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LAN fighting eviction from Argentine airport

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MICHAEL WARREN | August 21, 2013 08:47 PM EST | AP

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BUENOS AIRES, Argentina — Latin America's largest airline said Wednesday that an Argentine government order to vacate its hangar at the downtown Buenos Aires airport would force it to stop operating domestic flights in the country and that it was seeking a court injunction to block the eviction.

LATAM Airlines' subsidiary, LAN Argentina, said it has invested $5 million on the maintenance hangar at Aeroparque Jorge Newbery, and pays $20,000 a month in rent under a contract that runs through 2023.

The airport regulator's eviction notice doesn't explain the state takeover other than declaring it to be "in the national interest." The notice says the government offered to help move LAN's domestic flights to Argentina's main international airport in the Buenos Aires suburb of Ezeiza, but the company refused.

The Ezeiza airport is much less convenient for domestic flights than Aeroparque, and would add hours to any domestic trip for many residents of the capital. If LAN stops using Aeroparque and ends domestic flights, the money-losing state airline Aerolineas Argentinas would be free to operate without its toughest competitor.

"We'll go to the courts to enforce our rights," Agustin Agraz, LAN's spokesman, told Argentina's Diarios y Noticias agency. He said the eviction order would make it impossible to maintain 10 jets that currently fly within Argentina, and would put 1,500 employees out of work.

The union representing airline cabin staff and technicians warned that it would use "all union and legal means" available if the move brought job cuts.

The union said that since 2010, LAN "has been the object of systematic persecution by different state organs and businesses to make things difficult for it and cause its services to deteriorate by raising costs."

"If the Argentine government is bothered" that Aerolineas Argentinas and its domestic subsidiary Austral must compete against LAN Argentina, "it should be an honest rival in costs, prices and services," the union said.

The head of Aerolineas Argentinas, Hector Recalde, denied the union's accusations. "There is a conflict that has to do with other things and the hangar is being used as an excuse," he said.

He said LAN has held a privileged position in the domestic market and the Argentine government is now looking for a system "that is a bit more just in its proportional distribution and priority given Aerolineas Argentinas as Argentina's airline."

Calls asking for comment by Argentina's national airports regulator were not returned.