In the search to unblock the sanction of the Bases Law in the Argentine Senatethe government and the block of legislators that responds to the ruling party put the future of Argentinian airlines on the negotiating table.
According to sources close to the legislative debate, the government agreed to remove the flag airline company from the list of state companies to be privatized, along with Correo Argentino and Radio y Televisión Argentina (RTA).
Agua y Saneamientos Argentinos (AYSA), Belgrano Cargas, Sociedad Operadora Ferroviaria (SOFSE) and Corredores Viales would remain within this list, which also includes Intercargo, a state handling company.
“If a bullet has to be spent, it will be for Airlines and not for Intercharge“says a source close to the opposition, citing that the impact on public opinion of keeping Aerolíneas Argentinas within the orbit of the state is evidently greater.
In the ranks of the ruling party, they do not frown upon advancing with the privatization of Intercargo, since due to its results – and a position in the market that borders on monopoly – it is “easily sellable.” Although to Airlines There is no shortage of candidates.
If Aerolíneas Argentinas is sold, who buys it?
Contrary to what public opinion thinks -induced by certain speeches and downgrades- Argentinian airlines would have bidders, if the company were privatized or, after the modification of the annex to the Base Law, a hybrid scheme with public-private participation is advanced.
Hierarchical personnel of the state airline company indicated to Aviationlinewith reservation of identity, that they have received “several approaches” from companies interested in the airline, and that they have requested conditions for a future investment or purchase, as soon as the model under which the company will continue to operate under Milei management is defined.
The same sources commented that, even though DNU 70/2023 allows the business units to be separated – which would allow the Pilot Training and Training Center (CeFePra) and the Maintenance division to be sold separately, as was done in analogous privatizations like that of the old Mexican either Alitalia-, both the interested parties and Aerolíneas Argentinas contemplate an operation that includes the company as a whole.
(dirty?) work ahead
A condition for the investment, sources say, is that the “dirty work” of adapting the Collective Labor Agreements to make it “more competitive” must be done before private capital is landed.
According to reports, at the end of April a document was circulated that listed a series of modifications to the working conditions of pilots. At that time, after Aviacionline’s consultations with the company and APLA, both parties accused each other of leaking said document, but agreed that those were the points that were on the table.
From symbolic changes such as the elimination of the remises service to modifications to access to vacation tickets for the family group, the elimination of the retirement bonus and the relocation of pilots from Wide Body to Narrow Body in an eventual fleet reduction, the company aims to rationalize working conditions.
It is significant that the “elimination of all union mandates” is included in the points, in favor of “strict” compliance with the CCT and current regulations.
After the debate, the future
What would change if the Bases Law were approved (in general and in particular) in the near future of Argentinian airlines? The doubt remains, because even if it had been decided to privatize it, the adaptation process will take months and the internal front would have presented a high degree of conflict.
The exclusion of the company from the list of companies to be privatized will provide a little more calm, but will be subject to how the airline is handled in its rationalization plan. The reduction in operations and fleet, which accompanies a voluntary retirement program that has not had a notable result, at least in the first stage, has as a consequence a relative weakness in an airline market that has not expanded for some time.
See also: Open Skies: the Memorandums of Understanding with Uruguay and Chile go for everything
Added to this situation is the signing of agreements “Open skies” which will allow – on paper at least – greater competition in the cabotage market. The codeshare agreement with SKY is a protective measure that can help, but it is still early to evaluate its success. In a region that is consolidating, looking for allies is a successful strategy. The problem is seeing how much back is left, and if not it is too little too late.
