LAN To Buy Argentina's Aero 2000

March 21, 2005

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Chile's dominant carrier, LAN Airlines, said on Monday it and a group of Argentine investors have agreed on the conditions to jointly purchase small Argentine airline Aero 2000, which does not currently operate.

The estimated investment is not a significant amount, LAN said in a statement published on the web site of Chile's securities regulatory agency, the Securities and Insurance Superintendency.

LAN has flights all over the Americas, including Argentina, as well as to Europe and to Australia, and has affiliate airlines in Peru, the Dominican Republic and El Salvador.

The Chilean airline has been seeking to buy into a small Argentine airline for some time, in order to form an affiliate and a hub in the neighboring country.

Earlier this month LAN signed an agreement with the Argentine government to take on 860 workers of Argentine government airline LAFSA, which has no airplanes, when it buys into a local airline.

But employees of LAFSA, which was created by the Argentine government to rescue the jobs of workers at two broke private airlines, have protested the entry of LAN Airlines, saying the government is turning over the local market to foreigners.

The Argentine airlines market is dominated by Aerolineas Argentinas, which is controlled by Spanish travel group Marsans.