Several weeks ago, Javier Milei was elected the new president of Argentina, and he’s without a doubt among the most unusual people to be elected leader of a country in quite some time (and there’s a pretty high bar for that nowadays!). Argentina’s economy is not in a good place, and it seems like Argentinians voted for Milei because he couldn’t be further from the status quo in the country.
Milei is an ultra-libertarian, and wants the state to stay out of most things, including the country’s struggling national airline. Several weeks ago I wrote about Milei’s plans to essentially “hand over” Aerolineas Argentinas to the employees, and we now have more of a sense of what this could look like.
In this post:
Milei wants to give Aerolineas Argentinas to the workers
As one of his first orders of business, Milei wants the government to no longer be involved with Aerolineas Argentinas, the country’s national carrier. Specifically, he wants to hand over control of the airline to “the workers” (which in this case means the unions), and he wants the airline to compete with other airlines on equal footing.
Here’s how Milei describes his plans for the airline in a recent interview, as reported by Clarin:
“Our idea is to hand it over to the employees and for them to do the purification themselves and begin to compete in an open skies policy. Airline personnel are very qualified personnel, the problem lies in political contamination.”
For context, the state took over control of Aerolineas Argentinas in 2008, and since then, the airline has lost more than $8 billion. For 15 consecutive years, the airline has lost money. Heck, even in the 18 years leading up to the government taking control of Aerolineas Argentinas, the company still wasn’t making any money.
Interestingly a week after Milei announced his plans for Aerolineas Argentinas, the company’s president stated that he anticipated that in 2023, the airline would turn a mild profit for the first time in decades. The timing of that sure is suspect, since no such claim was made before Milei was elected. Let’s wait for the audited financial statements…
What do the unions think about this? Here’s the response of a leader of the Aeronautical Personnel Association (APA), as reported by La Nacion:
“Give the company to the workers, it would be the death certificate for airlines, because what he proposed was to hand over the company to the workers, declare open skies and withdraw state contributions. And this company cannot function without contributions from the State.”
“A black night is coming for the country led by this man who we believe has some type of mental illness and the unfortunate thing is that people have voted for him.”
The latest update here is that Milei has just announced the substance of the decree of necessity and urgency (DNU), which includes more than 300 measures intended to deregulate the economy. As it impacts Aerolineas Argentinas, this decree would allow all shares of the company to be transfered to employees, putting them in charge of running it.
Only time will tell if this policy plan is implemented, because this would have major implications…
This is an absolutely absurd plan
Milei’s plan for Aerolineas Argentinas is beyond ridiculous. Let me be clear, though — I’m not suggesting the status quo needs to be maintained, but rather that we need to be realistic about the implications of this plan.
Aerolineas Argentinas has some major structural issues. Like many government owned airlines, Aerolineas Argentinas is such a bloated and inefficient company. The state has provided enough support to keep the airline alive, but not enough support to actually turn it around. Furthermore, the airline has been dealing with many factors outside of its own control, like the massive inflation of the country’s currency, which makes it hard to run an international airline.
Given the state of Argentina’s economy, and with so much of the country living in poverty, maybe the airline isn’t worth keeping alive. Conversely, there is major economy benefit to having good air connectivity, and it’s something that needs to be weighed. But it’s also not unreasonable to hope that if Aerolineas Argentinas collapses, other airlines may increase service to the country. Domestically, Argentina has some successful competitors, there just wouldn’t be a national long haul airline in Argentina.
Reasonable people can disagree about whether Aerolineas Argentinas is worth saving. However, the concept of handing over the airline to employee unions is just objectively silly. The airline has a massive amount of debt, an inefficient fleet, and given the state of Argentina’s economy plus the added uncertainty now, you can bet the airline won’t get any investors, and would be out of business in no time.
I know some people disagree with me on this, but honestly, if you were an employee of Aerolineas Argentinas, would you want a stake in the airline?
By all means just shut down the airline, if that’s what Milei thinks is best for the country. But the airline simply has no shot at survival without government support, under the control of unions. I’m curious to see how this plays out. If Milei follows through on his word, SkyTeam will have one less member airline in the near future…
Bottom line
Argentina has a new president, and he’s an ultra-libertarian. Part of his agenda involves privatizing many industries in which the government is currently involved. Argentinian national carrier Aerolineas Argentinas has been losing billions of dollars, so the president’s plan is to turn over the company to the unions, and let them run it.
He’s now moving forward with this plan, with a decree that would allow the company to be privatized, and would permit for all shares to be handed over to employees.
