LAN Airlines

Marshall Steele, Michelle Daigle, Samantha Frankel, Jorge Torres,

Corey Woloschin

Introduction to Chile

• Official Name: Republic of Chile• Declared independence on February

12, 1818 from Spain• Current President: Sebastián Piñera• Founding member of the U.N.

Chile’s Economy• Produces more than 1/3 of

the world’s copper• In 2006, Chile became the

country with the highest nominal GDP per capita in Latin America

• Income inequality is very high

• Ease of business rank is 49th out of 183 economies

History of LAN• Founded by Chilean Air Services

commander Arturo Merino Benitez

• Began operations on March 5, 1929

• Merged with Ladeco in 1998– Became Latin American Network

Airlines• Voted in 2008 as the 3rd best

airline in the world and the best airline in South America

International Influence• Largest airline in Chile and operates

domestically in Peru and other Latin American countries

• Compromised of multiple different segments that serve different locations.– LAN Airlines, LAN Express, LAN Peru,

LAN Ecuador, and LAN Argentina • Also has many international flights

to the US, Europe, and Latin America• Member of Oneworld (TM), the

world's leading global airline alliance– Includes eleven of the world's biggest

and best airlines

Industry

• Regularly scheduled intercontinental flights• Oligopoly

– many barriers to entry which inhibit new entrants• increases industry attractiveness

– relative power of consumers• consumers can shop on price• gives them power

• Competition- a few large businesses that service the same area– TAM: Brazil’s largest airline company

• Provides domestic and international travel• Also in Oneworld Alliance

– Aerolineas Argentinas• Out of Argentina service to South American countries

Opportunities and Challenges

• Need to comply with legislation and policies– subject to special regulations

• Planes must meet safety regulations– Employees must know all safety procedures

• Challenges to minimize impact on environment- – Preserving natural resources while preventing

pollution– Reducing waste that results from their activities

Interest to Business and Engineering

• Provides engineering and business jobs

• Very profitable industry• Provides other

businesses with domestic and international transportation

Global/National Environment• Politics

– President Piñera owned a large stake in LAN prior to election• Criticized for his delay in

selling them• Finally sold all shares, raised

$1.5 billion• Possible tax misconduct

• Environment– Earthquakes can shut down

flights, affect economy

Global/National Environment (cont.)• Economy

– Aircraft Industry due to bounce back after rough decade• Terrorist attacks• Increasing fuel prices• More environmental

regulations

• Technology– Inaugural Aircraft Industry

Fair this March– Information Technology deal

with IBM

Engineering Principles

Getting The Product• The LAN fleet is composed of Boeing and Airbus planes, which are

created at their factories.• Materials are delivered by air, land, and sea to the manufacturing

plant where the parts are made and put together• Include aluminum, hydraulic fluid, composites, glass, wiring,

sensors, lighting, and engine parts• Companies like Boeing and Airbus put all these materials together

into a plane

Boeing 777s being assembled An Airbus 318 under construction

Engineers at LAN

• Aerospace Engineers– Design and oversee construction

of planes• Flight Engineers– Inspect planes, check and

operate instruments during flight, plan and record fuel consumption

• Mechanics– Repair planes between flights

Safety Concerns• Engine failure, equipment failure, cabin

depressurization– Engineers must design structurally and

mechanically reliable planes• Turbulence, poor weather conditions– Engineers must compensate for flight variables

Questions for LAN

• What does the company do to mitigate environmental concerns?

• What technological improvements are they working towards?

• How do they benefit from the Oneworld Alliance?

• Do you plan on expanding further internationally?

Questions for Students

• What attractions should we make sure to see?• How do you view America and its people?• What is the night life like in Chile?• What are they looking to do after they

graduate?• What is your favorite time of year in Chile?• Have you ever left Chile or visited America?