In late 2023, Javier Milei was elected 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 wasn’t 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, and many assumed the situation couldn’t get worse.
Milei is an ultra-libertarian, and wants the state to stay out of most things, including the country’s struggling national airline. Shortly after being elected, he committed to privatizing Aerolineas Argentinas. While nothing has been finalized yet, the situation keeps getting more contentious, and airline unions are now basically at war with the president.
In this post:
Milei demands Aerolineas Argentinas be privatized
Milei wants the government to no longer be involved with Aerolineas Argentinas, the country’s national carrier, which also controls two-thirds of the domestic market.
This past week, Milei issued a decree declaring that Aerolineas Argentinas is “subject to privatization,” which is intended to speed up the effort to sell the airline. This requires congressional approval, and it remains to be seen what will happen there.
As Transport Secretary Franco Mogetta explains, “this company has cost the state billions of dollars, which have come out of the pockets of all Argentines, including many who have never stepped foot on a plane,” and “we insist it must be privatised.”
Of course the challenge is figuring out which private entity would want to take control of an airline that has been losing billions of dollars for years, especially in a market like Argentina, which isn’t exactly stable.
When Milei was first elected, his plan was to hand over control of the airline to “the workers” (which in this case means the unions), and at the same time encourage competition to enter the market, by allowing foreign airlines to operate domestic flights within Argentina.
As he explained at the time, “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,” and that “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 16 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.
Milei tries to ban airline staff from striking
In recent weeks, we’ve seen tensions escalate between Milei and the unions representing Aerolineas Argentinas employees. Labor unions at the airline have been requesting pay increases, given that Argentina has seen triple digit inflation.
In mid-September 2024 there was a strike that saw all Aerolineas Argentinas flights canceled for 24 hours. Milei and his government have reportedly refused to engage in any dialogue with labor unions. Instead, Milei has fired some pilots for going on strike, and has also tried to declare air travel an essential service, which would prevent strikes from being allowed. However, a court overruled that plan.
There’s no resolution here, as employees at Aerolineas Argentinas are planning more strikes, which the government is continuing to try and block.
I’m curious to see how this plays out
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.
At this point, Aerolineas Argentinas is one of the few national airlines in South America that’s government owned, with the others being in Bolivia and Venezuela (yay Boliviana de Aviaicion, though, am I right?!).
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. It’s hard to battle inflation if the government doesn’t cut back on spending. Conversely, there is major economic 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, what I do take issues with is Milei’s approach toward labor. On the one hand, he wants the airline to be privatized, and to not be the government’s responsibility. But on the other hand, he wants to be able to declare that workers can’t go on strike, because they’re essential. It seems like those two things would be at odds with one another, at least to some extent.
Bottom line
In late 2023, Argentina elected an ultra-libertarian president. 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, and is one of the president’s primary targets.
While he has been talking about these plans for nearly a year, he has issued a decree in the past week to expedite this, so we’ll see how it plays out.
As you’d expect, employees of the airline aren’t happy about this, and are continuing to request pay increases, to help offset the country’s wild inflation. The government is responding by firing employees for striking, and trying (unsuccessfully) to declare them as essential employees who can’t strike.
This situation is messy….
How do you see this situation playing out for Aerolineas Argentinas?
Perhaps he should work to fix the mess of Argentina before focusing on a fluff crusade of AR. It’s like having cancer but focusing on a hangnail as a distractive solution.
This was viewed as helping "fix the mess" by cutting the cost of the country funding the airline losses from the budget.
So that is what he is trying to do.
Why is this fluff? Aerolineas has lost more than us$8 billion since 2018, which is more than $1.3m a day, in a country with no money at all. The airlines lost hundreds of millions of us$ last year, and were able to mask some of that by accounting tricks to use two different exchange rates (MEP vs. official) for income and expenses "un truco". The company has around us$600 in debt. the vast majority of...
