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LAN and TAM announce intention to combine



Investor Presentation
August 13, 2010
Forward Looking Statements

This presentation contains forward-looking statements, including with respect to the negotiation, implementation and
effects of the proposed combination. Such statements may include words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “would” or other similar expressions. Forward-looking statements are statements that
are not historical facts, including statements about our beliefs and expectations.

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 and uncertainties include in particular those described in the documents we have filed with the U.S.
Securities and Exchange Commission. 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.

ADDITIONAL INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION AND WHERE TO FIND IT:
This presentation relates to a proposed business combination between Lan Airlines S.A. (“LAN”) and TAM S.A., which will become the subject of a registration statement and prospectus to be
filed with the SEC by LAN and a new entity to be formed in connection with the combination. This presentation is not a substitute for the registration statement, prospectus and offering
materials that LAN and the new entity will file with the SEC or any other documents that they may file with the SEC or send to shareholders in connection with the proposed combination.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROSPECTUS, EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT
DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
BUSINESS COMBINATION. All such documents, if filed, would be available free of charge at the SEC’s website (www.sec.gov) or by directing a request to LAN, through Gisela Escobar
Koch, at 56-2-565-3944 or by e-mail at gisela.escobar@lan.com , or through Jorge Helito, at 55-11-5582-9715 or by e-mail at jorge.helito@tam.com.br .




                                                                                                                                                                                        | 2
Evolving global context has created the opportunity for a Latin American leader to
emerge

     ▪ The world is consolidating
       – International players are consolidating, either through mergers or broad anti-trust
         agreements
       – These airlines are looking at Latin America for growth


     ▪ Regional consolidation creates the opportunity for a Latin American carrier to
       enter on an equal footing with the world leaders
       – Creation of a world-class Latin American carrier
       – World-class Latin American carrier would have a strong presence in all major home
         markets across Latin America
       – Increased importance to the global alliance picture


     ▪ LAN and TAM have the opportunity to create this global champion
       – Leading home market positions across Latin America
       – Shared focus on creating value for investors, caring service for customers and
         opportunities for employees

                                                                                           | 3
Two local leaders = one global champion
    Extensive route network
      – Complementary networks with little overlap
      – Existing relationship on codeshare flights, maintenance and
         aircraft purchasing
      – Seamless travel throughout the region and beyond
      – Increased cargo capacity, frequency and destinations

    Unparalleled service in the region

    Combination expected to generate estimated annual
     synergies of US ~$400M

    Shared focus on building shareholder value, providing
     world-class service to customers and benefits to employees

    Provides opportunities for the group to grow faster and
     increase profits

    Strongest frequent flyer program in the region


                                                                      | 4
This is the right time for TAM and LAN


                                     Unique opportunity to lead Latin America – one
                                      of the fastest growing regions in the world

                                     Economic growth and improving consumer
                                      disposable income are accelerating demand for
                                      competitive transportation product offerings in
                                      the region

                                     Current environment provides the opportunity to
                                      build a continental leader unparalleled across
                                      Latin America, as well as a strong global presence

                                     Both have solid financial and operating positions




                                                                                           | 5
Corporate structure

                                                                  All stock transaction – TAM Shareholders
                                                                   offered newly issued shares of LAN
                 LATAM Chairman of the Board
                     Mauricio Rolim Amaro
                                                                  Structure designed to comply with foreign
                                                                   ownership restrictions, including Brazil 20%
                         LATAM CEO
                         Enrique Cueto                             foreign ownership restriction

                                                                  Economic alignment of all shareholders while
                                                                   the Amaro family would retain majority voting at
                                                                   TAM subject to veto rights
                                         TAM SA Chairman
                                         Maria Cláudia Amaro
           LAN CEO                         TAM SA CEO
         Ignacio Cueto                     Marco Bologna              No change of control at either TAM
                                                                                  nor LAN
                                    TAM Linhas Aereas CEO
                                        Líbano Barroso

  Plus affiliates                 Plus affiliates
       LAN Peru                        TAM Mercosur
       LAN Argentina                   Multiplus
       LAN Ecuador
       LAN Cargo                                                                                              | 6
Transaction overview
                            Deal terms                                                  Corporate governance
    On Friday August 13th, a non-binding MOU was signed                Organization model will be based on the balance of two
     outlining their intentions to combine their holdings into the       principles:
     leading Latin American airline group                                  – BU heads operating as CEOs with real autonomy to
    TAM shareholders are to receive 0.90 shares in LAN for                    run the business
     each TAM share                                                        – Group structure/processes designed to ensure
                                                                               integration, full synergy capture and optimization
                                                                        Shareholders agreements will govern relations among the
                                                                         two companies and the controlling shareholders