There’s simply no planet on which an airline that has been losing money for decades being handed over to workers would turn it into a sudden success. If Milei thinks it’s no longer worth it for the country to invest in the struggling national carrier, that’s fair enough. But just shut the thing down, rather than suggesting that handing it over to employees is a viable option.
What do you make of Milei’s plans for Aerolineas Argentinas?
Are they alive at customer service-no contact and website unresponsive. They did however take my money
Lol privatization doesn’t mean better. Look at best airlines in the world. They’re government ran.
and subsidized by their governments means either taxpayers or, in the case of the Middle East airlines, oil revenues from western countries.
and their employees subsidize the company by providing wages below western airlines.
As it ever dawned on you that the airlines that offer the best onboard service also provide no career for their flight attendants and many of their pilots are also expats?
I don't know what you do/did for...
and subsidized by their governments means either taxpayers or, in the case of the Middle East airlines, oil revenues from western countries.
and their employees subsidize the company by providing wages below western airlines.
As it ever dawned on you that the airlines that offer the best onboard service also provide no career for their flight attendants and many of their pilots are also expats?
I don't know what you do/did for a living but I doubt very seriously you would consider a career where you only can work for about 5 years and then be forced out for a younger worker.
what you see as better is only a small part of the total equation
Presumably some people are happy to have the chance to travel the world, make new friends, learn new languages, live in free or heavily subsidised accommodation, all whilst being paid, for five years, then go and do something else. It's not a hard sell for many people on the planet, which is possibly why the flight attendants at those airlines are often happy and provide a great service.
Socialist Canada privatized air traffic control. They now use GPS while in the US, government-run ATC pushes pieces of paper and uses radar.
Leftist Democrat Jimmy Carter deregulated airlines in 1978 and no one since has called for government to take them over again.
It's not just Libertarians who call for deregulation and privatization.
That left is long gone. In Australia too we had a great deregulatory left in the 80s, but it's nothing like the modern left.
However the Canadian govt keeps on subsidizing Air Canada.
Pure politics.
Where has overnight, wholesale deregulation helped an airline?
When it fails, Mellei can blame the unions .
If the unions bring in experienced management, the airline could easily survive and even thrive. However, it will require sacrifices from the workforce in order to achieve greater efficiency. It will be interesting to see if greed and the failure of the airline is the final result, or if sacrifices are made to make it a thriving operation.
Millei needs to bust the corrupt government owned ground handling operation at Ezeiza - Intercargo. Open it up for competition from Menzies, Swissport etc. who are not allowed to operate ramp/cargo services in Argentina. High costs are just another mechanism to protect AR.
It would make the market much more competitive. Carriers are reluctant to add service - even if allowed - due to the high costs at EZE.
Lucky, Not that I am a fan of Milei, but you keep saying he must shut down the airline and then criticize him for what he is doing resulting in airline shutdown!
Well, this is a conundrum. I’m planning a trip to Argentina and Chile in the fall, and the Argentine part of the trip depends heavily on the Aerolineas Argentinas domestic network — tickets not yet purchased. Regardless of the merits of these changes, it seems like, in the short term, the transition could be an absolute sh-tshow. Should I cancel the Argentine portion of the trip and wait to see how things shake out?
I heard the airline will continue to functions like it is now, and is going to be for a year, I don't think is going to be a risk, they will start to shut down non profitable routes and those are flights to Europe and other countries they don't have many passengers. USA is not one of those routes, inside the country most of the flights are profitables they are doing to be maintained
yes, or buy extremely good Flight Insurance!
This guy is insane, but something needs to change in Argentina, and soon. The usual stuff has not worked, so I guess he is trying something new.
As far as the airline, it is probably better if it just ceases operation vs. handing it to the employees.
Best bet would be to seek out investors, but not AA. It seems a One World partner would be best, but unfortunately it would be IAG.
Without being familiar with the Argentine Market, what Aerolinas needs is a strong Partner/Investor such as Qatar to help turn them around. SKYTEAM is not a good Alliance for them because of Delta's involvement with LATAM and what Argentina does not need is LATAM taking over the entire South American continent. Aerolinas needs a Latin Partner that operates in a Latin manner and get the operation turned around.....someone like COPA, IBERIA (if IAG would be...
Without being familiar with the Argentine Market, what Aerolinas needs is a strong Partner/Investor such as Qatar to help turn them around. SKYTEAM is not a good Alliance for them because of Delta's involvement with LATAM and what Argentina does not need is LATAM taking over the entire South American continent. Aerolinas needs a Latin Partner that operates in a Latin manner and get the operation turned around.....someone like COPA, IBERIA (if IAG would be interested) or maybe AZUL,GOL that have Latin roots. Not a fan of LATAM at all.
and then you have to look at who has the money and whether it is easier to just allow other competitors into the market rather than trying to save AR.
