View Full Version : Any more news on Aerolineas??

Eastwest Loco
21st Jun 2001, 13:31
Hi Ppruners.

Just wondering if anyone has any further news on the impending shutdown of AR.

There has been ZERO news out here in the antipodes and the AR staff are not saying a word - obviously dirty at Aussies after QF cancelled code share arrangements with no notice on the transpolar flights.

Any input would be greatly appreciated and is desperately needed.

Best regards all.


21st Jun 2001, 15:36
Hi Eastwest, what's with the new thread?

As per old thread, airline due to hold meeting today to decide whether to claim insolvency.

Yesterday, a Peruvian concern - Aero Continente offered to purchase the airline.

Today, Spain's Finance Minister said that he would not contemplate selling the airline to an insolvent buyer. Not clear whether he meant AC!!

Eastwest Loco
21st Jun 2001, 16:14
Thanks news

I obviously have my timelines wrong. Sorry.

Thanks for the new updates - we are getting absolutely squat out here.

I hadnt had any posts on the old topic and figured it was dead.

Best regards


Jorge Newberry
21st Jun 2001, 21:26
It's a confusing mess but it ssems pretty clear that it's only a matter of days now.

The directors are meeting today to decide whether to initate a "convocatoria de acreedores" a sort of pre-bankruptcy proceedings. They have said that the only thing that will stop them from doing this is if the technicians union signs the new directors plan entailing cuts in wages, longer hours etc. All the other unions have expressed their willingness to sign.

The press here is full of hints that Cirielli - boss of the technichans union - is close to Eduardo Eurnakian, head of AA2000, the company that runs the country's major airports. Eurnakain, already a substansial shareholder in Southern Winds, is allegedly very keen to become the owner of the nations major airline as well as its airports.

Eurnakian has also been reported to be a great mate of Domingo Cavallo, the current Finance Minister and to have given the nation's entirely sane and in no way megalomaniac virtual president, the occasional lift in his private jet.Of course only communists, and evil-minded conspiracy theorists would read anything into that.

Cirielli says he won't sign because the Spanish intend to do what they did to VIASA and shut the company down anyway.

A federal judge last night ordered Aerol'neas to continue trading and flying the routes the government has ssigned to it but nobody - probably not even the judge herself - expects anyone to take any notice of this. Business is business after all.

My money is on Aerol'neas going bust, a gleefull Eurnakian leading a consortium to pick up the pieces and at least half the current workforce to lose their jobs.

22nd Jun 2001, 12:46

Nice to see some "local" input. Following on from yesterday, AP carries this:

"Aerolineas Argentinas filed for protection from its creditors Thursday, a sign the Spanish government may be ready to sell the troubled airline to private owners.

Saddled with nearly $1 billion in debt and facing bankruptcy, Aerolineas has been embroiled in a protracted labor dispute with airline unions over a cost-cutting plan to keep the air carrier afloat.

But talks between unions and the Spanish government, Aerolineas' largest shareholder, have stalled over the plan, which calls for large-scale layoffs. The airline is losing $20 million to $30 million a month.

Spanish holding company SEPI has warned it might be forced to close Aerolineas if the airline's seven unions don't agree to an austerity plan setting new worker rules, lower salaries and layoffs.

To date, only five of the company's seven unions have backed the plan.

On Thursday, Aerolineas' board of directors announced its latest move to file for bankruptcy protection in a statement. Analysts said the company wanted to protect its interests ahead of a possible sale.

"We deeply regret reaching this situation due to the uncompromising attitude of two unions that have put their jobs at risk," the statement read.

Privatized by the Argentine government in 1991, Areolineas is now 90 percent- owned by SEPI. The government, which owns 5 percent of the airline, has intervened a number of times to mediate labor disputes between the companies' unions and SEPI.

Both the Spanish and Argentine governments have refused to pour any more money into the fledgling airline."