                       Corporate structure                                               Business operations
    LAN would be the holding vehicle of the combined                   Each entity would retain its own brand and independent
     operations, along with changing its name to LATAM                   operations
    LATAM would be listed in New York, Santiago and Sao                TAM will continue to operate in Brazil and Paraguay, and
     Paulo                                                               LAN will continue to operate in Chile, Argentina, Peru, and
                                                                         Ecuador
                                                                        Carriers would build a comprehensive passenger and
                                                                         cargo network

                                                                                                                              | 7
LAN and TAM today



  Operational           Passengers (millions)                            30.4      15.4

                        Destinations                                         63     70

                        Countries served                                     14     17

                        Employees (thousands)                            26.3      17.7

                        Aircraft                                             143    98

                        Aircraft orders                                      90+    121

                        2009 ASKs (billions)                             64.7      38.8

                        Tons (thousands)                                     183    649

   Financial            2009 Revenue (USD billions)                          4.9    3.7

                        2009 EBITDAR margin                             14.0%      22.5%



   Note: Most recent figures except for financials and ASK (as of Dec 2009)                 | 8
Combined, LATAM will be among the leading airlines in the world

  The Top 15 passenger airlines in revenue                           The Top 15 passenger airlines in passengers
  USD Billions, 2009                                                 Millions, 2009

 1 Lufthansa Group                                              31   1    Delta                                    161
     Air France-KLM Group                                      30         United-CO                        102
     United - CO                                              29          Southwest                       86
      Delta                                                   28          American                        86
 5 AMR Corporation                                       20          5    Air France-KLM              71
     BA - Iberia                                         19               Lufthansa                   70
      JAL                                           16                    China Southern             66
     ANA Group                                     13                     Ryanair                    65
     Qantas                                       11                      BA - Iberia            52
 10 US Airways                                 10                    10   US Airways            51
     Southwest                                 10                         LATAM                 46
     Singapore Air Group                      9                           China Eastern        44
     Cathay Pacific                           9                           JAL                  41
     Air Canada                               9                           Air China           40
 15 LATAM                                    9                       15   Qantas              38


SOURCE: Company reports for LAN and TAM, Airline Business                                                        | 9
LATAM will have an extensive passenger network offering


 Five key flows in the combined
 network
 1    Key domestic markets
 2    Regional Latin America           3
                                                                   4
 3    North and Central America
 4    Europe
 5    South Pacific/Australia              1
                                               1           2
                                                               1
                                                   1

                                   5                                      Operated by LAN only
                                                   1   1
                                                                          Operated by TAM only
                                                                          Operated by both carriers*

       South America + Domestics         US and Canada                 Europe and Rest of World
             102 Destinations             6 Destinations                   12 Destinations
               10 Countries                2 Countries                       11 Countries
         +1200 Daily Departures        ~19 Daily Departures              ~14 Daily Departures
     Source: OAG                                                                                       | 10
LAN cargo expertise + TAM market opportunity = cargo growth
LAN’s global and diversified cargo network…          …with TAM’s Brazilian market presence

                                   Europe to South
     North America to                 America
        South America




          Regional (intra) South
             America                                     Brazil is the largest domestic cargo market in
                                                          Latin America
                                                         TAM offers significant strengths
                                                           – Domestic widebody network
                                                           – Existing cargo operation
                                                           – Strong and growing European network

                                                                                                           | 11
LATAM would offer an unparalleled level of service in the region
  Revenue                                                                              Destinations
  USD Billions, 2009                                                                   Number of cities, as of today
    $8.5                                                                                   116

                                                                                                         62       58
                 $3.5
                             $2.6                                                                                           51
                                         $1.3


   LAN-TAM      GOL        Avianca-    Copa                                              LAN-TAM        GOL    Avianca-   Copa
                           Taca                                                                                Taca

 EBITDAR                                                                               Passengers
 USD Millions, 2009                                                                    Millions, 2009

   $1,505                                                                                 45.8


                                                                                                        28.4
                $690
                             $400        $320                                                                    11.3
                                                                                                                            5.6


   LAN-TAM      GOL        Avianca-    Copa                                             LAN-TAM         GOL    Avianca-   Copa
                           Taca (E)                                                                            Taca




