect Correction. At Customer’s option, Boeing as soon as reasonably practicable will either Correct or reimburse Customer to Correct defects in Boeing Products discovered during the warranty period.

4.2 Warranty Labor Rate. If Customer or its Authorized Agent Corrects a defective Boeing Product, reimbursement to Customer for Direct Labor Hours will be provided at Customer’s established Warranty Labor Rate. Customer’s established Warranty Labor Rate will be the greater of the standard labor rate or 150% of Customer’s Average Direct Hourly Rate. The standard labor rate paid by Boeing to its customers is established and published annually. Prior to or concurrently with submittal of Customer’s first claim for Direct Labor reimbursement, Customer will notify Boeing of Customer’s then-current average direct hourly labor rate, and thereafter notify Boeing of any material change in such rate. Boeing will require information from Customer to substantiate such rates.

AGTA-LAN	C
	2-2

4.3 Warranty Inspections. In addition to the remedies to Correct defects in Boeing Products, Boeing will reimburse Customer for cost of Direct Labor to perform certain inspections of the aircraft to determine whether or not a covered defect exists in a Boeing Product, provided:

4.3.1 the inspections are recommended by a service bulletin or service letter issued by Boeing during the warranty period; and

4.3.2 such reimbursement will not apply to any inspections performed after a Correction is available to Customer.

4.4 Credit Memorandum Reimbursement. Boeing will make all reimbursements by credit memoranda which may be applied toward the purchase of Boeing goods and services.

4.5 Maximum Reimbursement. Unless previously agreed, the maximum reimbursement for Direct Labor and Direct Materials used to Correct ( but not replace) a defective Boeing Product will not exceed 65% of Boeing’s then-current sales price for a new replacement Boeing Product.

5. Discovery and Notice.

5.1 For a claim to be valid:

(i) the defect must be discovered during the warranty period; and

(ii) Boeing Product Assurance Contracts must receive written notice of the discovery no later than 90 days after expiration of the warranty period. The notice must include sufficient information to substantiate the claim in accordance with Article 6.2.

5.2 Receipt of Customer’s notice of the discovery of a defect secures Customer’s rights to remedies under this Exhibit C, whether or not Customer has performed the Correction at the time of the notice.

5.3 Once Customer has given valid notice of the discovery of a defect, claims may be submitted at any time after performance of the Correction.

5.4 Boeing may release service bulletins or service letters advising Customer of the availability of certain warranty remedies. When such advice is provided, Customer will be deemed to have fulfilled the requirements for discovery of the defect and submittal of notice under this Exhibit C as of the date specified in the service bulletin or service letter.

AGTA-LAN	C
	2-3

6. Filing a Claim.

6.1 Authority to File. Claims may be filed by Customer or the Authorized Agent that Customer appoints to act on Customer’s behalf. Such appointment will only be effective upon Boeing’s receipt of the Authorized Agent’s express written agreement, substantially in the form set out in Appendix VI or such other form as is reasonably acceptable to Boeing.

6.2 Claim Information.

6.2.1 Claimant is responsible for providing sufficient information to substantiate Customer’s rights to remedies under this Exhibit C. Boeing may reject a claim for lack of sufficient information if such information was requested but not provided . At a minimum, such information must include:

(i) identity of claimant;

(ii) serial or block number of the aircraft on which the defective Boeing Product was delivered;

(ii) part number of defective Boeing Product;

(iii) purchase order number and date of delivery of a spare part

(iv) description and substantiation of defect; and

(v) date the defect was discovered.

(vi) date the Correction was completed.

6.2.2 Additional information may be required based on the nature of the defect and the remedies requested.

6.3 Boeing Claim Processing.

6.3.1 All claims must be signed and submitted in writing directly by Customer or its Authorized Agent to Boeing Product Assurance Contracts.

6.3.2 Boeing will promptly review the claim and will give notification of claim approval or rejection. If the claim is rejected, Boeing will provide a written explanation.

