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Business isn’t good at LAN Airlines (LFL) but it is getting better.

On January 26, 2010 the Chilean airline, which accounts for nearly 75% of Chile’s domestic air passenger traffic, reported fourth quarter net income of $109.8 million. That was an increase of 17.6% from the very depressed fourth quarter of 2008. In the third quarter of 2009 net income fell by 37% from the third quarter of 2008.

System passenger traffic for December increased 10.6% . Capacity climbed by 7.8%. That took the load factor up 1.9 percentage points to 76.7%.

For the full year LAN’s net income fell by 31%.

Total revenue in the fourth quarter declined to $1.07 billion from $1.11 billion in the fourth quarter of 2008 on a 1.6% decline in passenger revenue and a 10.7% drop in cargo revenue. Passenger revenue makes up 71% of total revenue. For the full 2009 year revenue declined by 14.7% from 2008.

Look out for some for some volatility in the stock as winning presidential candidate Sebastian Pinera carries out his promised sale of his 26% stake in LAN Airlines before he takes office on March 11.

 A recent sell-off in the Chilean peso, which hit a four week low on January 25, had sent the stock lower this year by 5.7%  until it rallied by almost 1.7% on the earnings news.

The stock is a member of my long-term Jubak Pick’s 50. If you’ve been looking to add shares of this play on rising air travel in Latin America (besides Chile, LAN services Peru, Ecuador, and Argentina) and on rising exports to the United States (LAN operates a big air cargo facility in Miami), this volatility might provide a good buying opportunity. For more on why you want to increase your exposure to emerging market stocks such as LAN Airlines see my post http://jubakpicks.com/2009/11/24/how-to-escape-the-next-lost-decade/ )

Full disclosure: I own shares of LAN Airlines in my personal portfolio.