Chile's dominant carrier LAN Airlines said on Monday it is in talks to acquire or form an alliance with Argentina's Southern Winds airlines.

LAN has flights to Argentina, but has been trying for more than a year to create a subsidiary airline in the country.

"LAN, as it has expressed, maintains its interest in entering the Argentine market and it is analyzing different alternatives, such as associating with a local airline, the formation of a new company with local associates and the open skies policy," the company said in a statement.

"In this context, the company has engaged in conversations with Argentina's government and Southern Winds," it said.

LAN considered buying a stake in small Argentina airline American Falcon, but those talks broke off in June.

LAN was interested in the airline because of its hangars, maintenance facilities and operating rights. LAN is looking to establish a unit and a hub in Argentina as part of a strategy to expand in Latin America.

The company has affiliate airlines in the Dominican Republic, Ecuador and Peru and flies to Europe, Australia and throughout the Americas.

Southern Winds has been in the news recently in connection with a drug trafficking scandal that broke in September when 130 pounds (60 kg) of cocaine traveling as unaccompanied baggage arrived in Madrid on a Southern Winds flight.

The company launched an internal investigation in October, and last month the head of operations at Buenos Aires' Ezeiza Airport, also a Southern Winds employee, was fired after being named as suspect in the case.

Last week, LAN posted a 35 percent jump in quarterly net profit, to USD$47.6 million in fourth-quarter 2004 from USD$35.2 million the same quarter a year before, after seeing its passenger revenue rise 26 percent and cargo revenue go up 32 percent.