AGTA-LAN	C
	2-4

7. Limited Warranty for Certain Materials.

7.1 Boeing warrants that, at the time of delivery, all information contained in Materials (as defined in paragraph 1 of Part 3 of Exhibit B) created by Boeing will be correct (although Boeing provides no warranty as to its completeness which Customer hereby acknowledges) and the media in which that Material is conveyed will be free from defects. In the case where such Materials are provided by on-line electronic access, media is the digital format transmitted from Boeing.

7.2 Warranty Periods and Claims. The warranty period with respect to any incorrect Materials created by Boeing or defect in the media in which the Material is conveyed begins at delivery of the Materials and ends 48 months after delivery of the Materials.

The claimed incorrect Material or defect in media must become apparent to Customer within the applicable warranty period, and the Boeing Product Assurance Regional Manager must receive written notice thereof at the earliest practicable time after it becomes apparent to Customer, but in no event later than 90 days after expiration of the applicable warranty period.

7.3 Remedy. Customer’s remedy for any incorrect Material or a defect in media is replacement of the erroneous Materials with correct Materials and/or correction of the defect in media.

8. Corrections Performed by Customer.

8.1 Facilities Requirements. Customer may at its option Correct defective Boeing Products at its facilities or may subcontract Corrections to a third party contractor or an Authorized Agent.

8.2 Technical Requirements. All Corrections done by Customer, a third party contractor or Customer’s Authorized Agent must be performed in accordance with Boeing’s applicable service manuals, bulletins or other written instructions, using parts and materials furnished or approved by Boeing.

8.3 Reimbursement.

8.3.1 Boeing will reimburse for reasonable costs of Direct Materials and Direct Labor (excluding time expended for normal overhaul) at Customer’s Warranty Labor Rate to Correct a defective Boeing Product. Claims for reimbursement must contain sufficient information to substantiate Direct Labor hours expended and Direct Materials consumed. Customer, the third party contractor, or Customer’s Authorized Agent may be required to produce invoices for materials.

8.3.2 Reimbursement for Direct Labor hours to perform Corrections stated in a service bulletin will be based on the labor estimates in the service bulletin.

AGTA-LAN	C
	2-5

8.3.3 Boeing will reimburse Customer for freight charges associated with Corrections performed by a third party contractor or Customer’s Authorized Agent.

8.4 Disposition of Defective Boeing Products Beyond Economical Repair.

8.4.1 Defective Boeing Products that are found to be beyond economical repair will be retained for a period of 60 days from the date Boeing receives Customer’s claim. Boeing may request return of such Boeing Products during the 60 day period for inspection and confirmation of a defect.

8.4.2 After the 60 day period, a defective Boeing Product with a value of U.S. $2000 or less may be scrapped without notification to Boeing. If such Product has a value greater than U.S. $2000, Customer must obtain confirmation of unrepairability by Boeing’s on-site Customer Services Representative prior to scrapping. Confirmation may be in the form of the Representative’s signature on Customer’s claim or through direct communication between the Representative and Boeing Product Assurance Contracts.

9. Corrections Performed by Boeing.

9.1 Freight Charges. Customer will pay shipping charges to return a defective Boeing Product to Boeing. Boeing will reimburse Customer for the charge for any item determined to be defective under this Aircraft General Terms Agreement. Boeing will pay shipping charges to return the Corrected Boeing Product.

9.2 Customer Instructions. The documentation shipped with the returned defective Boeing Product may include specific technical instructions for work to be performed on the Boeing Product. The absence of such instructions will evidence Customer’s authorization for Boeing to proceed to perform all necessary Corrections and work required to return the Boeing Product to a serviceable condition.

9.3 Correction Time Objectives.

9.3.1 Boeing’s objective for making Corrections is 10 working days for avionics and electronic Boeing Products, 30 working days for Corrections of other Boeing Products performed at Boeing’s facilities, and 40 working days for Corrections of other Boeing Products performed at a Boeing subcontractor’s facilities. The objectives are measured from the date Boeing receives the defective Boeing Product and a valid claim to the date Boeing ships the Correction.