Eastwest Loco
22nd Jun 2001, 14:38
Thank you Jorge and News

It is obvious that even the staff down here in Oz dont have the faintest as to what is transpiring.

My agency has rerouted clients over SCL and LAX and MIA to stay away from this debacle.

I am sure it must be like '89 in Australiia all over again for those involved.

A great number of air and ground crews looking at a very bleak future - and very very little coverage - at least out here.

All I can say is good luck guys and girls - and please please - post any new information here.

I have made this sites name available to my franchises network and to others as well - so Aussie will be watching.

A well informed Travel community can switch the lights back on immediatelly a resolution is at hand - and start pouring millions back into the operation.

Thanks again for the news (from EWL in the info black hole).

Best regards as always


27th Jun 2001, 12:23
Hi East West, further bulletin, this from Wall Street Journal:

"Troubled national carrier, Aerolineas Argentinas, plans to maintain scheduled flights, despite filing for bankruptcy protection last week, union leaders said Monday.

Union leaders made the statement after all seven of the airline's guilds met Monday to discuss Aerolineas' current situation.

Earlier news reports said the company might cancel flights once more because the company didn't feel adequate "security conditions existed."

However, Edgardo Llano, number two at the Aeronautic Personnel Association union, said the company denied these rumors and assured union leaders the company would keep flying.

The flagship airline, struggling under $1.2 billion in debt and set to lose $600 million this year, filed for bankruptcy protection last Thursday after it failed to resolve long-running disputes with labor unions over a restructuring plan.

Union leaders charged that the talk of suspending flights was in response to the meeting bringing together all seven unions.

"This is another one of the strategies that [Spain's State Industrial Holdings Co.] SEPI is trying and is in response to the meeting Monday of the seven unions," Ricardo Cirielli, head of the Aeronautic Technical Personnel Association, said.

The unions' united front is a change from the earlier bickering among each other after two unions refused to sign on to an earlier plan designed to save the company.

The unions were angered by a plan put forward by SEPI that called for pay cuts and a hiring freeze to save Aerolineas, which is struggling under nearly $1 billion in debt and losing $20 million to $30 million a month.

SEPI, which controls 90% of Aerolineas, had refused to put fresh funds into the struggling company unless all seven unions agreed to their plan of salary cuts and hiring freezes.

Earlier this month, Argentine President Fernando de la Rua dispatched a deputy to Madrid after Aerolineas suspended flights outside Latin America, saying it couldn't afford to buy fuel. Argentina's labor minister had called on Spain to cover the company's debts so it can be sold to a third party.

Another Argentine cabinet member threatened to auction off the seven international routes that Aerolineas suspended in early June, including New York and Miami, if the airline doesn't reinstate them.

Neither the Spanish nor Argentine government wants to put more money into Aerolineas. However, there is significant political pressure in Argentina to keep the airline flying.

Airline unions say corporate mismanagement rather than wages or employee headcount are at the root of the airline's troubles. "Even if we all worked for free the company would lose money," said Gabriel Mocho Rodriguez, spokesman for the national crewmembers' union.

Since early May the airline has been essentially paralyzed by the labor disputes. Aerolineas is flying at only 20% to 30% of capacity after suspending almost all international flights and six domestic flights.

The government privatized Aerolineas Argentinas in 1991 with SEPI becoming the primary shareholder with more than 90% of the shares. Argentina retained a 5% stake in the company and during the past 10 years has intervened at various times in labor disputes between the companies' unions and SEPI.

Neither the Spanish nor Argentine government wants to put more money into Aerolineas. However, there is significant political pressure in Argentina to keep the airline flying.

Union leaders favor the renationalization of the airline and are opposed to Aerolineas's sale to another company. However, government officials strongly criticize talk of returning the airline to state ownership.

However, Economy Minister Domingo Cavallo, speaking at the Argentine Bank Association conference, reiterated Monday that the government didn't have the funds to do so.

