Cristina Kirchner, Argentina's new president, is looking to secure a three-way "social pact" to restore reliable service at Aerolineas Argentinas, ensure investment in the airline and allow her government to expand its stake from 5% to 20%.

Aerolineas has suffered crippling delays and cancellations over the past year due to labour unrest and finger pointing. Unions blame Grupo Marsans, the airline's Spanish owner, for not investing in Aerolineas. Management says it cannot raise wages unless the government lifts its freeze on fares.

Marsans has shelved plans for a public offering, delayed selling a stake to the government and is threatening to shift aircraft now on order from Aerolineas to Spain's Air Comet, which it also owns, ­unless peace is restored.

President Kirchner's proposed "social pact" aims to address all these ills. She is bringing Aerolineas officials, union leaders and key agency heads into three-way talks aimed at a pact to span at least the next two years.

The issues are complex because each side's position depends on commitments from the other two. Union concerns include but extend beyond traditional labour demands they especially want Marsans guarantees on investment in the airline. Yet, one of the more combative unions wants Grupo Marsans to leave Aerolineas.

If negotiations succeed, Marsans says it will sell a 15% stake to the government and give it a seat on the board. The group says it will then dust off its IPO plan and eventually sell the rest of its interest in Aerolineas.

Marsans may sell a 15% stake in Aerolineas to the government.


Source: Airline Business