UPDATE 2-Chile's Pinera begins LAN stake sale process
* To propose LAN stake sale at Feb. 5 shareholder meeting
* Pinera LAN stake seen worth around $1.5 bln
* Pinera has vowed to sell all LAN shares before March 11
* Cueto family to discuss capital increase (Updates with Cueto family to discuss capital increase)
By Alvaro Tapia and Antonio de la Jara
SANTIAGO, Jan 20 (Reuters) - Chile's president-elect, billionaire Sebastian Pinera, on Wednesday set the ball rolling on the sale of his 26.3 percent stake in flagship airline LAN LAN.SN(LFL.N).
Chile's Axxion AXX.SN, Pinera's main holding company, said it would call a shareholder meeting for Feb. 5 to propose the sale of his major stake. [ID:nN18182024].
The Cueto family, which also has a major stake in LAN, has the first option to buy Pinera's stake, and its Costa Verde Aeronautica holding company on Wednesday set its own shareholder meeting for Feb. 5 to discuss a capital increase.
Pinera has already placed hundreds of millions of dollars worth of investments in a blind trust to dispel fears of conflicts of interest while serving as president, and has vowed to sell all his shares in LAN before taking office on March 11.
Pinera was elected president on Sunday, ending two decades of center-left rule since the end of Gen. Augusto Pinochet's dictatorship in 1990. [ID:nN18164836]
"The board of Axxion has agreed to call an extraordinary shareholder meeting for Feb. 5 ... to propose to shareholders ... the sale of part or all of the shares Axxion holds in LAN Airlines," Axxion said in a statement to the Santiago bourse.
Shares in Chile's Axxion surged on Wednesday in speculative trade ahead of the sale of Pinera's LAN stake sale. [ID:nN20130963]
Shares in LAN LAN.SN (LFL.N), which have soared in recent weeks, fell 2.31 to 8,196 pesos per share on Wednesday amid continued uncertainty over how Pinera will sell his major stake at the top carrier.
Shares in Axxion AXX.SN closed 52.94 percent higher at 26 pesos a share after rising as much as 70 percent earlier in the session.
"Everybody is trying to guess at what's going to happen with Pinera's block of LAN," said Allan Becker, a trader at the CorpCapital brokerage.
Trading in Axxion was suspended on Tuesday after surging 21.43 percent to 17 pesos per share, but the stock exchange allowed the shares to resume trade on Wednesday morning.
The share was again briefly suspended late on Wednesday to give the market time to read the shareholder meeting announcement.
Axxion said on Tuesday it believed the sharp gains were due to the market's perception of Pinera's presidential win on Sunday. (With reporting by Aaron Nelsen. Writing by Simon Gardner; editing by Carol Bishopric)