Why is this fluff? Aerolineas has lost more than us$8 billion since 2018, which is more than $1.3m a day, in a country with no money at all. The airlines lost hundreds of millions of us$ last year, and were able to mask some of that by accounting tricks to use two different exchange rates (MEP vs. official) for income and expenses "un truco". The company has around us$600 in debt. the vast majority of the plane are leased (52 of 81). They have pilots working 46 hours a month and they are on strike because they and their family don't get seats in business class. With the inefficiencies and debt, the company is essentially worthless.
Argentina is not a huge economically that can loose this $. Almost no one has a formal (tax paying) job, but everyone demands pensions and education for free. The non-government payroll that actually works on the books is around 11% of the working population so the only way to pay for this is inflation of hundreds of percent, and loans. The country owes $400b in external debt, and a single payment of say $8b can be more that that month's total budget. They are a serial defaulter, and have gotten caught fibbing economic data, so no sane bank will loan them a peso. They owe the IMF (lender of last resort) more than every country on the planet. Their bonds trade around 25-30 cents on the dollar and are rated as junk.
So, no, it's not a fluff crusade to stop the bleeding
The only reason a foreign airline would step in would be if they ended up with significant slots at AEP and not be forced to serve unprofitable routes. Argentina and Chile are very long countries that require air service, however without subsidies some routes won’t be commercially sustainable
One Word: Alitalia
I would also have thought LATAM might resurrect its defunct LATAM Argentina which was disbanded in 2020 due to issues surrounding Buenos Aires' 2nd airport Newburry. Interestingly, Delta owns 20% of LATAM Group and is a member of SkyTeam. If LATAM were to take over more of the market share of Aerolineas Argentina - it would stay in SkyTeam Alliance.
The Argentine government created a second airline, Flybondi, in 2018. Then, government meddling killed LAN Argentina (LATAM) at the beginning of Covid. Both Aerolíneas and Flybiondi should be privatized. This year I have flown Aerolíneas 8 times, mainly because my Air France Gold status gets a few benefits, but the app and website are archaic and the airline will involuntarily change your departure to EZE after you buy tickets from AEP. They don't care about...
The Argentine government created a second airline, Flybondi, in 2018. Then, government meddling killed LAN Argentina (LATAM) at the beginning of Covid. Both Aerolíneas and Flybiondi should be privatized. This year I have flown Aerolíneas 8 times, mainly because my Air France Gold status gets a few benefits, but the app and website are archaic and the airline will involuntarily change your departure to EZE after you buy tickets from AEP. They don't care about customers because they have a near monopoly.
The President is a professor of economics and has been chief economist in a private company. I think he knows what he's doing about the economy. Let the airline workers own the airline and figure it out, it makes total sense. If it fails, some foreign or private airline will come in to pick up the slack.
so many airlines around the world are bailed out all the time. Air Canada is a classic example, its private but constantly get money.
Ben, write about an airline business situation and here comes all the unsolicited political commentary.
They can't help themselves.
Unions suck. Anyone read about the longshoremen union that just "paused" it's strike? 50,000 workers, but only 25,000 of them actually WORK anymore due to the Union paying members to stay home from work from previous agreements. Also the Union leader is a multi-millionaire who's two sons also get SIX FIGURE salaries from the Union because of Daddio. Imagine how much more affordable shipping would be if the labor cost was cut by half (those...
Unions suck. Anyone read about the longshoremen union that just "paused" it's strike? 50,000 workers, but only 25,000 of them actually WORK anymore due to the Union paying members to stay home from work from previous agreements. Also the Union leader is a multi-millionaire who's two sons also get SIX FIGURE salaries from the Union because of Daddio. Imagine how much more affordable shipping would be if the labor cost was cut by half (those 25k "Ghost" workers)??? Inefficient, ineffective, and Inept: Unions.
You generalize so much in your comments like an inept idiot politician. Facts, reasoned discussion? Nope, that's not your thing.
You should direct those comments more at Delta's #1 PREMIUM fanboy.
