[Rferguson2]

Argentina has just elected a new President who is also ultra libertarian.

One of the first economic decisions he has revealed is that he plans for the government to relinquish Aerolineas Argentinas and hand it ‘to the workers’ which he likely means unions.

In an interview with Argentinian news outlet Clarin the new Pres stated (translated from Spanish to English)

“Our idea is to hand it over to the employees and for them to do the purification themselves and begin to compete in an open skies policy. Airline personnel are very qualified personnel, the problem lies in political contamination”

The main union of the airline has replied in rival news outlet La Nacion and basically says that Aerolineas cannot exist without government support:

“Give the company to the workers, it would be the death certificate for airlines, because what he proposed was to hand over the company to the workers, declare open skies and withdraw state contributions. And this company cannot function without contributions from the State.”

“A black night is coming for the country led by this man who we believe has some type of mental illness and the unfortunate thing is that people have voted for him.”

The new Pres has a point. Since the Argentinian govt took control of Aerolineas in 2008 it has lost around US$8b with the airline not being profitable at any point of the ownership.

It looks like Aerolinas may go in the same direction as the former brasilian carrier VARIG.

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transtraxman, AndrewinHK, cwoodward

[AndrewinHK]

Milei has a point, as is almost always the case, state-supported companies are inherently inefficient, the state cannot in perpetuity support loss-making endeavors, and it isn’t as if Aerolineas is a cheap airline, a 45-minute flight from Buenos Aires to Montevideo, one way in Y, often goes for in excess of 250 GBP. The private sector will move in and replace Aerolineas if it truly can’t survive without a government put.

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cwoodward, Rferguson2

[BackOfThePlane]

Argentina is a very large country with some isolated destinations that might need government ‘support’ when it comes to transport links. For the most part however, I would say that Aerolineas Argentinas is beyond saving, such is its entrenched culture of depending on the state for its survival. This an opportunity for a country to be brave and open up its aviation market to anyone and everyone with NO limits on foreign ownership.

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transtraxman, Rferguson2

[Rferguson2]

I can see this going down the line of what we have seen before in the likes of Brazil, or Switzerland for example.

National carrier wound down (ie Varig or Swissair).

Smaller, leaner carrier that operates limited services in the country without government support or huge union issues (ie TAM, Crossair) moves in and picks up the bits they can make profitable.

The only aspect I do not understand is why the government doesn’t just follow a path or winding Aerolineas down and trying to find a buyer for at least some parts of the company that may be profitable instead of ‘handing it to the workers’.

[MartinJ]

I reckon that “handing the airline over to the employees” is political rhetoric pointing at the collusion between government and unions. The latter are enemies of the state to Milei, to give you some idea of his extreme thought. I think every Argentinian government of the last two decades has agreed that AR cannot continue like this, but no-one has ever presented a workable recovery plan.

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Rferguson2

[stevescoots]

cost, sometimes its just lower cost to hand over everything than to wind it down. We did the same at one site, the redundancy costs, bureaucracy and market value of the assets meant it was lower cost to just hand it over for a nominal payment to the local staff and they become our supplier.

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cwoodward, transtraxman, Rferguson2

[transtraxman]

You might remember what happened when the outgoing regime, Cristina Fernandez de Kirschner and her acolytes, came to power. There was an escape by big business out of the country because they knew no new solutions would be provided for Argentina´s problems but worse. One that saw that was the Chilean/Brazilian airline LATAM. This airline was being run very successfully in the country and making big inroads into the market. However, they knew that the Kirchner clan would squeeze them out of the market to favour Aerolineas. So they cut their losses and left.
For the new President, Milei, to succeed he must coax LATAM, and others back into the market to provide a decent service. Maybe he will.

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MarkCymru, AlanOrton1, Rferguson2

[Author]

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