MercoPress. South Atlantic News Agency

LAN Readies Expansion into Colombian and Brazilian Markets

The Chilean flag carrier has affiliates in Ecuador, Peru and Argentina

Chile's flagship carrier LAN Airlines S.A. (NYSE:LFL) is looking to enter the Colombian domestic passenger market by helping Colombia’s Aeroasis S.A. obtain the necessary permits to operate in the country, Chief Executive Enrique Cueto said on Thursday.

If those permits are obtained, LAN (NYSE:LFL) has an option to buy Aeroasis and make it part of its company, the Chilean carrier's president, Jorge Awad, told reporters on the sidelines of a conference. LAN currently has hubs in Chile, Peru, Argentina and Ecuador.

As part of the airline's growth plans, CEO Enrique Cueto said the company will continue to diversify its routes and also its passenger-to-cargo mix. Between now and 2018, the company will invest 5.5 billion USD to increase its passenger and cargo fleet. LAN will increase its fleet from 96 planes in 2009 to 176 in 2018. As part of its expansion plans, LAN will purchase 26 Boeing 787-8 Dreamliner passenger jets and lease another six from Boeing (NYSE:BA).

Despite losses caused by the February earthquake in Chile that closed down Santiago’s main airport for over a week, LAN managed to increase its net profit to 88 million USD in the first quarter of 2010 from 65 million the same period a year ago.

Cueto also anticipated that LAN aims to “deepen” its relationship with TAM Airlines (NYSE:TAM), Brazil’s biggest airline. “Finding a partner in Brazil is an important step for LAN,” said Cueto. “We have a very good alliance with TAM and we would like to deepen it with them or with Gol (NYSE:GOL).”

LAN and TAM signed a code-sharing alliance in 2007 to expand their Latin American flight coverage. LAN is seeking to enter the Brazilian market that is forecasted to grow as much as 18% this year. Brazilian law restricts foreign ownership of airlines, forcing LAN to seek a partnership with a Brazilian company. LAN is Latin America’s biggest carrier by market value.