A union put me through high school and college. A union put clothes on my back and food in my mouth. Your opinion is like your sphincter: it stinks and waste comes out of it.
Give the airline to the employees and let them figure it out. Let's see how long they last. Argentina taxpayers should not be paying for an airline that has LOST $8 BILLION dollars and by Lucky's own words, hasn't made money in 34 YEARS. Time to let it go.
Has Tim Dunn ever been outside of Atlanta? Does he know the Argentine economy?
I worked there for 20 years so I have a good perspective - including the horrible dollarization of the economy which was a trainwreck.
I don’t live in Atlanta or any other Delta hub. Intelligent free, thinking people can live anywhere in the country and world.
"Intelligent free" is by far the best way you ever described yourself. Kudos.
the comma is in the wrong place as in "intelligent, free thinking..."
but, let's face it... when you don't like the message, shoot the messenger.
It's time for Argentina's taxpayers to cut the cord on AR.
Opening up the Argentinian airline market to foreign competitors ensures that the country will not lack for air service and will be the biggest kick in the backside that the employees of AR have to deal with reality...
the comma is in the wrong place as in "intelligent, free thinking..."
but, let's face it... when you don't like the message, shoot the messenger.
It's time for Argentina's taxpayers to cut the cord on AR.
Opening up the Argentinian airline market to foreign competitors ensures that the country will not lack for air service and will be the biggest kick in the backside that the employees of AR have to deal with reality which is that their jobs could be very short-lived if they can't figure how to turn the company around
On this matter, I agree with Tim Dunn (I don't always, but he is correct on this one)
The people who are getting hammered the hardest by this wack job are the poorest.
Argentina's poverty rate has soared to almost 53% in the first six months of Javier Milei's presidency, offering the first hard evidence of how the far-right libertarian's tough austerity measures are hitting the population.Sep 27, 2024 The Guardian
Hmm. Are you and your Guardian pals saying Argentina was an economic paradise last Dec. and somehow Milei ruined everything? Because last year inflation was 210%+ and poverty rate was 46%.
Milei is not spending money that Argentina doesn't have. That's the only difference in the economy since last year, they are not printing imaginary money or spending IMF loans. Why? - no one will loan them anything.
The economy has been disconnected...
Hmm. Are you and your Guardian pals saying Argentina was an economic paradise last Dec. and somehow Milei ruined everything? Because last year inflation was 210%+ and poverty rate was 46%.
Milei is not spending money that Argentina doesn't have. That's the only difference in the economy since last year, they are not printing imaginary money or spending IMF loans. Why? - no one will loan them anything.
The economy has been disconnected from reality for 30+ years, and some "wack job" has to clean up the mess. You're right, the pain is real. But the country racked up $400B in debt long before Milei. They spent 20%+ more than they had every year for decades, long before this wack job. They've added millions of people to the pension system who almost nothing, and have one of the shortest retirement minimums, but with almost no one in the non-government formal economy paying taxes to support this. Likewise there's demands for peoples "rights" to free university education, etc/ that the population demands, but mathematically, other than sales tax, almost no one is paying for anything, for decades. The "adjustment" is simply making the exchange rate a tiny closer to the real currency value by removing one of the 11 tricks they had been using to prop up a fake exchange rate, (which of course had been paid for by US taxpayers in IMF loans for unsustainable social spending.)
You can say the current pres is a wack job, no argument, but to say that he created this mess is nonsense. . it is. Aerolineas is a perfect example - it looses billions for a country that literally has no cash and only 10% can afford to fly, and yet some people try to wrap in in bizarre social justice to explain its existence.
Milei has been abandoning his own people to please extremists like Musk and war criminals like Netanyahu.
Musk an extremist? Hahahaha. Extremely smart? Extremely successful at making transportation more carbon friendly? He’s a moderate liberal, just ask him.
I realize we live in a highly polarized world, but business people should be seen for what they do in accomplish and not by what they believe. Managed to get Internet into storm ravaged North Carolina when the government struggles to even find people who have been missing for a week.
