In the quest to unlock the sanction of the Bases Law in the Argentine Senate, the government and the bloc of legislators aligned with the administration put the future of Aerolíneas Argentinas on the negotiation table.
According to sources close to the legislative debate, the government agreed to remove the national airline from the list of state-owned 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 on this list, which also includes Intercargo, a state-owned handling company.
«If we have to spend a bullet, it will be for Aerolíneas and not for Intercargo,» says a source with ties to the opposition, citing that the public impact of keeping Aerolíneas Argentinas under state control is significantly greater.
Within the ruling party, there is no opposition to advancing with the privatization of Intercargo, as its results and a market position that borders on monopoly make it «easily sellable.» However, Aerolíneas does not lack suitors.
If Aerolíneas Argentinas is sold, who buys it?
Contrary to public opinion – influenced by certain narratives – Aerolíneas Argentinas would have bidders if the company were privatized or, following the amendment of the Bases Law, moves forward with a hybrid public-private participation scheme.
Senior management of the state-owned airline indicated to Aviacionline, under anonymity, that they have received «several approaches» from companies interested in the airline and have requested conditions for future investment or purchase, once the model under which the company will operate under Milei’s management is defined.
The same sources commented that, even though DNU 70/2023 allows for the separation of business units – which would allow the Pilot Training and Training Center (CeFePra) and the Maintenance division to be sold separately, as was done in similar privatizations such as the old Mexicana or Alitalia -, both the interested parties and Aerolíneas Argentinas consider an operation that includes the company as a whole.
Dirty work ahead?
A condition for investment, according to the sources, is that the «dirty work» of adjusting the Collective Labor Agreements to make it «more competitive» must be done before private capital arrives.
According to reports, at the end of April, a document circulated listing a series of changes to the working conditions of pilots. At that time, after inquiries from Aviacionline to the company and APLA, both parties accused each other of leaking the document but agreed that these points were on the table.
From symbolic changes such as the elimination of car service to modifications in access to vacation tickets for family members, the elimination of retirement bonuses, and the reassignment of Wide-Body Pilots to Narrow-Body Pilots in the event of fleet reduction, the company aims to rationalize working conditions.
It is significant that the points include the «elimination of all union mandates» in favor of the «strict» compliance with the CCT and current regulations.
After the debate, the future
What would change if the Bases Law (in general and in particular) were approved in the near future for Aerolíneas Argentinas? The doubt remains because even if it were decided to privatize it, the adaptation process would 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 bit more calm, but it will depend on how the airline is managed in its rationalization plan. The reduction of operations and fleet, which accompanies a voluntary retirement program that has not had a notable result, at least in the first stage, results in a relative weakness in an air market that has long since stopped expanding.
See also: Open Skies: Memorandums of Understanding with Uruguay and Chile go all out
Adding to this situation is the signing of «Open Skies» agreements that will – at least on paper – allow greater competition in the domestic market. The code-sharing agreement with SKY is a protective measure that may help, but it is still early to evaluate its success. In a consolidating region, seeking allies is a sound strategy. The problem is to see how much support remains and if it is too little and too late.