SOURCE: Company 20-F filings, Airline Business, + IR presentation, Company websites.                                              | 12
LATAM would be the clear #1 within South America and co-leader on routes to/from the
 U.S. and Canada
                   Current capacity
                   Millions of seats per month

                                  1.6                      1.4                 1.1
        100%
                                 Other                                      Others
                                                         Others
                                 Pluna
                                                                                     Alitalia
            80                Aerolineas                Avianca      Avianca
                                                       United and     Lufthansa and Swiss
                                 GOL                   Continental
                                                                     4th    LATAM
            60
                                                          Delta
                               Avianca
                                                                             TAP
            40                                   2nd     LATAM
                                                                           Air France
                                                                           and KLM
                          1st LATAM
            20
                                                       American        British Airways
                                                                          and Iberia
             0
                         Intra South America       US and Canada            Europe

NOTE: International non-stop segments                                                           | 13
SOURCE: OAG as of July 2010
And would have the ability to grow into new markets




                                                              3                                     Future growth
                                             2                                                     would result in
                                                                                                    the creation of
                                                                     1                                 jobs and
                                                                                                      economic
                                                          4                                        growth in Brazil
                                                                                                      and rest of
                                                                                                    Latin America




   Four primary growth areas for the network initially…
    1   Brazil to Europe/Africa             Increased Southern cone feed to support new service to Europe
    2   Lima to North/Central Am.           Increased Brazil feed supports new service to US and Mexico
    3   New hubs                            Potential new hubs could connect to Europe and US
    4   Cargo                               Combination of LAN’s expertise and TAM’s footprint
                                                                                                                  | 14
Provides opportunities for the group to grow faster and increase profits

   ▪ Faster top-line growth
     - Enhances ability to launch new flights
     - Increases alternatives for passenger
       and cargo customers, capturing new
       customers


   ▪ Improved cost competitiveness
     - Leverages economies of scale
     - Benefits from best practice sharing
     - Operational coordination in
       international markets


   ▪ Enhanced strategic positioning
     - Creates the leading Latin American
       carrier
     - Better able to compete with other
       global carriers
                                                                           | 15
The transaction is expected to generate estimated annual synergies of US ~$400M


     Annual synergies Break-Down              Highlights


       100% =       US$ ~400M                  Estimated total synergies of ~4% of combined revenues
                                                (in line with other recent industry transactions)
                  Cargo Revenue                Management expects to implement approximately one
                      $110M                     third of the synergies within the first year, largely
                                                offsetting one time costs
                                               All synergies would be implemented by the end of the
                   Pax Revenue                  third year
                      $170M                    Potential integration risks should be mitigated by the
                                                complementary nature of networks
                                               Synergy values do not include other potential benefits,
                      Costs                     such as expansion of domestic cargo and sharing of
                      $120M                     best practices in domestic passenger business units




                                                                                                         | 16
Detailing the estimated US ~$400M in synergies

             Revenue: Cargo ~$110M, Pax ~$170M                                                    Cost ~$120M
Synergy         Value                                                     Synergy       Value
source          US$ Millions         Rationale                            source        US$ Millions   Rationale


 Cargo                         110   New service, sharing of best         Airports          25         Consolidation of functions in
                                     practices                                                         overlapping stations

                                     Improved access to joint hubs and
 Network                                                                                               Leveraging economies of scale in
                        50           combined network appeal              Procurement       25
 relevance                                                                                             contracts
                                     (especially to high yield)

 New and                             Combined network creates new city
                                                                                                       Streamlining of corporate overhead
 increased             40            pairs and increased service          Corporate        20
                                                                                                       and some functions
 connectivity


 New                                 Combined network supports new                                     Efficiencies of common IT platforms
                       35            flights and hubs                     IT               20
 flights


 Other                               Including consolidation of partner
                                                                                                       Leveraging economies and
 passenger             35            airline contracts and increased      Maintenance     15
                                                                                                       efficiencies of scale
 revenue                             utilization


 Frequent                            Consolidation of the programs and                                 Efficiency of combined sales efforts
                  10                                                      Sales           15
 flyer                               sharing of best practices
                                                                                                                                       | 17
Committed to a superior customer experience




                                          ▪ More destinations and greater
                                            schedule options

                                          ▪ LATAM would serve more than 115
                                            destinations in 23 countries

                                          ▪ More opportunities to earn and
                                            redeem miles in the strongest frequent
                                            flyer program in the region

                                          ▪ Sharing of customer service best
                                            practices