On June 20, Peruvian air carrier Grupo Aero Continente made an offer to buy all outstanding shares of Aerolineas but analysts said this might be more of a publicity stunt than a serious offer.

Airline-industry analysts have also mentioned LAN Chile as a potential buyer."

Eastwest Loco
27th Jun 2001, 14:35
Thank you so much news - If ever an off the thread post was welcomed - it was yours mate.

For your info - QF has officially and publicly severed all arrangements with AR - as to code share and oncarriage which cant help their plight.

Oncarriage arrangements with RG have been put in place and all their market nets over EZE now reflect this.

Once again news - thanks heaps as we are still in a relative black hole here re this chain of events. Comes to something when I can deliver info to airline State Managers!!!

You may be able to contribute to the thread too news! Dig into the memory bank!!



Eastwest Loco
27th Jun 2001, 14:40
Ooops - sorry news - I assumed you had dropped into my current thread in Dunnundah - funniest onboard announcements.

Dur!!!! What a git I am!!!

Maybe you would get a giggle reading in mate.

Thanks again - a thick EWL! http://www.pprune.org/ubb/NonCGI/eek.gif

29th Jun 2001, 19:51
Doing my best to ignore the ramblings of a temporarily deranged EWL, the following appeared in yesterday's Buenos Aires Herald paper, not very encouraging:

"According to reliable sources Aerol'neas Argentinas employees have put together a proposal whereby they are seeking to purchase the airline themselves. This new proposal, which has been called Cooperativa Aérea Argentina, or CAAR, has tabled the following proposals:

• A debt reduction of 50 percent
• A 50 percent tax reduction
• A five-year tax holiday
• A return of all its historic routes
• A government investigation of the last 10 years

In return the employees are prepared to offer:

• Salary reductions in proportion to income
• Staff reductions in all areas
• Democratic union meetings with secret ballots
• Voluntary retirement programmes paid by employees themselves
• If the airline is producing a loss by year five, indemnity payments are cancelled and the airline closes.
• Management appointed in open selection procedure

A reserve fund would be set up and each employee would have a share in the company depending on years worked and salary level.
Other parts of the proposal are that each employee would have one vote at union meetings, each union would have one vote on company decisions and voting will be secret and obligatory.

Employees would be allowed to sell their shares, which would be listed on the stock exchange, but would lose their right to vote if sold before three years.

Voluntary retirements would be paid out of the salary reserve fund and directors would be chosen through a selection process and paid a maximum of $20,000. Area managers would be selected - and fired if inefficient - by their colleagues.

This new proposal has the unmistakable flavour of the old state nostalgia as for five years it proposes a complete tax holiday.

What is worse is that again a huge state apparatus is built up with monopoly conditions to the detriment of the private sector which is itself in the midst of a serious crisis out of which nobody is helping it to survive.

Also not answered in the proposal is who settles the remaining 50 percent debt that hasn’t been condoned?

These proposals are a blatant attempt to destroy market competition and distort market forces as its main aim is to return to the status quo that existed before the airline was privatized in 1990.

Also relevant is that the proposal makes no reference to key issues such as fleet management and personnel management.

It would seem that any measure now goes to save the Condor, closer to extinction than to death.

Currently Aerol'neas Argentinas and its subsidiary Austral have a domestic market share of 16 percent while the remainder is split up among LAPA, with 49 percent, Dinar 17 percent, Southern Winds 13 percent and the rest 5 percent."

Jorge Newberry
30th Jun 2001, 04:11
Papers here today say there is only money for another weeks ops. SEPI says they aren't going to put in another cent. Various legal processes are in train accusing the spanish of such charmingly archaic crimes as "economic sabotage" Meanwhile Eurnekian watches and waits.

Asking for a five year tax holiday doesn't seem too unreasonable to me. Big business generally doesn't pay tax here and the above-mentioned Mr E's AA2000, is in "dispute" with the Revenue to the extent of various tens of millions of dollars over it's tax liabilities.

