Argentina’s government buys back flag carrier Aerolineas Argentinas from private firm

Friday, September 5, 2008, 8:07 by Aviation Correspondent

Argentina is to bring back the troubled Aerolineas Argentinas, the country’s flag-carrier airline, under state control.

The move to buy back Aerolineas Argentinas, which was sold to the private sector 18 years ago, is a part of the government of Argentina’s efforts to expand its presence in key sectors, according to media reports.

Argentina’s Senate approved the nationalisation of Aerolineas Argentinas and its subsidiary airline, Austral Líneas Aereas, in a 46-21 vote. The ruling Peronist party of Argentina and its allies passed the measure after over 10 hours of debate.

Lawmakers made a change in the original Bill to remove any mention of re-privatising Aerolineas Argentinas in the future.

Argentina’s lower house had, in August 2008, approved the re-nationalisation measure, which requires that the state hold a majority of company shares.

Now the Senate has approved the outlines of an agreement that the Argentine government reached with Spanish travel group Marsans in July 2008 to buy all the shares that Marsans holds in Aerolineas Argentinas and its Austral unit.

According to the government, Aerolineas Argentinas is overstaffed, heavily unionised and over half its ageing fleet of 67 planes are grounded.

Aerolineas Argentinas, the largest domestic and international airline in Argentina, accounts for 83% of Argentina’s domestic airr traffic and over 50% of international flights from Ministro Pistarini International Airport, located in Ezeiza, Buenos Aires. Aerolíneas Argentinas and LAN Airlines are the only Latin American airlines that fly to Oceania.

Austral Líneas Aereas, based in Buenos Aires, Argentina, is the sister company of Aerolíneas Argentinas and the second largest domestic scheduled airline in Argentina. Its main base is Aeroparque Jorge Newbery in Buenos Aires.

The government of Argentina and the Spanish travel group Marsans are still negotiating a price for the country’s biggest airline, media reports said.

Argentina’s President Cristina Fernandez was quoted by the media as saying that the state had no option but to buy out Marsans because “the heavily indebted airline was behind on salary payments.”

Aerolineas Argentinas and Austral Lineas Aereas, which together operate about 80% of Argentina’s domestic flights, employ some 9,000 workers.

The two carriers compete with LAN Airlines, based in Santiago, Chile. (LAN Airlines, the principal airline of Chile and one of the largest airlines in South America, operatees flights to Latin America, United States, Canada, the Caribbean, Oceania, and Europe.)

Aerolineas Argentinas was on the brink of bankruptcy in 2001 when Marsans bought it from a group controlled by the Spanish government. Aerolineas was first privatised in 1990, according to the airline’s website.

In August 2008, Argentina’s Secretary of Transportation had charged the Spanish travel group Marsans with “draining” Aerolineas Argentinas. He had insisted that the government need not have to pay anything for the airline, which was estimated to have debts amounting to about $900 million (£505 million).