The Argentinian president has decided on the latter proposal.
Milei is opening the Argentinian skies, many other Latin American airlines are going to start flying inside Argentina again. probably the Chilean, jet smart, sky airlines and LATAM, all well regarded airlines and in strong expansion in Latin America, also LATAM is considered the best airline in Lantin America according with Skytrax. LATAM had a big presence in Argentina many years ago with lots of flight to all big cities then Cristina Kirchner close the...
Milei is opening the Argentinian skies, many other Latin American airlines are going to start flying inside Argentina again. probably the Chilean, jet smart, sky airlines and LATAM, all well regarded airlines and in strong expansion in Latin America, also LATAM is considered the best airline in Lantin America according with Skytrax. LATAM had a big presence in Argentina many years ago with lots of flight to all big cities then Cristina Kirchner close the operations and LATAM left, the Argentinians were very disappointed because AR became a monopoly and service was bad and expensive. the Chileans airlines have better chance because are more familiar with Argentina and there are expansion from other Chileans cities with Argentinian cities. soon Jet Smart will be opening the Route Concepcion in Chile with Buenos Aires, and Santiago with Bariloche covered by LATAM. Less like to have pacts with the Brazilian Azul or Gol due to the strong differences of president Miley with president Lula.
Unions don’t fire employees; they’ll offer juicy early retirement packages to AR staff who will fight each other to get it. Debt will skyrocket. This airline will be dead in less than 5 years.
Maybe giving unions P&L ownership along with ownership in the actual business entity is a way to teach them a lesson about their demands.
What demands?
This tactic is completely disingenuous by Milei. It's impossible to just quit a subsidy cold turkey.
There's no transition plan, just plain stop.
I agree there's a need to change how they can keep Aerolineas Argentina operating, or even just cease to exist. However, this approach is nothing but guaranteed failure.
They'll wind up with unemployed workers, and just more hardware that'll be left to be picked up by opportunists paying pennies on the dollar...
This tactic is completely disingenuous by Milei. It's impossible to just quit a subsidy cold turkey.
There's no transition plan, just plain stop.
I agree there's a need to change how they can keep Aerolineas Argentina operating, or even just cease to exist. However, this approach is nothing but guaranteed failure.
They'll wind up with unemployed workers, and just more hardware that'll be left to be picked up by opportunists paying pennies on the dollar for whatever aircraft contracts left.
Argentina will wind up with no national carrier for the foreseeable future, and be completely dependent on international/foreign airlines that will just cherry pick the routes that are profitable.
There's a reason even the US, under the "free market system" has programs like Essential Air Service to support routes that would otherwise not be sustainable.
the plan is to keep the airline flying and give a year to do a transition, they are going to cut unprofitable routes, and keep the profitable ones, and they will need to compete with foreign airlines that will arrive to Argentina, they still need to continue with the airplane leases and will discontinue their contracts with the routes that are not working, probably at the end it will be sold to private hands, or...
the plan is to keep the airline flying and give a year to do a transition, they are going to cut unprofitable routes, and keep the profitable ones, and they will need to compete with foreign airlines that will arrive to Argentina, they still need to continue with the airplane leases and will discontinue their contracts with the routes that are not working, probably at the end it will be sold to private hands, or leave mostly flights inside Argentina to service the cities that are not covered by other airlines.
This is amazing trolling. He essentially gets to:
1. End the government subsidy without shutting down the airline himself
2. Make the unions admit their agreements are unsustainable (essentially admitted as much via their comments)
3. Show socialisim doesn't work. This is 100% pure socialisim - give the company ownership to the workers. It will fail in no time.
It is not socialism. If employee owned is socialism then every self-employed person is in a socialist situation.
This is on purpose. By giving the airline over to workers it will ensure it's demise.
I take work trips a couple of times a year from Europe to Argentina; AR is never my airline of choice though last month IRROPS meant I flew them business class on an A330, Rome—BsAs.
It was like regressing 30 or 40 years. The staff were mostly very nice and seemed to know their stuff: clearly they were AR “lifers”.
The seat was ancient but lay-flat, in a 2-2-2 layout, perfectly adequate. No working...
I take work trips a couple of times a year from Europe to Argentina; AR is never my airline of choice though last month IRROPS meant I flew them business class on an A330, Rome—BsAs.
