Chile LAN Suspends Santiago-Toronto Flights On High Oil Prices

Chile's flagship carrier LAN Airlines will suspend non-stop flights between Santiago and Toronto starting in early April because of rising crude oil prices, a company spokeswoman said Friday, confirming a local newspaper report.

Late last month, the company said it will increase ticket prices for its international routes between 8% and 12% because of high oil prices, which are trading above $100 per barrel for the first time in two years.

Rising turmoil in the Middle East and North Africa, including U.S. and allied military operations in Libya, have pushed crude prices higher. Light, sweet crude for May delivery settled at $105.60 a barrel on the New York Mercantile Exchange and Brent crude on the ICE futures exchange settled at $115.72 a barrel Thursday.

"Currently, rising fuel prices is an important factor to consider," said LAN according to daily newspaper El Mercurio.

The Chilean airline added that "given the importance of the Canadian market for our clients, LAN assures its clients that the service [to Toronto] will remain available through affiliated oneworld alliance airlines, connecting in New York, Miami, Los Angeles and San Francisco."

The oneworld airline alliance includes LAN, British Airways, a unit of International Consolidated Airlines Group SA (IAG.LN, IAG.MC), AMR Corp.'s (AMR) American Airlines, Cathay Pacific Airways Ltd. (0293.HK) and Qantas Airways Ltd. (QAN.AU).

A shortage of long-range aircraft also influenced LAN's decision to suspend non-stop flights between Santiago and Toronto, El Mercurio said. The company spokeswoman, however, declined to comment on this.

LAN is in the process of merging with Brazilian TAM SA (TAM, TAMM4.BR), although the Chilean antitrust court's review of the merger will likely delay the creation of Latin America's largest airline until at least the fourth quarter.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929; [e-mail]