9.3.2 If Customer has a critical parts shortage because Boeing has exceeded a Correction time objective and Customer has procured spare Boeing Products for the defective Boeing Product in quantities shown in Boeing’s Recommended Spare Parts List (RSPL), then Boeing will either expedite the Correction or provide a similar Product on a no charge loan or lease basis until a Corrected Boeing Product is returned.

AGTA-LAN	C
	2-6

9.4 Title Transfer and Risk of Loss.

9.4.1 Title to and risk of loss of any Boeing Product returned to Boeing will at all times remain with Customer or any other title holder of such Boeing Product. While Boeing has possession of the returned Boeing Product, Boeing will have only such liabilities as a bailee for mutual benefit would have, but will not be liable for loss of use.

9.4.2 If a Correction requires shipment of a new Boeing Product, then at the time Boeing ships the new Boeing Product, title to and risk of loss for the returned Boeing Product will pass to Boeing, and title to and risk of loss for the new Boeing Product will pass to Customer.

10. Returning an Aircraft.

10.1 Conditions. An aircraft may be returned to Boeing’s facilities for Correction only if:

(i) Boeing and Customer agree a defect exists;

(ii) Customer lacks access to adequate facilities, equipment or qualified personnel to perform the Correction; and

(iii) it is not practical, in Boeing’s estimation, to dispatch Boeing personnel to perform the Correction at a remote site.

10.2 Correction Costs. Boeing will perform the Correction at no charge to Customer. Subject to the conditions of Article 10.1, Boeing will reimburse Customer for the costs of fuel, oil and landing fees incurred in ferrying the aircraft to Boeing and back to Customer’s facilities. Customer will minimize using all reasonable endeavors the length of both flights.

10.3 Separate Agreement. Boeing and Customer will enter into a separate agreement covering return of the aircraft and performance of the Correction. Authorization by Customer for Boeing to perform additional work that is not part of the Correction must be received within 24 hours of Boeing’s request. If such authorization is not received within 24 hours, Customer will be invoiced for work performed by Boeing that is not part of the Correction (unless Customer has instructed Boeing within such 24 hour period not to carry out such additional work).

11. Insurance.

The provisions of Article 8.2 “Insurance”, of the AGTA, will apply to any work performed by Boeing in accordance with Customer’s specific technical instructions, to the extent any legal liability of Boeing is based upon the content of such instructions.

AGTA-LAN	C
	2-7

12. Disclaimer and Release; Exclusion of Liabilities.

12.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND THE REMEDIES OF CUSTOMER IN THIS EXHIBIT C ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, BOEING PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

(A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

(B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

(C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND

(D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT.

12.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, BOEING PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT.

12.3 Definitions. For the purpose of this Article, “BOEING” or “Boeing” is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees and agents.

AGTA-LAN	C
	2-8

PRODUCT ASSURANCE DOCUMENT

PART 3: BOEING SERVICE LIFE POLICY

1. Definitions.

SLP Component — any of the primary structural elements (excluding industry standard parts) of the landing gear, wing, fuselage, vertical or horizontal stabilizer listed in the applicable purchase agreement for a specific model of aircraft that is installed in the aircraft at time of delivery or is purchased from Boeing by Customer as a spare part. The detailed SLP Component listing will be in Supplemental Exhibit SLP1 to each Purchase Agreement.

2. Service Life Policy.

2.1 SLP Commitment. If a failure or defect is discovered in a SLP Component within the time periods specified in Article 2.2 below, Boeing will as soon as reasonable practical, at a price calculated pursuant to Article 3 below, Correct the SLP Component. If any such defect is discovered during an applicable warranty period, then the customer shall be entitled to process a warranty claim under Part 2 of Exhibit C in lieu of any claim under this Service Life Policy.

2.2 SLP Policy Periods.

2.2.1 The policy period for SLP Components initially installed on an aircraft is 12 years after the date of delivery of the aircraft.

2.2.2 The policy period for SLP Components purchased from Boeing by Customer as spare parts is 12 years from delivery of such SLP Component or 12 years from the date of delivery of the last aircraft produced by Boeing of a specific model, whichever first expires.