It was like regressing 30 or 40 years. The staff were mostly very nice and seemed to know their stuff: clearly they were AR “lifers”.
The seat was ancient but lay-flat, in a 2-2-2 layout, perfectly adequate. No working charger sockets. Very little IFE choice.
And the food… everything served in shrink-wrap, except the main course which you chose from all the hot plates laid out on a trolley parked next to your seat. Being catered out of Italy it was perfectly edible if utterly uninspiring. A post-dinner whisky was served in a very large glass that was almost full — as if it were a beer. But it meant I slept very well.
Next-door Uruguay lost its national airline, PLUNA, a few years ago. Foreign airlines have never plugged the gap, and Uruguay remains one of the less well-connected countries in Latin America (especially odd given its role as “the Switzerland” of LA, large numbers of people trusting their savings to Uruguayan banks rather than their own inflation-riddled countries).
So if the death of PLUNA is typical, Argentina is about to lose a big chunk of air service.
On staffing levels, the 1970s British aviation entrepreneur Freddie Laker (of trans-Atlantic LCC Skytrain fame) had a rule of thumb that he would never employ more staff than the total number of aircraft seats in his fleet. A crude metric but designed to keep costs down. Seems like AR hasn’t managed that.
So what's your solution? Fire everyone now? Thanks to their union and government interference, AR has the most horrendous employment bloat of any government airline on the planet. I mean, everyone is in agreement that AR has to die. The question is whether the President should kill it and suffer the blame or give it to the unions and let them take the blame. It's not as though other airlines won't immediately step in with...
So what's your solution? Fire everyone now? Thanks to their union and government interference, AR has the most horrendous employment bloat of any government airline on the planet. I mean, everyone is in agreement that AR has to die. The question is whether the President should kill it and suffer the blame or give it to the unions and let them take the blame. It's not as though other airlines won't immediately step in with service once AR can't offer subsidized flights.
Uruguay is a much smaller market and smaller country.
Argentina was once one of the wealthiest and most influential countries in Latin America.
The President is appealing to the desire of so many Argentinians for a return to common-sense governance and economics that doesn't cost the average citizen.
Sounds like a way to shut down the airline, without saying “shut down the airline”.
I just got defrauded out of $1000 on Saturday, stupidly flying on Aerolinas Argentinas the day before the new president took office. The airline claimed "you have no baggage checked into our system." then the airline proceeded to charge me $1000.00 to check FIVE bags under my sole name while I traveled with my father, both of us flying first class. When I told United how displeased I was as I desperately tried to get...
I just got defrauded out of $1000 on Saturday, stupidly flying on Aerolinas Argentinas the day before the new president took office. The airline claimed "you have no baggage checked into our system." then the airline proceeded to charge me $1000.00 to check FIVE bags under my sole name while I traveled with my father, both of us flying first class. When I told United how displeased I was as I desperately tried to get them to do something to save us the cost? The airline attendant called police on me, claiming I insulted him. Police came but didn't arrest me. I only realized later how I had been scammed by all the confusion. Fortunately we only paid $300 since it was dolar blue, but yes, abandon ship. This never happens with GOL or Copa. I will make sure to never book with Aerolinas Argentinas again - booked my husband's next flight with GOL.
This is "Animal House" playing out again. Soon the union will declare all animals equal but some animals are more equal than others. United Airlines was an employee owned company a while back.
I think you mean "Animal Farm." Animal House was a movie about a fraternity.
What does this mean for the in-flight fax machine?
Well, at first glimpse it looks like a smart move, because AR is currently better than usual (sort of at break-even). Thus privatizing now, means that any future losses are the responsibility of the new management (i.e., the unions). However, the problem is that AR has a huge debt, which is largely financed by the government. Therefore, the government will still suffer from any downturn.
And then, the government, more precisely, the MoD, has another...
Well, at first glimpse it looks like a smart move, because AR is currently better than usual (sort of at break-even). Thus privatizing now, means that any future losses are the responsibility of the new management (i.e., the unions). However, the problem is that AR has a huge debt, which is largely financed by the government. Therefore, the government will still suffer from any downturn.
And then, the government, more precisely, the MoD, has another commercial airline called LADE - which is smaller but financially much worse ...
Left-leaning Canada privatized air traffic control. The US and every other country should do the same. Government subsidies should be reduced or eliminated wherever possible with all modes of transportation.
ATC in the US along w/ the entire aviation system is funded by user fees. It is not subsidized. In fact, the opposite is true. The US airline industry rightfully argues that airline fees are not being fully plowed into ATC as should be happening.