                                                                                     | 18
The combination would also benefit employees


    More career opportunities
      - Access to new stations across the
        combined network
      - Fast growing airline with over 200
        airplanes on order
    Improved job stability from our
     enhanced ability to compete with global
     leaders
    Pride in creating a global leader that
     would drive economic growth
     throughout the region
    Both airlines will continue to fly with
     their current certificates, relying on
     their respective pilots and flight
     attendants


                                               | 19
LATAM would have the strongest frequent flyer program in the region




     As of the end of 2009, Fidelidade had ~7M and LANPASS ~4M members
     Going forward, combining Fidelidade and LANPASS would provide a strong starting position to gain
      further scale in the region
     We anticipate that the new combined frequent flyer program would drive customer loyalty, business
      growth and ancillary revenue streams




                                                                                                          | 20
LATAM: creating the world-class global airline group for Latin America

       Latin American leader with major strategic and economic benefits for employees,
        customers and shareholders


       LATAM would have pro-forma combined revenues of US $8.5B (as of year-end
        2009), serving more than 115 destinations, and would become one of the most
        valuable airlines worldwide


       Complementary assets and market positions expected to contribute to a stronger
        competitive position for the company, and further growth through new
        destinations and more flights


       Synergies as a part of the arrangement are expected to save US ~$400M annually,
        ~1/3 of which are expected to be implemented by the end of year one, largely
        offsetting one-time costs

