LAN suspends flights in Argentina over conflict

BUENOS AIRES, Argentina (AP) -- Hundreds of passengers remained stranded at Argentina's airports on Friday after LAN Airlines S.A. temporarily suspended all domestic and international flights over a dispute with a state-owned company that is the country's sole handler of passenger luggage.

The local branch of LATAM Airlines Group said all its flights in Argentina are suspended at least until Saturday because Intercargo refuses to transfer passengers on buses to and from airplanes, clean the planes and unload cargo and luggage.

"Intercargo is not letting flights leave from any airport in the country," Agustin Agraz, LAN's corporate-affairs manager told local television. "We're negotiating with the company so they allow us to get back in service."

LAN says Intercargo is breaching its contract and is demanding a payment of $6.6 million. Intercargo says LAN pays 40 percent less than other carriers for the service they provide and is demanding more after a recent order by the civil aviation authority.

"No other company has benefitted as much in recent years," Intercargo said in a statement.

LATAM was created when Chile's LAN took over Brazil's TAM last year.

The carrier reported this week that its first quarter net profit dropped by nearly half from the same period last year on lower cargo revenue, sudden changes in foreign exchange and the grounding since January of three Boeing 787 Dreamliners in LAN's fleet.