3. Price.

The price that Customer will pay for the Correction of a defective or failed SLP Component will be calculated pursuant to the following formula:

P =	CT
	144

where:

P =	price to Customer
C =	SLP Component catalog price at time of Correction
T =	total age in months of the defective or failed SLP Component from the date of delivery to Customer to the date of discovery of such condition.

AGTA-LAN	C
	3-1

4. Conditions.

Boeing’s obligations under this Policy are conditioned upon the following:

4.1 Customer must notify Boeing in writing three months after the date of discovery of the defect or failure.

4.2 Customer must provide reasonable evidence that the claimed defect or failure is covered by this Policy and if requested by Boeing on reasonable grounds, that such defect or failure was not the result of (I) a defect or failure in a component not covered by this Policy, (ii) an extrinsic force, (iii) an act or omission of Customer, or (iv) operation or maintenance contrary to applicable governmental regulations or Boeing’s instructions.

4.3 If return of a defective or failed SLP Component is practicable and requested by Boeing, Customer will return such SLP Component to Boeing at Boeing’s expense.

4.4 Customer’s rights and remedies under this Policy are limited to the receipt of a Correction at prices calculated pursuant to Article 3 above.

5. Disclaimer and Release; Exclusion of Liabilities.

This Part 3 and the rights and remedies of Customer and the obligations of Boeing are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 12 of Part 2 of this Exhibit C.

AGTA-LAN	C
	3-2

PRODUCT ASSURANCE DOCUMENT

PART 4: SUPPLIER WARRANTY COMMITMENT

1. Supplier Warranties and Supplier Patent Indemnities.

Boeing will use diligent efforts to obtain warranties and indemnities against patent infringement enforceable by Customer from Suppliers of Supplier Products (except for engines) installed on the aircraft at the time of delivery that were selected and purchased by Boeing, but not manufactured to Boeing’s detailed design. Boeing will furnish copies of the warranties and patent indemnities to Customer in Boeing Document D6-56115, Product Support and Product Assurance Supplier Defined Equipment Information, prior to the scheduled delivery month of the first aircraft under the initial purchase agreement to the AGTA.

2. Boeing Assistance in Administration of Supplier Warranties.

Customer will be responsible for submitting warranty claims directly to Suppliers; however, if Customer experiences problems enforcing any Supplier warranty obtained by Boeing for Customer, Boeing will conduct an investigation of the problem and assist Customer in the resolution of those claims.

3. Boeing Support in Event of Supplier Default.

3.1 If the Supplier defaults in the performance of a material obligation under its warranty, and Customer provides evidence to Boeing that a default has occurred, then Boeing will furnish the equivalent warranty terms as provided by the defaulting Supplier.

3.2 At Boeing’s request, Customer will assign to Boeing, and Boeing will be subrogated to, its rights against the Supplier provided by the Supplier warranty.

AGTA-LAN	C
	4-1

PRODUCT ASSURANCE DOCUMENT

PART 5: BOEING INTERFACE COMMITMENT

1. Interface Problems.

An Interface Problem is defined as a technical problem in the operation of an aircraft or its systems experienced by Customer, the cause of which is not readily identifiable by Customer but which Customer believes to be attributable to the design characteristics of the aircraft or its systems. In the event Customer experiences an Interface Problem, Boeing will, without additional charge to Customer, promptly conduct an investigation and analysis to determine the cause or causes of the Interface Problem. Boeing will promptly advise Customer at the conclusion of its investigation of Boeing’s opinion as to the causes of the Interface Problem and Boeing’s recommendation as to corrective action.

2. Boeing Responsibility.

If Boeing determines that the Interface Problem is primarily attributable to the design of any Boeing Product, Boeing will Correct the design to the extent of any then-existing obligations of Boeing under the provisions of the applicable Boeing Warranty or Boeing Service Life Policy.

3. Supplier Responsibility.

If Boeing determines that the Interface Problem is primarily attributable to the design of a Supplier Product, Boeing will assist Customer in processing a warranty claim against the Supplier.

