Cross-border equity ties carry their own risks. Aerolineas Argentinas and LAN Argentina are learning this as they face public opposition to their foreign links.

Relations between Aerolineas and Buenos Aires have never been smooth, but they worsened in September when the government went to court to challenge the airline’s financial report and was forced to intervene in a series of wildcat strikes.

Criticising the airline’s management, undersecretary of transport Ricardo Cirielli called for the renationalisation of Aerolineas. Other officials quickly distanced themselves from his remark. Aerolineas chief executive Antonio Mata says he will stay, and the government’s financial challenge failed, but these incidents underscore a growing tension between the government and the airline’s Spanish owners and managers.

LAN Argentina faces similar problems. Some lawmakers claim LAN took advantage of the chaos caused earlier this year by a drugs-running scandal that staggered Southern Winds. They claim LAN set up Aero 2000 as a paper airline to circumvent foreign caps, that Chile controls LAN Argentina, and that the transport minister erred in approving its licence.

The finance minister recently deflated most of these arguments by clearing LAN’s purchase of Aero 2000. But the perception remains among some that LAN still pulls the strings.

Meanwhile, Aerolineas, owned by Spain’s Marsans group, is opening a new route, between Buenos Aires and Barcelona, the first of several from Latin America to the Spanish city.

Source: Airline Business