Aero Continente? The papers here are full of nasty, malcious gossip that they are a bunch narcotraficantes. I just can't believe how they get away with printing that kind of rubbish.

Eastwest Loco
30th Jun 2001, 10:00
Thanks Jorge and news.

Yep - EWL was mentally challenged news - and not sure anything has changed.

This sounds like a major mess.

We have airlines out here falling around our ears as well - but not the flag carrier thankfully.

Impulse and Flight West for two - with one major looking shakey and totally non viable if not for the SQ involvement.

We do live in interesting times!!!

Thanks again for the update.

Best always


13th Jul 2001, 15:44
EWL, news from "TheDeal.com:

"Aerocontinente SA, Peru's largest commercial airline, has hopes of being the savior of bankrupt Aerol'neas Argentinas SA.

On July 12, Aerocontinente presented a $100 million bid, which would include the assumption of $900 million in debt, to take over Argentina's flagship air carrier, which is majority held by Spain's state-owned Sociedad de Participaciones Estatales, or SEPI.

Lima-based Aerocontinente is the fourth entity to express an interest in buying the struggling carrier since SEPI began seeking a buyer in recent months but the first to present a formal financial bid.

"We are very interested in buying Aerolineas," said a Aerocontinente spokesman, who spoke on condition of anonymity. "We are the first one's to make an actual price offer for the airline."

He said the Peruvian company hopes to begin negotiations with SEPI by July 23, the day Aerolinea's shareholders will vote on whether to continue restructuring the carrier or liquidate it.

The spokesman said Aerocontinente, which is owned by Peru's Cevallos family, would also assume all of Aerolinea's debt, which it would amortize in 10 years. As part of a package sale, Aerocontinente would also buy regional airline Austral, which also belongs to the SEPI.

Aerocontinente was scheduled to outline the details of its offer for Aerolineas in Buenos Aires late Thursday.

Madrid-based SEPI, which owns 91.7% of the Argentine airline, wouldn't comment on Aerocontinente's proposal. A spokeswoman for Aerolineas also did not comment.

Aerolinea's routes in Europe, Australia and America would represent valuable assets for Aerocontinente, which is eager to expand its international flights.

"Their routes are interesting and would allow us to continue growing," the spokesman said. Aerocontinente boasts 67% of Peru's airline market, ahead of Peruvian state-owned Tans SA, and Lan Peru.

Argentina's airport-management company, Grupo Eurnekian, and financial conglomerate Grupo Pellegrini are two of the companies that have expressed an interest in buying Aerolineas. Spain's charter air group, Grupo Marsans, has also said it could buy the carrier. "

Eastwest Loco
14th Jul 2001, 10:05
Thanks again News!! AR seem to be on a thrashing to nothing ride.

As per usual the only news about this down here is indeed - news.

The only winner seems to be RG - all of a sudden they have become the oncarriage carrier for QF psgrs travelling beyond EZE.

Thanks again mate

best as always


Jorge Newberry
19th Jul 2001, 18:19
Pedro Ferreras, the outgoing head of SEPI, the Spanish state holding company that controls both aerolineas and austral, has announced that if a deal to sell them hasn´t been done by next monday the 23rd then both airlines will cease to operate and be wound up. He also says that that they´ve had four or five offers so far. No word about how serious any of them are. My money is still on Eurnekian.

Spanish readers can look here www.lanacion.com.ar (http://www.lanacion.com.ar) for more

The Guvnor
19th Jul 2001, 18:32
Unfortunately, AR is a perfect example of the consequences of pilots demanding huge pay increases from companies that can't afford it - and striking in order to make their point.

I'd be willing to bet that more airline managements will take a similar approach to these demands in the future - especially in times of recession like this.

My sympathy, in this case, lies with the non striking employees who were striving hard to keep their company afloat.