                                                                                          | 21
LAN and TAM announce intention to combine



Investor Presentation
August 13, 2010

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LAN + TAM = LATAM Airlines

  • 1. LAN and TAM announce intention to combine Investor Presentation August 13, 2010
  • 2. Forward Looking Statements This presentation contains forward-looking statements, including with respect to the negotiation, implementation and effects of the proposed combination. Such statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “would” or other similar expressions. Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. 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 and uncertainties include in particular those described in the documents we have filed with the U.S. Securities and Exchange Commission. 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. ADDITIONAL INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION AND WHERE TO FIND IT: This presentation relates to a proposed business combination between Lan Airlines S.A. (“LAN”) and TAM S.A., which will become the subject of a registration statement and prospectus to be filed with the SEC by LAN and a new entity to be formed in connection with the combination. This presentation is not a substitute for the registration statement, prospectus and offering materials that LAN and the new entity will file with the SEC or any other documents that they may file with the SEC or send to shareholders in connection with the proposed combination. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROSPECTUS, EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION. All such documents, if filed, would be available free of charge at the SEC’s website (www.sec.gov) or by directing a request to LAN, through Gisela Escobar Koch, at 56-2-565-3944 or by e-mail at gisela.escobar@lan.com , or through Jorge Helito, at 55-11-5582-9715 or by e-mail at jorge.helito@tam.com.br . | 2
  • 3. Evolving global context has created the opportunity for a Latin American leader to emerge ▪ The world is consolidating – International players are consolidating, either through mergers or broad anti-trust agreements – These airlines are looking at Latin America for growth ▪ Regional consolidation creates the opportunity for a Latin American carrier to enter on an equal footing with the world leaders – Creation of a world-class Latin American carrier – World-class Latin American carrier would have a strong presence in all major home markets across Latin America – Increased importance to the global alliance picture ▪ LAN and TAM have the opportunity to create this global champion – Leading home market positions across Latin America – Shared focus on creating value for investors, caring service for customers and opportunities for employees | 3
  • 4. Two local leaders = one global champion  Extensive route network – Complementary networks with little overlap – Existing relationship on codeshare flights, maintenance and aircraft purchasing – Seamless travel throughout the region and beyond – Increased cargo capacity, frequency and destinations  Unparalleled service in the region  Combination expected to generate estimated annual synergies of US ~$400M  Shared focus on building shareholder value, providing world-class service to customers and benefits to employees  Provides opportunities for the group to grow faster and increase profits  Strongest frequent flyer program in the region | 4
  • 5. This is the right time for TAM and LAN  Unique opportunity to lead Latin America – one of the fastest growing regions in the world  Economic growth and improving consumer disposable income are accelerating demand for competitive transportation product offerings in the region  Current environment provides the opportunity to build a continental leader unparalleled across Latin America, as well as a strong global presence  Both have solid financial and operating positions | 5
  • 6. Corporate structure  All stock transaction – TAM Shareholders offered newly issued shares of LAN LATAM Chairman of the Board Mauricio Rolim Amaro  Structure designed to comply with foreign ownership restrictions, including Brazil 20% LATAM CEO Enrique Cueto foreign ownership restriction  Economic alignment of all shareholders while the Amaro family would retain majority voting at TAM subject to veto rights TAM SA Chairman Maria Cláudia Amaro LAN CEO TAM SA CEO Ignacio Cueto Marco Bologna No change of control at either TAM nor LAN TAM Linhas Aereas CEO Líbano Barroso Plus affiliates Plus affiliates LAN Peru TAM Mercosur LAN Argentina Multiplus LAN Ecuador LAN Cargo | 6
  • 7. Transaction overview Deal terms Corporate governance  On Friday August 13th, a non-binding MOU was signed  Organization model will be based on the balance of two outlining their intentions to combine their holdings into the principles: leading Latin American airline group – BU heads operating as CEOs with real autonomy to  TAM shareholders are to receive 0.90 shares in LAN for run the business each TAM share – Group structure/processes designed to ensure integration, full synergy capture and optimization  Shareholders agreements will govern relations among the two companies and the controlling shareholders Corporate structure Business operations  LAN would be the holding vehicle of the combined  Each entity would retain its own brand and independent operations, along with changing its name to LATAM operations  LATAM would be listed in New York, Santiago and Sao  TAM will continue to operate in Brazil and Paraguay, and Paulo LAN will continue to operate in Chile, Argentina, Peru, and Ecuador  Carriers would build a comprehensive passenger and cargo network | 7
  • 8. LAN and TAM today Operational  Passengers (millions) 30.4 15.4  Destinations 63 70  Countries served 14 17  Employees (thousands) 26.3 17.7  Aircraft 143 98  Aircraft orders 90+ 121  2009 ASKs (billions) 64.7 38.8  Tons (thousands) 183 649 Financial  2009 Revenue (USD billions) 4.9 3.7  2009 EBITDAR margin 14.0% 22.5% Note: Most recent figures except for financials and ASK (as of Dec 2009) | 8
  • 9. Combined, LATAM will be among the leading airlines in the world The Top 15 passenger airlines in revenue The Top 15 passenger airlines in passengers USD Billions, 2009 Millions, 2009 1 Lufthansa Group 31 1 Delta 161 Air France-KLM Group 30 United-CO 102 United - CO 29 Southwest 86 Delta 28 American 86 5 AMR Corporation 20 5 Air France-KLM 71 BA - Iberia 19 Lufthansa 70 JAL 16 China Southern 66 ANA Group 13 Ryanair 65 Qantas 11 BA - Iberia 52 10 US Airways 10 10 US Airways 51 Southwest 10 LATAM 46 Singapore Air Group 9 China Eastern 44 Cathay Pacific 9 JAL 41 Air Canada 9 Air China 40 15 LATAM 9 15 Qantas 38 SOURCE: Company reports for LAN and TAM, Airline Business | 9
