Aerolineas Argentinas has spent 2024 in the midst of a process of shrinking and massive cost-cutting. The reason is the plans to privatize the state-owned and largest airline in the country, launched by President Javier Milei.
Since his 2023 election campaign, the ‘libertarian’ Milei has been announcing that he would sell the loss-making carrier back to private capital, but the process has been tortuous.
While it has secured the necessary approvals to put it up for auction, the current administration has been cutting costs in order to improve its financial situation.
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According to Reuters, 13% of the workforce has been laid off while less profitable routes have been cut and services such as on-board snacks have been eliminated.
Milei says that Aerolineas has consumed US$8 billion in government funds since 2008, when it was renationalized. In the 1990s, then-President Carlos Menem had privatized it and transferred it to a group that included Spain’s Iberia.
Owners of Avianca and Gol are interested in privatization
The Argentine air travel market underwent a major deregulation process during President Mauricio Macri’s administration.
New airlines emerged and began to compete for market share with Aerolineas, which until then had held a near monopoly, but with Alberto Fernández’s inauguration, the state-owned company once again began to count on government aid.
The new privatization is seen as one of the solutions for the flagship airline. The other would be its closure.
Milei has already said that he intends for employees to have a shareholding in the company, but it is not yet clear which groups might be interested in buying it.
So far, only Grupo Abra, which controls Colombia’s Avianca, and Brazil’s Gol, have shown interest in Aerolineas, which has had a joint venture since 2023.
However, Chile’s LATAM has signed code-share agreements with the Argentine carrier that apply to its subsidiaries in Brazil, Colombia, Ecuador, Paraguay and Peru.
To put Aerolineas Argentinas up for auction, Milei will have to obtain approval from the country’s parliament, which should be attempted in early 2025, before the legislative elections.
The airline’s fleet currently consists of 83 aircraft, including ten Airbus A330-200s, 49 Boeing 737s (12 of which are MAX 8 variants) and 24 Embraer E190s.