Then why is Melonhusk blasting out far right propaganda on the website that he blew $44 billion on? If you think he's moderate or liberal, you haven't been paying attention the last few years.
Says the Hamas supporter.
Miles has been abandoning his own people to please extremists like Musk and war criminals like Netanyahu.
Lucky,
Much of what he has tried is working to help Argentina's economy. He eliminated price controls on apartments and the average price came down. That is because many landlords kept their property off the market due to the controls. Now that there is better supply the prices are more manageable. Similarly he has slowed the inflation rate. Argentina, as I'm sure you know, has been in a horrible place economically the last few years...
Lucky,
Much of what he has tried is working to help Argentina's economy. He eliminated price controls on apartments and the average price came down. That is because many landlords kept their property off the market due to the controls. Now that there is better supply the prices are more manageable. Similarly he has slowed the inflation rate. Argentina, as I'm sure you know, has been in a horrible place economically the last few years and a new approach is needed. Not saying all he tries will work but it is clear continuing the same old way wasn't going to cut it.
How does one privatise an “essential service”? Lolol. Funny guy.
I don’t know the condition of that country’s air travel market but maybe they could benefit from a dependable, punctual low cost airline to connect the country. In private hands, of course.
Easy to privatize an essential service. Many countries have privatized airlines and most leading countries do not have state owned airlines
Are there any (not government subsidised) essential services anywhere in the world that make a profit for the operator?
If there are, I wonder then why they are classified as essential services....
OMAAT audience has been so supportive of this willy for being a libertarian.
Let's see how fast they'll change their stances for the same guy they've been praising about for banning strikes - something that OMAAT audience have been valuing more than their lives.
To be fair, if they actually do change their stance and look this guy negatively, at least they're turning for a good sake, so not complaining there IG.
Banning strikes is not just the preserve of the 'radical right'. Here in socialist Spain, many air routes are subject, by law, to a minimum frequency, strike or not.
Regardless of what Ben thinks, Argentina has been an economic disaster for decades under socialists. Ben rarely demonstrates an understanding of economics. The Argentinian people reached the point where somebody had to take charge and make tough decisions.
Airlines have been deregulated around the world because the free market is fully capable of managing them better than state entities.
Unions are notoriously, unwilling to face economic realities, and that has been true with Aerolineas...
Regardless of what Ben thinks, Argentina has been an economic disaster for decades under socialists. Ben rarely demonstrates an understanding of economics. The Argentinian people reached the point where somebody had to take charge and make tough decisions.
Airlines have been deregulated around the world because the free market is fully capable of managing them better than state entities.
Unions are notoriously, unwilling to face economic realities, and that has been true with Aerolineas Argentinas.
The Argentinian government decision to open the market to full foreign competition first ensures that AR will be taken off the backs of Argentinian taxpayers one way or the other. That airline will either be forced to shrink and employee counts reduced to a level where it is profitable or foreign competitors will take its place. That is the cold, hard economic reality. It doesn’t matter whether it’s a foreign government or shareholders, the bleeding will stop in any business And in any country that is dependent on other countries for its survival which certainly includes Argentina, which has enormous amounts of foreign debt
Nobody should be surprised that this Argentinian government is doing what nobody else was willing to do. Airlines are high profile enough that the public is no longer willing to see a handful of people disproportionately benefiting while the rest of the public struggles.
What you said about Argentina may be true, but this moron they elected is hardly the answer.
he may or may not be but the gravy train ran out. Argentina is a democracy and that is what they chose.
among other things, they may not have an Argentinian international airline in a few years = but I doubt that is anywhere close to a concern for the vast majority of people.
Kind of changing the goal posts? Democracy has nothing to do with the decision, other than showing that people will vote for morns, as they did here.
I think this is the first time I’ve agreed with Mr. Tim Dunn
Tim's absolutely right, the same applies to Trump, Bolsonaro, and other controversial figures the world over (but not Maduro who's clearly rigging elections).