  • 10. LATAM will have an extensive passenger network offering Five key flows in the combined network 1 Key domestic markets 2 Regional Latin America 3 4 3 North and Central America 4 Europe 5 South Pacific/Australia 1 1 2 1 1 5 Operated by LAN only 1 1 Operated by TAM only Operated by both carriers* South America + Domestics US and Canada Europe and Rest of World 102 Destinations 6 Destinations 12 Destinations 10 Countries 2 Countries 11 Countries +1200 Daily Departures ~19 Daily Departures ~14 Daily Departures Source: OAG | 10
  • 11. LAN cargo expertise + TAM market opportunity = cargo growth LAN’s global and diversified cargo network… …with TAM’s Brazilian market presence Europe to South North America to America South America Regional (intra) South America  Brazil is the largest domestic cargo market in Latin America  TAM offers significant strengths – Domestic widebody network – Existing cargo operation – Strong and growing European network | 11
  • 12. LATAM would offer an unparalleled level of service in the region Revenue Destinations USD Billions, 2009 Number of cities, as of today $8.5 116 62 58 $3.5 $2.6 51 $1.3 LAN-TAM GOL Avianca- Copa LAN-TAM GOL Avianca- Copa Taca Taca EBITDAR Passengers USD Millions, 2009 Millions, 2009 $1,505 45.8 28.4 $690 $400 $320 11.3 5.6 LAN-TAM GOL Avianca- Copa LAN-TAM GOL Avianca- Copa Taca (E) Taca SOURCE: Company 20-F filings, Airline Business, + IR presentation, Company websites. | 12
  • 13. LATAM would be the clear #1 within South America and co-leader on routes to/from the U.S. and Canada Current capacity Millions of seats per month 1.6 1.4 1.1 100% Other Others Others Pluna Alitalia 80 Aerolineas Avianca Avianca United and Lufthansa and Swiss GOL Continental 4th LATAM 60 Delta Avianca TAP 40 2nd LATAM Air France and KLM 1st LATAM 20 American British Airways and Iberia 0 Intra South America US and Canada Europe NOTE: International non-stop segments | 13 SOURCE: OAG as of July 2010
  • 14. And would have the ability to grow into new markets 3 Future growth 2 would result in the creation of 1 jobs and economic 4 growth in Brazil and rest of Latin America Four primary growth areas for the network initially… 1 Brazil to Europe/Africa Increased Southern cone feed to support new service to Europe 2 Lima to North/Central Am. Increased Brazil feed supports new service to US and Mexico 3 New hubs Potential new hubs could connect to Europe and US 4 Cargo Combination of LAN’s expertise and TAM’s footprint | 14
  • 15. Provides opportunities for the group to grow faster and increase profits ▪ Faster top-line growth - Enhances ability to launch new flights - Increases alternatives for passenger and cargo customers, capturing new customers ▪ Improved cost competitiveness - Leverages economies of scale - Benefits from best practice sharing - Operational coordination in international markets ▪ Enhanced strategic positioning - Creates the leading Latin American carrier - Better able to compete with other global carriers | 15
  • 16. The transaction is expected to generate estimated annual synergies of US ~$400M  Annual synergies Break-Down  Highlights 100% = US$ ~400M  Estimated total synergies of ~4% of combined revenues (in line with other recent industry transactions) Cargo Revenue  Management expects to implement approximately one $110M third of the synergies within the first year, largely offsetting one time costs  All synergies would be implemented by the end of the Pax Revenue third year $170M  Potential integration risks should be mitigated by the complementary nature of networks  Synergy values do not include other potential benefits, Costs such as expansion of domestic cargo and sharing of $120M best practices in domestic passenger business units | 16
  • 17. Detailing the estimated US ~$400M in synergies Revenue: Cargo ~$110M, Pax ~$170M Cost ~$120M Synergy Value Synergy Value source US$ Millions Rationale source US$ Millions Rationale Cargo 110 New service, sharing of best Airports 25 Consolidation of functions in practices overlapping stations Improved access to joint hubs and Network Leveraging economies of scale in 50 combined network appeal Procurement 25 relevance contracts (especially to high yield) New and Combined network creates new city Streamlining of corporate overhead increased 40 pairs and increased service Corporate 20 and some functions connectivity New Combined network supports new Efficiencies of common IT platforms 35 flights and hubs IT 20 flights Other Including consolidation of partner Leveraging economies and passenger 35 airline contracts and increased Maintenance 15 efficiencies of scale revenue utilization Frequent Consolidation of the programs and Efficiency of combined sales efforts 10 Sales 15 flyer sharing of best practices | 17
  • 18. Committed to a superior customer experience ▪ More destinations and greater schedule options ▪ LATAM would serve more than 115 destinations in 23 countries ▪ More opportunities to earn and redeem miles in the strongest frequent flyer program in the region ▪ Sharing of customer service best practices | 18
  • 19. The combination would also benefit employees  More career opportunities - Access to new stations across the combined network - Fast growing airline with over 200 airplanes on order  Improved job stability from our enhanced ability to compete with global leaders  Pride in creating a global leader that would drive economic growth throughout the region  Both airlines will continue to fly with their current certificates, relying on their respective pilots and flight attendants | 19
  • 20. LATAM would have the strongest frequent flyer program in the region  As of the end of 2009, Fidelidade had ~7M and LANPASS ~4M members  Going forward, combining Fidelidade and LANPASS would provide a strong starting position to gain further scale in the region  We anticipate that the new combined frequent flyer program would drive customer loyalty, business growth and ancillary revenue streams | 20
  • 21. LATAM: creating the world-class global airline group for Latin America  Latin American leader with major strategic and economic benefits for employees, customers and shareholders  LATAM would have pro-forma combined revenues of US $8.5B (as of year-end 2009), serving more than 115 destinations, and would become one of the most valuable airlines worldwide  Complementary assets and market positions expected to contribute to a stronger competitive position for the company, and further growth through new destinations and more flights  Synergies as a part of the arrangement are expected to save US ~$400M annually, ~1/3 of which are expected to be implemented by the end of year one, largely offsetting one-time costs | 21
  • 22. LAN and TAM announce intention to combine Investor Presentation August 13, 2010