Chile's dominant airline, LAN, said on Wednesday it agreed to purchase 25 A318 and A319 Airbus planes for USD$750 million as it expands its regional and domestic fleets.

Santiago-based LAN said its board had also authorized the option to buy 15 additional planes.

"The new airplanes will operate flights in Latin America, including domestic routes in Argentina, Peru and Chile, supporting the international growth of the company," LAN said in a statement.

LAN has expanded aggressively in recent years and in May saw passenger traffic rise 18.9 percent compared with the same month last year.

The company said the new planes would be incorporated into its fleet beginning in the second half of 2006 and were meant to help replace its Boeing 737-200s. The company already has 19 of the new, A318 and A319 Airbus planes in its fleet.

Last week LAN was awarded new air passenger and cargo flights to and through the coveted Brazil market.