Jorge Newberry
19th Jul 2001, 21:52
I note with regret that the Guvnor isn't letting his obvious ignorance of the facts deter him from airing his prejudices.

Everyone who has followed the decline of Aerol'neas agrees that whatever has brought it to its knees it sure as hell hasn't been greedy pilots. Corrupt local politicians and a managment with an MBA in asset-stripping have had rather more to do with it.

Anyway,cutting a deal with the Spanish didn't do the VIASA workers much good did it?

20th Jul 2001, 05:53
I don't know why is it that every time a company is in trouble is because of greedy pilots, it is never management's fault, or the spanish for that matter. I would say that in AR case the situation is quite similar as VIASA, LADECO...etc. Just to name a few, but I must say that wherever the spaniards have taken over in South America, they have left an awful lot of people without a job...Just like 500 years ago. I would suggest to the guvnor to inform himself better...These are sensitive matters.

Eastwest Loco
20th Jul 2001, 14:27
The worst of all this is the damage it is causing to the families of employees and passengers - the SLF who fund thousands of employees - contractors - suppliers.

The harm it has done to thousands of lives is immesurable - and this needs to be resolved - Now!

I have no doubts that the Pilots have been dealt a raw deal and that there are huge corporate pressures to fix this but surely there must be some middle ground where performance rewards all.

Argentina ceases to be a tourist destination - as it is so expensive to get there. Who hurts?? The Airline employees who have lost their job- their families - the airline's suppliers - tourism operators - hoteliers - even the dude on the street corner selling burritos or whatever who now has 50% of his normal passing trade.

I dont want to open wounds - but this stinks of '89 Australia. Tasmania had may tourist operations go to the wall including hotels and restaurants owned by good mates.

The only winner here is Varig - who must be laughing all the way to the bank - Picked up the QF oncarriage contracts in the blink of an eye ex EZE into Brazil and God knows what else.

Ugly times ladies and gentlemen.

Best as always


Jorge Newberry
20th Jul 2001, 15:53
Aerocontinente, one of the perspective buyers for Aerol'neas, is in a spot of bother. A Chilean court yesterday seized six of its jets, froze 37 million dollars of its money and arrested three of its managers. All on suspicion of laundering drug money

Eastwest Loco
20th Jul 2001, 16:45
Oh bugger

Poor Aerolineas seems on a road to self immolation.

This does not soud promising Jorge - and thanks for the update too mate.

Please keep us posted.


Jorge Newberry
24th Jul 2001, 05:12
D-Day for Aerol'neas has been postponed till the 17th of August. It still looks like the Eurnekian consortium - AA2000, Air Europe, LAPA, SW etc -are the front runners. Basilio Pertiné, the President's brother-in-law is also on board though that will have no influence whatever on the final outcome. Just like Eurnekian being a mate of Domingo Cavallo will have no influence on it either.

Eurnekian and co want to consolidate (read "monopolise") the internal market and leave the international market till later, assuming they ever get around to it all.

Anyway, it looks like no liquidation for the moment at least.

Jorge Newberry
25th Jul 2001, 04:47
Looks like something has gone wrong with the negotiations between Eurnekian and SEPI. Just heard the former being interviewed on Jorge Lanata's programme flatly denying ever having been interested in buying Aerolineas. This despite serious journalists stating that his "people" were talking to SEPI's "people" until yesterday afternoon

The more I know the less I understand.

Eastwest Loco
25th Jul 2001, 13:18
Thanks again Jorge - still an info black hole out here.

Do they have any aeroplanes in the air at all???

If not they could make a bomb (poor choice of words) dry leasing to Sri Lankan - what an unbelievably ugly situation that is!!!

Varigs part of Americans computer seems to be at the limits of its bandwidth - we are getting a huge number of status errors - no doubt due to an unprecedented load situation.

Just hope they arent doing loco of the same system! Cross check the trims guys and girls!!!

Thanks again mate!!!