4. Joint Responsibility.

If Boeing determines that the Interface Problem is partially attributable to the design of a Boeing Product and partially to the design of a Supplier Product, Boeing will seek a solution to the Interface Problem through the cooperative efforts of Boeing and the Supplier and will promptly advise Customer of the resulting corrective actions and recommendations.

5. General.

Customer will, if requested by Boeing, assign to Boeing any of its rights against any supplier as Boeing may require to fulfill its obligations hereunder.

AGTA-LAN	C
	5-1

6. Disclaimer and Release; Exclusion of Liabilities.

This Part 5 and the rights and remedies of Customer and the obligations of Boeing herein are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 12 of Part 2 of this Exhibit C.

AGTA-LAN	C
	5-2

PRODUCT ASSURANCE DOCUMENT

PART 6: BOEING INDEMNITIES AGAINST PATENT

AND COPYRIGHT INFRINGEMENT

1. Indemnity Against Patent Infringement.

Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or alleged patent infringement through Customer’s use, lease or resale of any aircraft or any Boeing Product installed on an aircraft at delivery.

2. Indemnity Against Copyright Infringement.

Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or alleged copyright infringement through Customer’s use, lease or resale of any Boeing created Aircraft Software installed on an aircraft at delivery.

3. Exceptions, Limitations and Conditions.

3.1 Boeing’s obligation to indemnify Customer for patent infringement will extend only to infringements in countries which, at the time of the infringement, were party to and fully bound by either (a) Article 27 of the Chicago Convention on International Civil Aviation of December 7, 1944, or (b) the International Convention for the Protection of Industrial Property (Paris Convention).

3.2 Boeing’s obligation to indemnify Customer for copyright infringement is limited to infringements in countries which, at the time of the infringement, are members of The Berne Union and recognize computer software as a “work” under The Berne Convention.

3.3 The indemnities provided under this Part 6 will not apply to any (i) BFE, (ii) engines, (iii) Supplier Product (iv) Boeing Product used other than for its intended purpose, or (v) Aircraft Software not created by Boeing.

3.4 Customer must deliver written notice to Boeing (i) within 10 days after Customer first receives notice of any suit or other formal action against Customer and (ii) within 20 days after Customer first receives any other allegation or written claim of infringement covered by this Part 6.

3.5 At any time, Boeing will have the right at its option and expense to: (i) negotiate with any party claiming infringement, (ii) assume or control the defense of any infringement allegation, claim, suit or formal action, (iii) intervene in any infringement suit or formal action , and/or (iv) attempt to resolve any claim of infringement by replacing an allegedly infringing Boeing Product or Aircraft Software with a noninfringing equivalent.

AGTA-LAN	C
	6-1

3.6 Customer will promptly furnish to Boeing all information, records and assistance within Customer’s possession or control which Boeing considers relevant or material to any alleged infringement covered by this Part 6.

3.7 Except as required by a final judgment entered against Customer by a court of competent jurisdiction from which no appeals can be or have been filed, Customer will obtain Boeing’s written approval (which shall not be unreasonably withheld if payment is accompanied by a denial of liability and a full reservation of Customer’s and Boeing’s rights) prior to paying, committing to pay, assuming any obligation or making any material concession relative to any infringement covered by these indemnities.

3.8 BOEING WILL HAVE NO OBLIGATION OR LIABILITY UNDER THIS PART 6 FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES. THE OBLIGATIONS OF BOEING AND REMEDIES OF CUSTOMER IN THIS PART 6 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER INDEMNITIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY INFRINGEMENT OR THE LIKE BY ANY AIRCRAFT, BOEING PRODUCT, AIRCRAFT SOFTWARE, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT.

3.9 For the purposes of this Part 6, “BOEING or Boeing” is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents.

AGTA-LAN	C
	6-2

EXHIBIT D

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LANCHILE S.A.

