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An Interview With Aerolíneas Argentinas’ New Vice President
After Alberto Fernandez took office, succeeding Mauricio Macri as Argentina’s President, one of the big questions of the local commercial aviation market was who will take charge of the state-owned carrier, Aerolíneas Argentinas.
Pablo Ceriani was appointed CEO of the Aerolineas holding, in a move that was perceived as a continuation of Mariano Recalde’s presidency (2009-2015), in which Ceriani served as Chief Financial Officer.
Last week, a small group of journalists had the chance to talk with Gustavo Lipovich, Vice President, about the current status and the company’s short and long-term strategy.
AirlineGeeks: How did you find the company?
Lipovich: Operationally, the company was performing well. The most serious problems have to do with economics. We saw a significant drop in financial performance and a very fragile situation as a consequence. In the last four years, the economic management of the company had some alarming characteristics.
The previous management was keen on communicating about continuously requesting less and less state capital contributions but in order to achieve that several key areas were defunded. We left the company with circa 200 million dollars in funds and received it four years later with 9 million. Aerolíneas Argentinas’ net value was 15 million in 2015; it reached -441 million in 2019.
AirlineGeeks: Just a few days ago, the second to last Airbus A340 was flown to the desert and it will be followed quickly by the last one, effectively decommissioning the type. Is there a plan to replace the lost capacity?
Lipovich: Previous management ended with 10 widebodies, down from 15. We will replace them with A330, but we’re yet not clear on quantities and a probable date. But our goal is to expand in long-haul to at least recover the previous capacity.
AirlineGeeks: This increase in capacity will also be used to fly again to abandoned destinations?
Lipovich: What we’re going to do first is to recover frequencies. We don’t know yet if we’re to add new destinations.
AirlineGeeks: One of the new administration’s first rulings is to move regional flights back to Buenos Aires’ city airport, Aeroparque. How does that impact your daily operation?
Lipovich: It is a very important competitive advantage. Not only for Aerolíneas but for the country as well. The previous ruling -moving all regional flights to Ezeiza International and focus Aeroparque to domestic flights only- didn’t accomplish the goal it was intended to. We need the new ANAC (national aviation regulator) authorities to effectively rule the change prior to starting scheduling flights there again.
Our main goal is to increase the receptivity in all our domestic destinations. In these last four years, the number of passengers increased greatly in many destinations but the growth was not equally distributed. Half of the airports in our system lost passengers since low-cost carriers started operating. Our strategy is to help tourism to grow everywhere in our country.
AirlineGeeks: Last year, the region was shaken by the LATAM-Delta agreement and the IAG0Air Europa merger announcement. Do you think that the impact of those operations will force other Latin American carriers to pursue similar ventures?
Lipovich: It’s a little early to fully ascertain the impact of those moves, as the market is heavily dynamic. We drove a strategy of alliances back in 2015 when we joined Skyteam and several cooperation agreements. We will be keeping an eye open for the opportunities we can find on the way, though.
AirlineGeeks: Regarding the rest of the fleet, some efforts were made to replace the Embraer 190 module, as well as an update to the narrowbody core of Boeing 737NG to MAX. Is this technological transition effort still ongoing?
Lipovich: We aim to make the Embraer fleet efficient. We think the module is key for our operations. We’ll try to maintain our fleet in the best parameters possible of technological efficiency, fuel consumption, emissions, etcetera. We will follow that target permanently, according to our possibilities. We’re yet to see how the whole MAX situation ends, but our objective is to move forward in a technological improvement of our fleet, in each module.
We are working hard to present a “first-100-days” plan to address the most urgent matters, and simultaneously a business plan for the 2020-2024 period in which all these doubts will be answered, but one thing I can assure is that we’ll aim for efficiency in every aspect. The main goal of Aerolíneas Argentinas is for it to be a resource for the economic and social development of our country, but we have committed ourselves to be economically efficient as a business.
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