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LAN Airlines SA

LAN Airlines is ‘window shopping’ for acquisitions

Nathan Gill and James Attwood  Nov 23, 2009

Lan Airlines SA, Latin America’s biggest air carrier by market value, is “window shopping” for mergers and acquisitions as its Latin American passenger traffic recovers, Chief Operating Officer Ignacio Cueto said.

“We are looking at all the possibilities around -- we are window shopping,” Cueto said today in an interview at a conference in Santiago. “There is nothing concrete.”

The Santiago-based airline is seeking to expand its presence in Latin America as the region’s economies emerge from the global slump. The International Monetary Fund last month reiterated its forecast for regional growth of 2.9 percent in 2010, after an expected 2.6 percent decline this year.

Lan’s passenger traffic has increased in the past two months while cargo traffic is recovering “very slowly,” said Cueto, whose family controls Lan through an agreement with billionaire Chilean investor and presidential candidate Sebastian Pinera. Chief Executive Officer Enrique Cueto said in May that Lan was interested in forming an alliance with a partner “north of Ecuador.”

The Cueto family may buy some of Pinera’s stake if his presidential bid is successful over the next two months, Ignacio Cueto said. The first round of elections is slated for Dec. 13. Pinera, leading the center-right coalition, said in April that he was taking advice on how to sell his stake in Lan and placed shares of other companies he owns in a blind trust.


Lan has gained 35 percent this year, compared with a 38 percent advance for Chile’s main stock index. Lan slid 1.2 percent to 7,389 pesos today in Santiago trading.

Lan’s financial position is “adequate” enough to engage in acquisitions, which would allow it to increase regional market share, said Adolfo Moreno, an analyst at IM Trust, which this month reiterated Lan as its top pick among Chilean stocks.

“It wouldn’t surprise me that we could have news about something like this,” Moreno said.

Aerovias del Continente Americano SA, Colombia’s biggest airline, said last month that parent Synergy Aerospace Corp. will control a holding company that includes El Salvador’s Taca, forming Latin America’s largest network of air routes.

“It’s a time when the competition is consolidating,” said Ruben Catalan, an analyst who covers Lan for brokerage BCI Corredor de Bolsa SA in Santiago. “Companies are looking to increase their efficiencies through combining their operations.”

LAN Airlines is ‘window shopping’ for acquisitions
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