LAN Airlines S.A.‘s Board of Directors has decided to modify the accounting policy governing LAN’s aircraft maintenance expenses, following a recommendation from management, which was analyzed and ratified by the Company’s external auditors. This change is driven by the growth LAN’s fleet and operations have experienced in recent years. It aligns the Company’s accounting policy related to aircraft maintenance with that of other major international carriers.
The new policy will be effective retroactively from January 1, 2006. The change will generate a US$40.3 million non-operating, non-recurrent pre-tax benefit during the first quarter of 2006, due to the elimination in provisions constituted using the previous method. The change in accounting policy is expected to generate a US$2 million positive impact in operating results for the full year 2006.