And, as much as you and others want to argue, there is no evidence that any other country operates their ATC system, privatized or not, any better operationally or...
ATC in the US along w/ the entire aviation system is funded by user fees. It is not subsidized. In fact, the opposite is true. The US airline industry rightfully argues that airline fees are not being fully plowed into ATC as should be happening.
And, as much as you and others want to argue, there is no evidence that any other country operates their ATC system, privatized or not, any better operationally or financially, better than the FAA.
The US model of federally funded through user fees but locally controlled airports works far better than any other system in the world.
I would guess that your livelihood is not tied to any transportation company.
It's easy to call for everyone being fired--as long as you're not one of them.
You should stick with reviews of hotels and flights.
Left-leaning Canada privatized air traffic control. The US and every other country should do the same. Government subsidies should be reduced or eliminated wherever possible with all modes of transportation.
No highways, trains, subways or airports? Clearly you are Amish, Darren, but how are you reading and replying to a blog?
Then stop reading this website. So feeble minded.
This is a travel blog as far as I know. When someone that has only been to Argentina to review the Park Hyatt starts talking about their just elected president without knowing the pain their people has endured for the last decades, he better stick to his core competence.
Why can't there be other airline-related news posts?
Well.. let's make clear some points not mentioned on this post.
The worst problem of AR is that is infected of many Unions, not just one. 11k employees!! And soooo many of them are as we call "ñocquis" (an employee that is being paid without offering any service to AR)
Just to compare United has 45 employees per aircraft while AR has 145.
You can not fire people because of the Unions...
Well.. let's make clear some points not mentioned on this post.
The worst problem of AR is that is infected of many Unions, not just one. 11k employees!! And soooo many of them are as we call "ñocquis" (an employee that is being paid without offering any service to AR)
Just to compare United has 45 employees per aircraft while AR has 145.
You can not fire people because of the Unions strikes.
So Milei will continue giving money to AR for ONE YEAR under working capital concept. Forcing the company to make their own cleaning of "noquis" from inside.
The most clever idea so far. This will end up in a huge save of money for the Gob. and better use of our taxes.
There is some precedent in this. Not necessarily successful but I suppose the devil is in the details. West Jet, for example, was fully or partially "owned" by the workers at least in theory. Non-union at the time so that might help. Didn't Alitalia try this also?
You’re next KLM. Dutch Donald Trump Geert Wilders. Defund KLM.
The difference is that KLM is profitable. Even though smaller than Air France, KLM's margins are still slightly higher than Air France.
Wilders did say that he wanted to pull the Netherlands out of the EU but also acknowledges there is no public desire for that.
And Wilders' party does not have a majority so he will have to build coalitions.
The bigger point is that, even in well-developed economies, political favor...
The difference is that KLM is profitable. Even though smaller than Air France, KLM's margins are still slightly higher than Air France.
Wilders did say that he wanted to pull the Netherlands out of the EU but also acknowledges there is no public desire for that.
And Wilders' party does not have a majority so he will have to build coalitions.
The bigger point is that, even in well-developed economies, political favor can swing rapidly from one side to another. We have seen that in several European countries recently
It’s entirely different since KLM isn’t government owned. AR is 100pct government owned.
The NL government has a 13% share in the Air France KLM group.
Not sure why AR is in the SkyTeam as they bring no benefits and very poor standard at that . Connecting traffic is almost entirely domestic with the exception of Montevideo.
Wow, this may be the most obnoxious, insulting, uninformed comments section I've seen here. Y'all have managed to insult everyone -- Argentina, unions, government employees and Ben. I'm sure I missed someone too.
Let's all go relax and for those in the US enjoy the holiday,
A. ARG debit is USD 1.000.000 per day according to the press and Milei as well. Good move by the new president.
Wow. I’m impressed. The airline is a failure largely because of bloated union financial demands. So give it to them. Let the union fail. Let the worker see the unions lied.
Badly run, never saw a profit, a financial disaster, bad service, always in need of money, small fleet, other airlines can provide national and international connections. Close it;
Wow I wasn’t aware Aerolíneas Argentinas was in that much financial trouble. It’s interesting how much these airlines based in southern terminus countries of the world differ, like Qantas and Air New Zealand do fine, but SAA and Aerolíneas struggle. Why is that? Also, Ben, I wouldn’t consider 737 MAXs and A330-200s an inefficient fleet. This isn’t Boliviana de Aviación were talking about. Regardless I think turning the airline over to the unions will end...
