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Aviation History
2001
2001 - 2546.PDF
BUSINESS CONSOLIDATION MARIO FONSECA / RIO DE JANEIRO TAM buys AeroVip to tap air traffic between Argentina and Brazil Meanwhile, Buenos Aires continues to negotiate solution to Aerolineas Argentina's woes with Spanish parent SEPI Brazil's TAM Group has bought regional carrier Aerolineas Argen tinas Express in the latest move in a continuing shake-up of Argentina's airline market. It follows LAPA's recent transfer to local entrepreneur Eduardo Eurnekian and the ongoing talks by Spanish state-holding company SEPI to divest itself of an 85% share in Aerolineas Argentinas. Battling against acquisition overtures from local carrier Southern Winds and Eurnekian, TAM has pulled off the purchase of AeroVip, the company behind Aerolineas Argentinas Express. AeroVip, which was acquired for $3.75 million, has a long-standing partnership with Aerolineas Argentinas to act as a feeder for the country's largest airline. Aerolineas Argentinas Express operates six BAe Jetstream 32EP turboprops and pri marily serves six major towns and regional capitals from Buenos Aires. The airline has been hit hard by Aerolineas Argentinas' deepen ing financial difficulties. TAM's acquisition of AeroVip, which is being made by Paraguay- based TAM Mercosur, fulfils a long Problems at Aerolineas Argentinas have impacted on feeder carrier sought company objective to exploit scheduled services in Argentina. Serving as a bridgehead to the Argentine market, AeroVip will allow TAM to directly tap the considerable traffic between Argentina and Brazil. TAM has yet to disclose any fleet expansion plans for its latest buy, but says that development of the regional airline's route network was among its short-range goals. The take-over comes against a background of turmoil at Aero lineas Argentinas. Attempts by the Argentine Government to negoti ate a solution with SEPI over the future of the airline and its sister carrier, Austral, continue, follow ing the airline's recent request for Chapter 11 bankruptcy protection. The flag carrier, beset by inter mittent strikes since May, has slashed domestic and international routes to try to stem losses - run ning at up to $30 million a month. Weighed down by a $1.6 billion debt, the Chapter 11 move by SEPI followed a union refusal to accept a recovery plan which involved injecting $350 million into Aero lineas Argentinas, in exchange for 1,150 job losses and a company- wide salary reduction scheme. While the Argentine Govern ment has stated that Aerolineas Argentinas and Austral will con tinue operating, SEPI announced that it was willing to divest itself of its 85% holding in the two airlines. Eurnekian, who heads Aeropuertos Argentina 2000, a consortium that controls over 40% of Argentina's airports, has shown interest in acquiring a portion of SEPI's stake in Aerolineas. Another interested party that has come forward is Peruvian air line AeroContinente. • Brazilian airline Varig is to supply extra capital to Pluna, Uruguay's leading carrier, to stave-off bank ruptcy. A sharp fall in passenger traffic and rising fuel costs has seen the airline this year lose $52 mil lion - more than 75% of its assets. SATELLITE NAVIGATION EMMA KELLY / LONDON Europe completes statute for joint Galileo body The European Commission (EC) has completed the statute for the "Joint Undertaking" body being tasked with managing the develop ment of Europe's Galileo satellite navigation system. The move comes as Galileo Industries, which was established by Alcatel Space, Alenia Spazio and Astrium to bid to develop the system, says that Galileo delays have already cost the European space industry "a small fortune", warning that it cannot afford any more setbacks. The EC's proposal for the Joint Undertaking is designed to ensure the "smooth development" and the continuation of research and development for the 30-satellite system which is set to be the European equivalent of the US global positioning system. The Brussels-based body, which will exist for four years, must also bring together public and private sector funding, prepare for the deploy ment and operational phases, and develop business plans. The European Union, repre sented by the EC, and the Euro pean Space Agency will be founder members of the Joint Undertaking, while the European Investment Bank and private companies "may become" members, says the EC. The body will comprise an admin istrative board, an executive com mittee and a director. "The Joint Undertaking is a good idea if you add private industry expertise or get the European Investment Bank involved," says Evert Dudok, chairman and direc tor of Galileo Industries. If Europe does not get on with Galileo, Dudok warns, industry will give up on it. Astrium alone has already spent €3 million ($2.5million) on its Galileo efforts, says Dudok. "If we don't see strong political commitment setting the right framework [in December when Europe's transport ministers are due to commit more public funds] we may have to reconsider [our involvement]." What is it worth? The €3 billion ($2.5 billion) Galileo system is intended to allow Europe to secure a chunk of the global satellite navigation market, which is expected to be worth €40 billion by 2005. Its development has been dogged by setbacks, with European transport ministers first delaying go-ahead late last year due to concerns about financing and the public- private partnership to develop it. Europe's transport ministers gave partial go-ahead in April, with an initial €100 million of funding, after the EC secured agreement from industry to invest €200 million up to 2005. A further €1 billion in public funds will be considered at year-end. 24 10-16 JULY FLIGHT INTERNATIONAL www.flightintemational.com
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