In tough times, airlines talk merger, and it is fast becoming a major issue among Argentina's beleaguered airlines. With a 245% devaluation of the peso this year, and a projected 75% fall in revenue, most carriers have cut domestic flights and are codesharing with each other. Meanwhile, regional LAER stopped flying in May, and is still awaiting a white knight.

American Falcon, a mixed charter and scheduled carrier, recently bought near- bankrupt Dinar Airlines. Labour contracts may be a hurdle, but American Falcon is likely to merge Dinar with it. But the biggest change could come if Southern Winds completes a planned take-over of AIRG, the former LAPA, Argentina's second-largest domestic airline.

Eduardo Eurnekian, who holds 30% of Southern Winds and control of AIRG, says he is ready to quit the airline business and focus on his controlling stake in airport consortium AA2000. Juan Maggio, who controls Southern Winds, is willing to buy Eurnekian's AIRG stake. He would run AIRG, still in bankruptcy administration, as a separate airline, but benefit from synergies with Southern Winds. Given Argentina's crisis, competition officials are unlikely to object.

Source: Airline Business