Wow I wasn’t aware Aerolíneas Argentinas was in that much financial trouble. It’s interesting how much these airlines based in southern terminus countries of the world differ, like Qantas and Air New Zealand do fine, but SAA and Aerolíneas struggle. Why is that? Also, Ben, I wouldn’t consider 737 MAXs and A330-200s an inefficient fleet. This isn’t Boliviana de Aviación were talking about. Regardless I think turning the airline over to the unions will end up even worse.
SAA and Aerolineas are run by governments that have much bigger concerns with their economies than what they think the airlines can achieve
^what he said. AU/NZ have much more robust economies. Argentina has been an economic basketcase for decades but the past ~5 years have been particularly dire - inflation from Nov 2018 to now is over 800%
As a South African let me explain. SAA is ruined by nepotism and corruption and Aerolineas by corruption. it's not complicated.
Libertarians, regardless of whether they are left or right, need to accept that they just don't want to take the responsibilities.
Absolute L decision.
It’s not that they don’t want responsibility. That’s very broad. It’s that government is less efficient than business for profit. And ever since Peron, Argentina turned into a basket case from being the richest country. Giving away benefits has to be offset by taxes to pay it. Free is great til it turns into 300% inflation
This would be a great argument if the government was a for-profit business. It is not. The government's job is to provide necessary services that private businesses cannot and will not provide at all, or to the extent necessary for society to function. Examples, the civil infrastructure that allows private citizens and business to get water, power, or move around the country, the military, the mail system, emergency services, standardized education curriculums, social safety nets,...
This would be a great argument if the government was a for-profit business. It is not. The government's job is to provide necessary services that private businesses cannot and will not provide at all, or to the extent necessary for society to function. Examples, the civil infrastructure that allows private citizens and business to get water, power, or move around the country, the military, the mail system, emergency services, standardized education curriculums, social safety nets, healthcare, the list goes on. Taxation pays for these things, and no private entity responsible for just single service or a service in a local area is going to have the same level of resources or public accountability as the government does.
That is the point of being a Libertarian. The government is pretty awful at making decisions so market participants (i.e., the people) make the decision.
No We believe that crony capitalism is wrong as well as the state picking winners and losers. You might want to read about our platform and our beliefs,
Lucky: You are a miles blogger. Stick to your knitting. Don't pretend to be an economist. It is laughable.
"Lucky: You are a miles blogger."
L3: You must be new here.
This is a blog about what Ben finds interesting.
Stick to your knitting. Don't pretend to be smart. It's laughable.
the point is valid.
Lucky can comment about missing AR like he does about the A380 20 years from now but aviation fans don't and won't dictate the future of AR or any other airline.
The Argentinian people who are tired of their deteriorating economic positions knew full well that their president elect intends to privatize major portions of the economy to stem government subsidies. Their desires are rooted in far deeper realities...
the point is valid.
Lucky can comment about missing AR like he does about the A380 20 years from now but aviation fans don't and won't dictate the future of AR or any other airline.
The Argentinian people who are tired of their deteriorating economic positions knew full well that their president elect intends to privatize major portions of the economy to stem government subsidies. Their desires are rooted in far deeper realities than any blogger or most Americans will ever understand. My sympathies to the Argentinian people and I do wish them the best in their desired economic turnaround
Not confident that they fully understand the agenda of the fellow they've elected (I think this is true of the average voter in any election anywhere, not specific to Argentina) - they voted for him because of what he is not (i.e. not a Kirchner/Peronist) not because of what he is. As recent elections have made very clear, people will vote for absolutely horrific candidates when they dislike the other option even more.
"As recent elections have made very clear, people will vote for absolutely horrific candidates when they dislike the other option even more."
This is called cutting off your nose to spite your face.
Sure, but time and time again, we've seen people do it-- and we'll see it again.
USA seems next, based on current numbers.
A plurality of the voting populace (and potentially soon a majority) are numerically showing they'd rather elect a potential convicted-felon with autocratic tendencies.... than continue being led by a questionably-lucid corpse.
Two sh!t options. Looks like they're going to choose the sh!ttier.
At least Thatcher kinda tried to be strategic in divesting state assets in privatization.
She gave council houses to their tenants.
Thatcher saved the UK. Period. I think even the Labour party would agree (as long as nobody was listening).
I laugh to hear the union bosses say "how the hell can we run this?"
BS. Awful woman. Overjoyed when she left government.
Introduced section 28 and was the Ron de Santis of her day. Then the poll tax.
