* Pinera's Axxion approves LAN stake sale
* Axxion board must fix sale share price
* Cueto family has 20 days to decide on purchase (Recasts, adds details, background, byline)
By Antonio de la Jara
SANTIAGO, Feb 5 (Reuters) - Chilean President-elect Sebastian Pinera on Friday approved a plan to sell his majority stake in flagship carrier LAN LAN.SN (LFL.N), worth an estimated $1.5 billion, at a shareholder meeting of his main holding company Axxion AXX.SN.
Pinera had vowed to sell his total 26.3 percent stake in LAN, which is held in his holding companies Axxion and Santa Cecilia, before taking office on March 11 after winning last month's presidential run-off.
LAN is one of Latin America's biggest airlines.
Under the terms of a shareholder pact, Axxion's board must now fix the price of the sale. The Cueto family, which has the first option to purchase the stake, has 20 days to decide how much of it they will buy.
The Cueto family, which holds the second-biggest investment in LAN, at 25.5 percent, via its Costa Verde Aeronautica holding company, is expected to take a significant slice of the stake and possibly even all of it.
Costa Verde Aeronautica's shareholders are due to hold a shareholder meeting later on Friday to decide on a capital increase aimed at funding their purchase at part or all of Pinera's stake.
Shares in LAN were 1.8 percent weaker on Friday at 8.620 pesos each, broadly in line with wider bourse losses of around 1.7 percent on the back of sovereign debt fears in Europe.
"Axxion is part of a shareholder pact under which the sale of the shares of LAN is subject to a first option of purchase by Costa Verde Aeronautica," Axxion said in a statement.
Axxion holds a 19.03 percent stake in the airline, with another Pinera holding company, Santa Cecilia, owning an additional 7.3 percent. The two holding companies would coordinate the sale of their combined stakes, Axxion added.
Pinera will place the funds raised from the stake sale in a blind trust, his holding company said last month.
Under a blind trust, a third party manages investments without any involvement or influence of the investor.
Pinera has already placed hundreds of millions of dollars worth of investments in a blind trust, seeking to counter critics who said his business empire poses conflicts of interest with the role of president. (With reporting by Fabian Cambero, Alsono Soto, Rodrigo Martinez, Simon Gardner, editing by Dave Zimmerman)