SANTIAGO -(Dow Jones)- Chilean flagship carrier LAN Airlines SA (LFL, LAN.SN) expects its Colombian operations to break even by 2012, the company's chief financial officer said Wednesday

During the first half of 2011, LAN will focus on "recovering profitability" at Aires, the Chilean carrier's CFO, Alejandro de la Fuente said during a conference call to discuss fourth quarter earnings and the company's outlook.

LAN, one of Latin America's largest airlines, purchased Aires, Colombia's second largest airline, in the fourth quarter last year. Aires has a 22% market share in Colombia and owns 24 planes, including nine Boeing Co. (BA) B737-700s.

In the longer-term, LAN is evaluating operating international routes from Colombia, de la Fuenta added.

LAN, which has domestic operations in Chile, Argentina, Ecuador and Peru and is in the process of merging with Brazilian airline TAM SA (TAM, TAMM4.BR), saw fourth-quarter net income surge 49.9% on the year to $164.6 million as its passenger and cargo businesses continued to expand.

De la Fuente also pointed out that costs associated with LAN's wages and benefits grew 29.7% on the year in the fourth quarter to $229 million, on increased headcount and the appreciation of local currencies.

Chile's peso was trading at a 31-month high against the dollar in December.

Regarding LAN's merger with TAM, de la Fuente reiterated that the merger will likely be complete within six to nine months, adding that it is subject to the approval of antitrust authorities in Chile and Brazil.

With LAN and TAM's combined revenue of $8.5 billion in 2009, the merger will place the newly-formed regional giant, called Latam Airlines Group, among the top 15 airlines in the world and make it Latin America's largest airline operator

Additionally, LAN will invest $1.02 billion to incorporate 19 new aircraft this year, bringing its total fleet to 150 planes.

The expansion plan, however, assumes the delay of the delivery of two Boeing 787 Dreamliners, which are now expected for delivery in 2012, de la Fuente said.

Boeing said earlier this month that it now plans to deliver its first 787 Dreamliner sometime in the third quarter, more than three years behind schedule.

LAN said it would likely not be the first airline to get delivery of the Dreamliner.

Finally, LAN agreed to sell its Blue Express Intl. SA and Blue Express SA land courier units to Chilean holding company Bethia for $54 million.

Bethia holds an indirect 8% stake in LAN, as well as a 12.5% stake in the nation's largest department store SACI Falabella (FALABELLA.SN).

Bethia, controlled by members of the local Solari family, earlier this year bought President Sebastian Pinera's Axxion SA holding company (AXXION.SN) for $425 million and through it acquired the LAN stake.

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