Brilliant political move. Milei avoids being accused of being the one to shut down the airline by handing it over to the greedy unions who know nothing of running a company (they only know how to extort them). The airline now can be a true "worker's paradise"...for the few hours before it naturally and inevitably implodes.
The union ownership thing is a blame-avoidance strategy by Milei for when the airline goes under. Milei can blame the workers for running the airline poorly, even though it's in such terrible condition now that there's no realistic chance it can continue without state aid. Milei, a hardcore libertarian, is no friend of labor unions. This just seems like a cynical ploy to shift blame to the unions when AA inevitably fails.
AA is AmericanAirlines AR is Aerolineas Argentinas,
in addition to the good comments below, let's keep in mind that there have been various attempts at competition within Argentina but most have not been successful because AR has been heavily subsidized by the government. The government does not need to and should not be subsidizing airline service - that has been proven to be a viable goal. Argentina simply does not have the money to subsidize businesses that should be operating on a...
in addition to the good comments below, let's keep in mind that there have been various attempts at competition within Argentina but most have not been successful because AR has been heavily subsidized by the government. The government does not need to and should not be subsidizing airline service - that has been proven to be a viable goal. Argentina simply does not have the money to subsidize businesses that should be operating on a free market basis and competitors will come in and replace what AR does IF the government removes the barriers that have protected AR. In a country that is in as much economic trouble as Argentina, ripping the bandaid off w/ AR is a good place to start the economic reforms that are necessary to turn the country around.
What about the Argentine Parliament?
No, that's unregulated free-market capitalism 101. I'm no great fan of Aerolíneas but not every entity that provides value to the public has to be run as a business yielding a profit.
Tell me you have no F idea about Argentina without telling me...
I’m from the government and I’m here to help.
Maybe Aerolíneas Argentinas could follow the Alitalia / ITA Airways model.
Alitalia restructuring/rebranding into ITA hasn't done much to stop it hemorrhaging money
...and is not the first attempt to pretend having an Italian flag carrier.
You mean just like American, Delta and United couldn’t compete in the international open market either?
They just resorted to chapter 11 and started again!
They just resorted to chapter 11 and started again!
Started what again? Do you even know what Chapter 11 is?
Yes. It’s a mechanism whereby American companies can play at being capitalist until they turn into a financial basket case.
The big 3 airlines of the US wouldn’t even exist in the REAL capitalist world where profit is king.
A simple "No" would've saved us both time.
Figured. But thought I'd ask anyway.
argentina is a broke country because it has a broken mentalitty
people just want to sit down and get gov money there
bye bye
Pulling the plug on state support for an airline that is not financial viable is not an absurd idea. A flag carrier should not come at any cost, as Uruguay decided with Pluna and Hungary decided with Malev. Milei would do better to shut the airline down and sell off its assets. Aerolineas Argentinas doesn't have the most modern fleet, but there should be some value there. Without that bloated subsidized mess in the market,...
Pulling the plug on state support for an airline that is not financial viable is not an absurd idea. A flag carrier should not come at any cost, as Uruguay decided with Pluna and Hungary decided with Malev. Milei would do better to shut the airline down and sell off its assets. Aerolineas Argentinas doesn't have the most modern fleet, but there should be some value there. Without that bloated subsidized mess in the market, there might be an opportunity for a new Argentine carrier.
The Argentine government also needs to rationalize operations at distant Ezeiza (BA's version of Narita) and close-in Aeroparque Jorge Newbery to make flying to, and connecting in, BA more attractive.
you dont have asset if you have 8billion debt
go back to school
mormon
"go back to school
mormon"
just beautiful
just beautiful
Right? I guess Joseph Smith didn't teach accounting?
Better holler at Elder Brigham Young... ;)
Jeez really rang the bell with that insightful comment. I really like the way they "Postum" around here.
I'll be here all week.
Haneda has 4 runways, Aeroparque has 1 and it's 1000m shorter than Ezeiza's longest which is probably an issue for fuel-heavy long-haul flights to Europe and North America.
Bingo. Looking at google maps, there’s very little, if any, room to expand AEP without some aggressive imminent domain.
Assets and debt are completely separate, jeeez. In fact, it is probably impossible (absent massive fraud) to accumulate $8 billion in debt if you have no assets. Unfortunately for Aerolineas Argentinas, its debt vastly outstrips its assets, so it's true Argentina almost certainly wouldn't get a dime from selling off the company's assets.
Someone can't read. There isn't $8 billion of outstanding Aerolíneas Argentinas debt. That figure identifies losses since renationalization. The government consistently gave subsidies to the airline to cover the losses, and that sort of government overspend is reflected in debt held by the IMF. From what I've read, Milei is not proposing to transfer any debt to the employee unions. To the contrary, he's proposing to give them working capital as well as the assets,...
