The new president, Javier Milei, wants to privatize the national airline and place it in the hands of the approximately 12,000 employees. The result would be a publicly owned company as established by Eastern European states during the era of the Soviet Union. The fact that these public firms were not productive and failed to cover their costs, has probably not yet come to the ears of the newly elected Pampa populist and Trump supporter. In any case, alarm bells began sounding at the management of Aerolíneas Argentinas after Milei's electoral victory was officially announced.
“Nothing that is done by a state can be considered efficient,” trumpeted Milei time and time again during his sometimes bizarre electoral campaign. Only hours after winning the election, he declared in the presidential villa, Casa Rosada, in downtown Buenos Aires, that he wants to put his words into action, by laying the fate of Aerolíneas Argentinas and the energy company YPF into the hands of their employees. “YPF has to be privatized, like Aerolineas. They have an exorbitant number of political posts. That doesn’t work that way,” declared Argentine’s new leader.
Under state control for 15 years
According to Milei, Aerolíneas Argentinas currently reports losses of USD 2 million per day and accumulates liabilities of USD 8 billion. In this sense, Milei pointed out that “Aerolíneas is one of the most scandalous cases. It should not be in the hands of the State, then it will never be financially sound. Hence, I am going to privatize it,” he declared. The debt-ridden airline has been under state control since 2008. It previously belonged to the Spanish Grupo Marsans and became a member of the SkyTeam alliance and its freight arm SkyTeam Cargo, in 2013.
And he added: “Let's discuss the methodology: the company is expensive, and it is absolutely unfair because the deficit is paid by those who cannot fly, for the benefit of those who do fly and those who belong to the company. Besides, there is a network of unions. So, I’ll hand over the airline to the employees, and it will be their responsibility to manage it properly or fail.”
Fleet renewal at stake
According to market experts, these considerations are based on an ideology of market liberalization and could turn out to be extremely risky. “Without strong investors, the intended expansion and modernization of the fleet cannot be financed,” an expert told CargoForwarder Global. The same applies to the ground and cabin service, and the network for passenger and cargo transportation cannot be expanded because experience shows that each additional route takes a year or even longer to become profitable.
Presenting the latest financial results, Pablo Ceriani, CEO of the national carrier, pointed out that the airline is still in the red, but has successively reduced its losses following the covid pandemic. He said that today’s Aerolíneas is a more efficient company, generating direct and indirect income, benefiting staff and clients. “This, we achieved by opening new routes, flying more, and incorporating new business units.”
A strategy that might come to a halt once the far-right populist Javier Milei is sworn in.
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