Aerolineas Argentinas is finally making progress with its regional units and recapitalisation, and plans to expand into Chile and Uruguay.
After months of delay it is trying to set up affiliated airlines in Chile and Uruguay. Plans for Chile are moving faster, with Aerolineas Austral Chile hoping to launch, in June or July, a newly created airline to fly domestic routes.
In Uruguay, bowing to regulatory hurdles, Aerolineas has scrapped plans to start its own airline and instead has moved to acquire as much as 70% of flag carrier Pluna. In addition to offering to buy Varig's share of Pluna, it would also like part of the government's 49% stake. It has created a local company, Aerolineas Austral Uruguay, as a holding company for these shares.
Varig has signed a letter of intent to sell its Pluna shares to Aerolineas, but authorities in Montevideo say the government would prefer to sell its Pluna shares via auction, a prospect that has drawn interest from other airlines.
Bolivia and Paraguay were included in Aerolineas' earlier plans for local airlines, but so far there are no reports of activity in either country.
Whether Aerolineas will meet its launch date in Chile remains unclear. It is hiring local staff, but has not yet applied for an operating licence. LanChile and Sky Airlines both complain that Argentina does not offer them reciprocal rights and Spanish investment in Aerolineas has also become an issue.
On the financial front, Aerolineas is doing better than Argentina in paying off debts. The airline previously agreed, as part of the 2002 arrangement that ended court supervision, to make a second debt payment in March. Now the airline plans instead to pay creditors the full agreed balance, about $100 million. This will effectively accelerate a final tranche due next year.
Aerolineas enjoyed a 59% jump in revenue last year, producing a $48 million net profit. It still receives payments from SEPI, the Spanish government entity that formerly owned Aerolineas, and which made a commitment to help clear the carrier's debts.
Finally, Aerolineas is aiming for an initial public offering of 40% of its shares on Argentina's stock market. The airline predicts this domestic flotation will occur in August or September, with later offerings in New York and Madrid.
Other Aerolineas plans remain on hold. Last year it said it would launch a domestic regional jet unit in March, but under pressure from Buenos Aires over its domestic near-monopoly, it has apparently shelved the idea.
DAVID KNIBB SEATTLE
Source: Airline Business
