Uraguay's parliament has approved a law that threatens the existence of failed national carrier Pluna by allowing the state-guaranteed portion of the fleet - seven Bombardier CRJ900s - to be auctioned to the highest bidder.
The law creates an institution for managing all Pluna assets for six months. Its tasks include the maintenance and sale of the fleet directly owned by the state, job assistance for Pluna workers and negotiating international traffic rights.
Leadgate, formerly Pluna's controlling shareholder, abandoned the carrier in June. The airline then was grounded by the government. That was followed by a search for new investors, with Jazz parent Chorus Aviation and Argentina ferry operator Buquebus among the frontrunners.
However, a 30-day exclusivity period for Jazz expired with no serious offer. The centre-left government then decided to stop the search despite heavy protests from Pluna's union.
Uruguay vice president Tabare Vazquez admitted earlier this week in a public statement the government's share of responsibility in the Pluna disaster, saying that they "committed errors" in its reprivatisation process.
In international surveys, as opposed to its large Argentinean neighbour, Uruguay routinely appears as one of South America's least corrupt and most transparent countries.
Pluna did not operate domestic flights but tried to connect Argentina's with Brazil's regions via Montevideo. The business model ultimately failed because Argentina's protectionism prevented Pluna to access some key markets vital to run a balanced hub structure.
Since Pluna's grounding, airlines such as GOL, Aerolineas Argentinas, Austral, Sol Lineas Aéreas (Argentina) and Sol del Paraguay, have opened new routes and added frequencies to Montevideo, while Argentina has proposed to Uruguay to make Aerolineas Argentinas the country's new national carrier.