Argentina's economic winter has been almost as hard on its airlines as on its governments. Conditions are still bleak - traffic for the year to date is down 20% and airport charges are up 266% - mainly thanks to the sharp devaluation of the Argentinian peso.

But the worst may be over. In one sign of a South American recovery, the number of passengers flying between Argentina and Chile has jumped 18% since mid-year, and Argentina's airlines are showing signs of resilience.

The most dramatic example is Dinar Airlines, grounded twice in the past two months by the same bank. Both times it has resumed operations, each time with a new owner. The latest is Antonio Martinez. "We've managed to survive once more," says a union leader.

Aerolineas Argentinas has also reached agreement with most of its creditors on a strategy to exit receivership. It presented its case to the bankruptcy court in late October for a plan to cut its 2.5 billion peso ($670 million) debts by 60% and pay off the rest over two years. If the plan is approved, it will see the carrier's debt more than halved to less than $300 million.

Devaluation has already slashed its peso-denominated debts, and SEPI, the Spanish government holding company that sold Aerolineas to its present owners, will make a final payment before year-end for its share of the airline's debts. If the court accepts this plan, Aerolineas could emerge from receivership in January.

But US carriers are still cautious about Argentina's recovery. Delta Air Lines will suspend its Buenos Aires flights in December, a year after Continental Airlines forfeited its route by delaying a Buenos Aires launch. Delta is also dropping its loss-making Rio de Janeiro service, leaving it with services to five South American destinations.


Source: Airline Business