The anti-populism narrative that is peddled by various people is profoundly undemocratic and often ends up spectacularly backfiring by helping populists convince voters that 'the establishment' or whatever is persecuting them. Voters are responsible for making decisions, reaping the (positive, negative, or otherwise) consequences and learning from the past.
Tim's absolutely right, the same applies to Trump, Bolsonaro, and other controversial figures the world over (but not Maduro who's clearly rigging elections).
The anti-populism narrative that is peddled by various people is profoundly undemocratic and often ends up spectacularly backfiring by helping populists convince voters that 'the establishment' or whatever is persecuting them. Voters are responsible for making decisions, reaping the (positive, negative, or otherwise) consequences and learning from the past.
And other than Maduro, all those people were failures who were voted out of office.
That's what democracy is all about!
Except voters are choosing now based on lies and showmanship that feeds into their worst impulses; many are not voting based on economic policies or plans, or social policies and investments. When information and truth is obfuscated, manufactured, or hidden by "free speech advocates," the voters are not part of a democratic process - they are part of scam.
do you honestly think that socialism tells everybody the truth either?
do you honestly think that socialism tells everybody the truth either?
Ah yes another right wing GOP nutcase this Tim Dumb
Literally not one answer/counterpoint to what was said, just a bunch of internet jokes and insults. Definitely some educated folks on these comment threads.
Nothing he said indicates GOP nutcase. Wat his argument lays out was widely accepted by both liberals and conservatives for many years. Milei may not be liked for his personality but let's see if his policies work a few years from now. Why burden the working class tax base with paying for services that disproportionately benefit others?
Interesting that Ben goes out of the way to define Milei as an extreme libertarian, but is extremely reluctant to give him any credit for what many consider to be a remarkable economic turnaround. I bet Ben was one of the Americans absolutely sure that the populist was going to destroy Argentina's economy because MSNBC told him so.
Yes, I'd encourage anyone interested to look into the remarkable economic turnaround in Argentina!
https://www.reuters.com/world/americas/argentina-economy-shrinks-17-q2-extending-recession-2024-09-18/
https://apnews.com/article/argentina-poverty-milei-economy-crisis-f766deb9302aa4ddde1bb9ae26aaf7af
Access denied to your link
@Calldude, interesting, which one? I don't have subscriptions to either and can get the full article for both links. In any event, try these to understand the remarkable economic turnaround in Argentina!
https://finance.yahoo.com/news/argentina-economy-forecast-extend-recession-181328705.html
https://www.bbc.com/news/articles/ceqn751x19no
All links worked for me.
It's hysterical to see folks trashing Milei less than a year into his tenure when he's had the unenviable task of cleaning up 80+ years of Peronist trash!
https://www.semafor.com/article/07/19/2024/argentinas-economy-is-growing-beyond-expectations
There is so much waste in the public sector of Argentina. I applaud all efforts to increase competition and deregulation to allow a proper free market to flourish. Also, further reductions in the crazy high taxes for international flights departing Argentina (which can represent over 200% of the return segment) need to be axed as soon as possible. The new administration is trying to inject some austerity measures, and is slowly reducing taxes to mitigate...
There is so much waste in the public sector of Argentina. I applaud all efforts to increase competition and deregulation to allow a proper free market to flourish. Also, further reductions in the crazy high taxes for international flights departing Argentina (which can represent over 200% of the return segment) need to be axed as soon as possible. The new administration is trying to inject some austerity measures, and is slowly reducing taxes to mitigate inflation; however, generations of overspending through failed socialist policies and the lack of adequate foreign reserves have made it difficult to pay off outstanding national debts and create a balanced budget.
Milei, Trump, Musk bad
Fauci, Kamala, Starmer good
This is axiomatic. Everything else is based on these unarguable truths. And if even a slightly alternate view is entertained, many apologies must be made for that.
Hey Simon! Any thoughts on why the woman is the only one referred to by first name here? Thanks!!