ESCALATION ADJUSTMENT

AIRFRAME AND OPTIONAL FEATURES

(For Model 737-600, 737-700 and 737-800, Airframe

Price Includes the Engine Price)

AGTA-LAN	D
	i

EXHIBIT D

ESCALATION ADJUSTMENT

1. [***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

AGTA-LAN	D
	1

EXHIBIT D-1

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-LAN

between

THE BOEING COMPANY

and

LANCHILE S.A.

ESCALATION ADJUSTMENT

AIRFRAME AND OPTIONAL FEATURES

(For Model 717-200, 737-600, 737-700, 737-800 and 737-900, the Airframe

Price Includes the Engine Price at its basic thrust level.)

AGTA-LAN	D
	i

EXHIBIT D-1

ESCALATION ADJUSTMENT

1. Formula.

Airframe and Optional Features price adjustments (Airframe Price Adjustment); are used to allow prices to be stated in current year dollars at the signing of the applicable purchase agreement and to adjust the amount to be paid by Customer at delivery for the effects of economic fluctuation. The Airframe Price Adjustment will be determined at the time of aircraft delivery in accordance with the following formula:

[***]

“[***]” This information is subject to confidential treatment and has been omitted and filed separately with the commission.

AGTA-LAN	D-1	SA 1
	2

EX-8.1

Exhibit 8.1

Subsidiaries

Legal Name	Place of Incorporation	Doing Business As	Ownership  %1
Lan Argentina S.A.	Argentina	Lan Argentina		94,99	%
Aerolinhas Brasileras S.A.	Brazil	ABSA		73.3326	%
Inmobiliaria Aeronáutica S.A.	Chile	Inmobiliaria Aeronáutica		100,00	%
Inversiones Lan S.A.	Chile	Inverlan		99.71	%
Lan Cargo S.A.	Chile	Lan Chile Cargo		99.8990	%
Lan Pax Group S.A.	Chile	Lan Pax Group		100	%
Transporte Aéreo S.A.	Chile	LanExpress		99,.8990	%
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Ecuador	Lan Ecuador		71.95	%
Aerotransporte Mas de Carga S.A.	Mexico	Mas Air		69.1508	%
Lan Perú S.A.	Peru	Lan Perú		7069.98	%
Lantours División Servicios Terrestres SA	Chile	Comercial MasterhouseLantours		100	%
Línea Aérea Carguera de Colombia S.A.	Colombia	LANCO		89.90	%
Aerovías de Integración Regional S.A.	Colombia	AiresLan Colombia		98.2221	%

1 Percentage of equity owned by Lan Airlines S.A. directly or indirectly through subsidiaries or affiliates

EX-12.1

Exhibit 12.1

CEO Certification

I, Enrique Cueto Plaza, certify that:

1. I have reviewed the annual report on Form 20-F of Lan Airlines S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 2, 2012

/s/ Enrique Cueto Plaza

Name: Enrique Cueto Plaza

Title: Chief Executive Officer

EX-12.2

Exhibit 12.2

CFO Certification

I, Alejandro de la Fuente Goic, certify that:

1. I have reviewed the annual report on Form 20-F of Lan Airlines S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 2, 2012

/s/ Alejandro de la Fuente Goic

Name: Alejandro de la Fuente Goic

Title: Chief Financial Officer

EX-13.1

Exhibit 13.1

Officer Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Lan Airlines S.A. (the “Company”), does hereby certify to such officer’s knowledge that:

The annual report on Form 20-F for the year ended December 31, 2011, (the “Form 20-F”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 2, 2012	/s/ Enrique Cueto Plaza
	Name: Enrique Cueto Plaza
	Title: Chief Executive Officer
Dated: April 2, 2012	/s/ Alejandro de la Fuente Goic
	Name: Alejandro de la Fuente Goic
	Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form F-3 (No. 333-142665) of LAN Airlines S.A. of our report dated February 14, 2012 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.

/s/ PricewaterhouseCoopers

Santiago, Chile

April 2, 2012

PricewaterhouseCoopers, Av. Andrés Bello 2711 – Pisos 2, 3, 4y5, Las Condes – Santiago, Chile

RUT: 81.513.400-1 – Teléfono: (56) (2) 940 0000 – www.pwc.cl