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Money-Losing Aerolíneas Argentinas Could Soon Be Employee-Owned
The unprofitable airline, which is nationally owned, could become privatized and plans are to give control to the employees of the company.
After the victory of Javier Milei in the Argentina presidential election, the future of the national carrier Aerolíneas Argentinas is uncertain. The unprofitable airline, which is nationally owned, could become privatized under the new presidency and plans are to give control to the employees of the company, according to Argentinian news agency Clarín.
Zero Profit Since Nationalization
Aerolíneas Argentinas has not had a single profitable year since it was nationalized in 2008. Its best financial result was posted this year, with a loss amounting to $48 million for the first half of 2023. For 2023, it is expected to lose over $100 million, which will be a significant improvement from 2022, which saw the carrier losing $246 million. 2022, in turn, was considerably better than 2021 and 2020 in terms of financial performance, largely due to COVID-19.
The airline also receives large sums of budgets from the government to support its recovery and cover its losses. According to Clarín, over $8 billion has gone to the airline to cover its operating losses since its nationalization in 2008.
Before nationalization, the airline was private from 1990 to 2008 with multiple owners, among them Iberia and American Airlines. The years as a private airline saw several crises and the business was hardly profitable. With the airline on the brink of going out of business, the government decided to nationalize it in 2008.
Competing on Equal Footing
The President-elect, Milei, said he wants to hand over management and essentially let Aerolíneas Argentinas compete on equal footing with other carriers including FlyBondi and JetSmart Argentina. Milei believes that employee unions and associations will have the ability to turn a profit and compete with domestic and international carriers.
The privatization could impact air services in Argentina negatively. Aerolíneas Argentinas is the only airline in Argentina to operate widebody aircraft and it provides essential links to destinations in Europe, North America, and many domestic communities. It is also a member of the SkyTeam Alliance, having a series of partnerships with airlines across the world.
Milei has been described as an advocate for economic liberalism. He opposes state intervention and plans to cut government expenditure significantly. Many state-owned businesses will see privatization, including Aerolíneas Argentinas, and we can expect to see deregulation across some industries. For aviation, this could mean scraping protectionist policies benefiting the national carrier and reducing barriers to entry for new players.
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