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Decision Made: LATAM Says Argentina Branch Will Go After Government Meetings
After a week of heated discussions in Argentina, LATAM Airlines Group has reiterated its decision to stop all operations of its Argentine branch LATAM Airlines Argentina as a “taken decision,” as reported by local newspaper La Nación.
The news comes after the local government met with the local management of the company, headed by CEO Rosario Altgelt. Led on the government side of the table by Argentinian Minister of Transport Mario Meoni, the meeting aimed to find a viable solution to all parties. It was reported that the closure of LATAM Argentina would lead to more than 1,700 layoffs, a figure the government was desperately hoping to eliminate.
Although according to major Argentinian aviation news portal Aviacionline, there were strong rumors about an agreement to maintain operations for 180 days, LATAM made clear on its position to fully close the company.
In a release after the meeting, the airline stated, “The conversation has developed in a cordial way, in the context of the situation the company is passing as a result of the COVID-19 pandemic.” However, it also added, “We transmitted that [the closing of LATAM Argentina] is a taken decision, and we agreed to continue the matter through the Ministry of Labor, over the basis of the Crisis-Preventing Procedure.”
The Crisis-Preventing Procedure is a legal process in Argentina that occurs when a large company intends to reduce a large part of its workforce.
According to data by Planespotters.net, twelve of LATAM Argentina’s fleet of 13 Airbus A320 will be returning to the mother company in Chile, already having its respective Chilean registrations reinstated. All of LATAM Argentina’s fleet is leased and is having its lease contracts renegotiated, according to a file presented by the group ten days ago under the terms of its Chapter 11 process.
A Letter to Employees and Chronic Productivity Issues
After the news about the end of LATAM Argentina, a letter from CEO Rosario Altgelt was sent to its employees. The internal document was leaked by La Nación.
According to the text, in which the executive states, “This is a message I never would have wanted to send you”, in recent years LATAM Argentina tried to turn itself more competitive, but every action made in this direction was “consistently” resisted. “Our biggest challenge in Argentina always was to obtain the sustainability of the operations, which made thereby essential to agree on new dynamics in terms of productivity, competitiveness and efficiency.”
The executive also appeared to refers to agreements with unions, which are a huge part of labor relations in Argentina and became a sticking point for the company.
“Still,” Altgelt added, “each initiative associated with these objectives was consistently resisted, which, in conjunction with a larger context, made each day more challenging, impeding the execution of the needed structural changes to assure our continuity.”
A 60-page document sent from LATAM Argentina to the Ministry of Labor, leaked by Clarín, summed up the difficult conditions that the airline had to face even before the COVID-19 pandemic arrived in the country. The airline stressed several times that not only the airline was underproductive against its global counterparts, but it was also underproductive in comparison to other branches of the LATAM Airlines Group itself.
The news report mentions especially “the continuous attrition with the unions” and “hundreds of measures proposed to improve the operation productivity, that clashed with the refusal of the unions.” The paper mentions that labor productivity is 30% lower compared to the rest of the company, while crew costs are around 40% higher.
The letter also pointed to a number of programs LATAM Airlines Argentina — legally registered under the name of LAN Argentina — was unable to implement, including self check-in, self luggage dispatch, and even buy-on-board services.
“LAN Argentina was the only member of LATAM Group that could not implement the project,” mentioned the text.
The document says that already during the pandemic, meetings in which representatives discussed pay cuts during the pandemic — which were ultimately shelved — “took place with union representation that may or may not have represented the real interest of LAN Argentina’s workers,” adding that the workers went so far as to contact authorities and inform of them of their “desire that LAN Argentina…was expelled from the country.”
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