The majority owners of Uruguayan flagship airline Pluna have started looking for a potential airline partner to invest in a second round of financing, company president Matias Campiani said Wednesday.

"We have until June next year to complete this process," Campiani told Dow Jones Newswires in an interview.

Campiani also heads investment group Leadgate, which bought a 75% stake in Pluna in April 2007 from the Uruguayan government, which retains 25% of the airline. The two parties agreed to invest at least $12 million by June 2010, and the government has said it will invest at least $3 million to maintain its current position.

Leadgate can contribute its share itself, but is seeking out an airline partner which would contribute know-how and experience, Campiani said. Leadgate is imitating the model used successfully by Panamanian airline COPA Holdings SA (CPA), which partnered with Continental Airlines (CAL), he said.

"An airline can provide much more than just money," including advice on fuel management and security, Campiani said.

Campiani said he's talking to a number of airlines from around the world but declined to name them, saying "it's really very early." They're focused on regional operators, rather than the major international carriers, as there'd be more of a fit with Pluna's model, he said.

One airline mentioned by local press in Uruguay as a possible candidate was Canada's Jazz Air LP. Manon Stuart, Jazz's corporate communications manager, said Jazz conducted exploratory discussions last year but nothing was ever negotiated, and "nothing is scheduled in the foreseeable future."

Under any circumstances, Leadgate would retain control of Pluna, he said.

Leadgate has been running the company for two "traumatic" years, in which significant changes have been introduced after almost 25 years of the same operating model, Campiani said.

The firm has done away with the hodgepodge of aircraft Pluna used, which was costly in terms of equipment, replacement and training, and replaced them with seven brand new CRJ-900 aircraft of Canada's Bombardier (BBD.B.T), with 90 seats in a single configuration.

Pluna, which has an option on eight more CRJ-900s, is the first airline in South America to sign up with Bombardier, and hopes that its head start could allow it to provide maintenance and training for any other airlines that may eventually buy that type of aircraft, he said.

Leadgate also set about revising Pluna's business model. Uruguay, with just over 3 million inhabitants, isn't a large enough market to support an airline, so Pluna has turned its home base, capital city Montevideo, into a hub, encouraging passengers to connect through there to reach other regional destinations.

Pluna flies to Buenos Aires and Cordoba in Argentina, Rio de Janeiro, Sao Paulo and Curitiba in Brazil, Santiago in Chile, and Asuncion in Paraguay, Campiani said. It has agreements with American Airlines, a unit of AMR Corp. (AMR), to fly passengers to the U.S. and with Spain's Iberia (IBLA.MC) to target Europe, Campiani said.

The airline has sought to extend operations within Argentina but has met some resistance, and recently failed to secure a license to operate out of Trelew, in the southern province of Chubut, Campiani said.

Given those hurdles, it's looking instead to open up routes through Paraguay, which doesn't have its own airline and could become another hub for Pluna, Campiani said. The company is about to start a direct flight between Asuncion and Santiago, the airline's first route which won't go through Montevideo.

Pluna turned profitable in November 2008 and had the most lucrative summer season in its history between December and February, he said. Pluna's crown jewel during the summer is the Uruguayan seaside resort of Punta del Este, a regional destination.

The company ended the first half of the year in the black, although the economic slowdown and a major swine flu outbreak in Argentina have raised the risks for the second year.

The traditional pickup in passenger activity in June and July, ahead of southern-hemisphere winter holidays, didn't materialize this year, Campiani said. Travel to Argentina has been especially weak, exacerbated by the Brazilian government's warning against travel to its neighbor to the southwest.

"We hope this passes quickly. Hopefully from September the situation will start to normalize," he said.

-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740; matthew.cowley@dowjones.com