LAN Peru Sued Over Damage to the South American Nation´s Image

Peru said it was suing a unit of Chilean airline LAN for an in-flight video depicting Lima as a dump and would formally protest to Santiago over reported arms sales to Peru´s enemy in a 1990s conflict.

The cases escalated a diplomatic spat between the South American neighbors and trade partners which have been at odds off-and-on since Chile claimed a chunk of Peru in a 19th century war.

"The Peruvian state will file a lawsuit against LAN Peru and seek compensation for the damage caused by the airing of this video," Prime Minister Carlos Ferrero told a news conference. He did not disclose how much it was seeking.

LAN Peru -Peru´s top airline and a unit of Chilean flag-carrier- said the board accepted the resignation of three senior executives, including the commercial director, at an extraordinary session on Friday.

The movie, intended to promote adventure tourism, included images several years old of a man urinating in the street and a road strewn with litter. Lawmakers said it showed Peru as a "pigsty" and protesters on Thursday smashed the glass doors of a LAN Peru office with stones.

The company apologized profusely for the blunder and swiftly withdrew the film, which it acknowledged had been aired on all LAN flights before company officials even watched it.

But Peru was incensed by comments from Chile´s Foreign Minister Ignacio Walker suggesting the affair could be a storm in a teacup.