Spoken like a true first year sociology major.
I did realize that after posting. But that was not intentional. Rather, Harris is a relatively common surname while Kamala is a unique and instantly recognizable name.
I know - next step is to accuse me of inherent bias, but there was no ill intent and certainly no offense meant.
For example, many say Trump instead of “President Trump”, which is a title he and all other ex-presidents keep for life.
I don't say "Trump". I just say "Mango Mussolini".
"Trust the science..."
The airline has no value. Give it to me free and free of debt and I would not want it. If I cut the bloated workforce, the rest will strike.
Delta is the greatest airline in the world so it should take control.
This is obviously a very hot topic down here . What I can say is that there’s obviously another side to this, with plenty of reasons to keep the company around - and in the state’s hands.
The most obvious one is that it currently connects a ton of cities, while private companies have no intention of doing that (being for costs, the economy, demand or a bit of everything).
It’s been told...
This is obviously a very hot topic down here . What I can say is that there’s obviously another side to this, with plenty of reasons to keep the company around - and in the state’s hands.
The most obvious one is that it currently connects a ton of cities, while private companies have no intention of doing that (being for costs, the economy, demand or a bit of everything).
It’s been told that the company has been to close to profitability in 2023 and that was a sustained trend until the government changed. Even if it’s not, the economic benefit for the country is several times it’s deficit.
This new government is mental (in all fronts and topics). Half the country worries of how much they are gonna sell and/or destroy. It’s not fun.
I have neither in-depth knowledge in nor a huge appetite to talk about the political situation in Argentina. However, the connectivity point is moot. The EU has developed an elaborate system of subsidies for defined routes awarded through competitive tendering (PSO framework) which anyone can copy and apply elsewhere in the world. There will definitely be people interested in bidding for those subsidies, particularly if foreign entities are allowed to participate.
Private companies aren't serving the city pairs because they are NOT profitable! There is no economic reason to serve the city pairs. it's like saying let's connect Little Rock, Arkansas to Spokane, Washington because it connects these cities.... Would you keep paying for a service (out of your own paycheck) you don't use because it is "good to have it"?
no, you can read the audit (happy to provide link. if you have some credible primary source, please provide it ) They actually lost hundreds of millions of dollars last year they have never been close to profitability. They tried pulling an interesting trick, using two different exchange rates for income and expenses, but there's no generally recognized accounting method that didn't show 2023 as another disaster. Since the it was returned to a state...
no, you can read the audit (happy to provide link. if you have some credible primary source, please provide it ) They actually lost hundreds of millions of dollars last year they have never been close to profitability. They tried pulling an interesting trick, using two different exchange rates for income and expenses, but there's no generally recognized accounting method that didn't show 2023 as another disaster. Since the it was returned to a state company in 2008 they have cost the citizens more than $8B, which is more than $1.3m a day. This is not a country with that kind of $.
To all the Milei bashers, I agree. But then go look at the monthly financials on the .ar treasury website. There is literally no money.
Aerolineas has $600m of debt and most of the fleet is leased. The pilots work 46 hours a month and last week went on strike went their family couldn't take Business Class for free. They are convinced that every airline pilot in the world also enjoys their birthday (and the next day for hangovers) off. (Seriously, look it up)
My point being, there's nothing "to destroy"
I am curious, what are your "plenty of reasons" to keep paying for this. Again, aviation is a USD industry, and there literally are none in Ar. There's only a small percentage of the country who can afford to fly. If it's rural connectivity, the 25 or so routes in question could certainly be subsidized for less than $1.3m a day, right?
It's so interesting to read OMAAT's stance on this.
Should immediately privatize
No mention of the Unions at EZE (Buenos Aires) international airport. They have a long history of deciding not to service a flight, showing up 12 hours late; just before the 2023 Election DL had massive delays/cancellations a couple times a week, eg, 10/27 DL 101 scheduled for 10:35p left at 1:30a.