Someone can't read. There isn't $8 billion of outstanding Aerolíneas Argentinas debt. That figure identifies losses since renationalization. The government consistently gave subsidies to the airline to cover the losses, and that sort of government overspend is reflected in debt held by the IMF. From what I've read, Milei is not proposing to transfer any debt to the employee unions. To the contrary, he's proposing to give them working capital as well as the assets, which is like lighting (more) money on fire.
Would it be possible for the union to declare bankruptcy and get rid of the debt and start over anew? Since Argentina will be using USD, I have to assume they would be able to do better accounting, labor and maintenance cost, etc. than before since they don’t have to deal with hyperinflation.
With creditors clawing back assets, do you think the unions would downsize their workforce or demand productivity improvements? Doubt it.
Yeah, I'm so sure the Unions would be prudent and cut back redundant positions and wasteful spending......
Likely an attempt to shift the burden of downsizing to the employees.
While the government shares an enormous part of the blame for allowing the status quo to just continue all these years, it would seem giving the airline's control to the other major cause of its inefficiencies (the Unions) is a brilliant idea. The Union leaders will now be forced to make decisions and cuts that go against the bloated nature and cronyism of their very existence.
Hope the new workers airline offers a status match.
James Hogan is just salivating at the idea of throwing a billion dollars at another mess
Can you do an article on the South American Airlines super groups? I've never fully understood LATAM / Avianca operating in multiple countries.
Agree that this would make a great explainer and that I have never understood these groups either!
its simple
Avianca is the worst lost dirty no service airline ever
Latam follows the same
@Super @Chris
If you want the short/simple version:
These are individual airlines that maintain an operational certificate in their respective international countries**, but who share common ownership holding, a livery, and a general directional cooperation.
They're not all that different than AirFrance-KLM, except they've decided to share colors and marketing.
As far as LATAM goes, the ownership structure is a bit tricky:
They're based in Brazil, traded in the USA, but the primary...
@Super @Chris
If you want the short/simple version:
These are individual airlines that maintain an operational certificate in their respective international countries**, but who share common ownership holding, a livery, and a general directional cooperation.
They're not all that different than AirFrance-KLM, except they've decided to share colors and marketing.
As far as LATAM goes, the ownership structure is a bit tricky:
They're based in Brazil, traded in the USA, but the primary shareholder is the bank of Chile. Qatar Airways, Delta Air Lines, and Santander bank are the 3 other large shareholders.
**(in order to maintain the rights to fly internationally from those countries, to other nations with whom that specific country has an bilateral air-authorities agreement).
that should be "independent countries" not "international countries"
Not sure about Avianca but LATAM effectively airlines as separate legal operating entities in each country under the same LATAM brand umbrella. Historically Argentina has had protectionist policies to bolster Aerolíneas from foreign competitors. LATAM gave up on Argentina early in the pandemic.
Look at all government agencies everything becomes bloated and costs always higher. Best method is for them have the airline be privatized by an expert in the field. Turning it private takes the losses off the government books and maybe sneak a clause in there government gets a little money down the line.
Realistically who would fill the gap if they shut down? It would be an opportunity for Latam, Sky or another regional airline?
"Avianca Argentina"?
Avianca Argentina already existed, by 2019. As well as Avianca Brasil, which lasted longer but also went bankrupt.
Giving the company to the works is basically the definition of communism. The real thing, not the boogeyman people are afraid of.
Quite ironic, coming from an ultra libertarian.
United Airlines was employee owned for a short period of time. It didnt work out well.
Not really ironic. He doesn't want to do this because he thinks it will benefit either the airline or the workers. He just wants the country to save some money, watch the airline fail, and then blame the union.
I'm wondering if he's aware enough to figure that out, since the dude seems quite unbalanced. However, in a more sinister perspective, this could be the most Libertarian move out here. Hand it over to the workers, knowing that it will fail, and then forever blame that on leftism, liberalism, communism, socialism, any-ism that they can think of. Definitely going to be worth watching.
He's an economist by training and profession. He may be crazy (not saying he is), but he's not an idiot.
I didn't even realize it was still around. Definitely an airline you don't hear much about anymore.
Are there any airlines in the world that are "run by the unions?". I assume not?
The only chance of rescue I would see is if a successful foreign airline/airline group purchased a controlling stake and used their expertise and resources to turn it around (like Lufthansa Group with ITA)
Bluestar Airlines