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Chile’s Lan Seeks Airline Partner, Traffic Expansion

By Nathan Gill and James Attwood
May 7 (Bloomberg) -- Lan Airlines SA, Chile’s biggest air carrier, is interested in forming an alliance with a partner “north of Ecuador,” Chief Executive Officer Enrique Cueto said.

Lan hasn’t reached any agreements and is looking for new markets to expand its cargo and passenger business, Cueto told reporters at a conference in Santiago today.

“We have interest and will continue looking to try and find partners with an airline north of Ecuador,” Cueto said.

Airline alliances provide benefits such as
booking fliers on each other’s planes, which can extend carriers’ networks without the expense of a merger. Lan said last week that first-quarter profit fell 35 percent to $65 million, damped by $57.9 million in costs from wrong-way bets on fuel prices.

Cueto said passenger capacity would rise 10 percent this year while cargo capacity falls 5 percent. Santiago-based Lan wants to fly cargo in Brazil and start passenger service in Colombia, Cueto said.

With fuel prices falling since last year, the airline will offer 2-for-1 travel packages to overcome customers’ reluctance to fly during a recession, Cueto said. The global swine flu outbreak won’t affect Lan’s cash flow, he said.

“A crisis for us is normal,” Cueto said in a speech at the conference. The airline industry “lives in crisis.”


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