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Future Of AR If The Government Runs Out Of Cash  
User currently offlineGonzalo From Chile, joined Aug 2005, 1985 posts, RR: 2
Posted (2 years 2 months 4 weeks 11 hours ago) and read 3024 times:

It is a known fact that AR is airborne thanks to a daily injection of cash from the government, with an estimate of 2,2 million dollars every day ( around 800 millions / year ).
The Central Bank of Argentina ( BCRA ), is running out of cash, the total reserves today are estimated at 47 billion dollars, but they must pay more than half of that in credit obligations ( 10 billions ) and oil and energy ( 14 billions ) before the end of the year. They are trying desperately to keep every dollar they can inside the country with a heavy control of every transaction and forbidding the free exchange of money, but the effect of this measures in the investors ( and in the general public in Argentina ) is precisely the anxiety for take every dollar out of the country or keep it under the bed, configuring a scenario of extreme uncertainty about the future capacity of the country to keep alive the subsidies, and among the subsidized companies we have, obviously, AR.

How can AR survive if the government can´t keep the flow of money into the airline ?
Privatization again ? Definitive closure ?

What do you think ? Any hypothesis ?

Rgds.,

G.


80 Knots...V1...Rotate...Gear Up...DC-3 / EMB-110 / Fairchild-227 / Ab318-19-20 / B732 / B763
16 replies: All unread, jump to last
 
User currently offlinescouseflyer From United Kingdom, joined Apr 2006, 3385 posts, RR: 9
Reply 1, posted (2 years 2 months 4 weeks 10 hours ago) and read 2993 times:

It's difficult to see them surviving in either of the outcomes I can think of:

1. the goverment manages to balance its books with a massive round of cost-cutting - daily cash injections to an airilne would be very high-up on the list. To survive then AR would have to operate like a true business and close unprofitable routes, ground expensive planes and cut staff costs.

2. The government runs out of cash and the whole country goes into crisis as it did ten years ago:

http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999-2002)

if that happens all bets are off


User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2358 posts, RR: 1
Reply 2, posted (2 years 2 months 4 weeks 1 hour ago) and read 2786 times:

Quoting scouseflyer (Reply 1):
1. the goverment manages to balance its books with a massive round of cost-cutting - daily cash injections to an airilne would be very high-up on the list. To survive then AR would have to operate like a true business and close unprofitable routes, ground expensive planes and cut staff costs.

I wonder if the govt would end its discriminatory policies against 4M and allow the market to decide routes. I suspect they would continue, or get worse in order to give AR as much of an advantage as possible.

Given a truly market based environment and AR's poor management, I suspect it wouldn't take long for 4M to overtake them.



The 747: The hands who designed it were guided by god.
User currently offlineGonzalo From Chile, joined Aug 2005, 1985 posts, RR: 2
Reply 3, posted (2 years 2 months 3 weeks 6 days 11 hours ago) and read 2551 times:

Quoting Byrdluvs747 (Reply 2):
I wonder if the govt would end its discriminatory policies against 4M and allow the market to decide routes.

Are you kidding ? The Argentinian government said out-loud, "we want a new paradigm of control". This control, ala 1984 of G. Orwell, covers every aspect of the markets ( all the markets, from cereals to airlines ), and they never, NEVER will take any action to make the things easier to 4M. I'm already surprised that they didn't "invent" some excuse to cancel the 4M operation in the country, maybe they don't have the nerve to do something like that because the common people likes the 4M service, but after YPF I have my doubts.

Rgds.
G.



80 Knots...V1...Rotate...Gear Up...DC-3 / EMB-110 / Fairchild-227 / Ab318-19-20 / B732 / B763
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17416 posts, RR: 46
Reply 4, posted (2 years 2 months 3 weeks 6 days 11 hours ago) and read 2539 times:

If Argentina runs out of money, they'll have bigger problems than rescuing AR, like loads of angry penniless pensioners for instance.


E pur si muove -Galileo
User currently offlinejfk777 From United States of America, joined Aug 2006, 8324 posts, RR: 7
Reply 5, posted (2 years 2 months 3 weeks 6 days 9 hours ago) and read 2432 times:
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I know this has little chance of happening because Argentina will have to swallow some pride, sell it to LAN and let them make what it can be. IT can be a profitable and "proud Argentina Airline"

User currently offlineiFlyLOTs From United States of America, joined Apr 2012, 471 posts, RR: 0
Reply 6, posted (2 years 2 months 3 weeks 6 days 9 hours ago) and read 2331 times:

Quoting jfk777 (Reply 5):
I know this has little chance of happening because Argentina will have to swallow some pride, sell it to LAN and let them make what it can be.

Why would LAN want it? Unless the Gov't actually shuts down LAN Argentina, there is really no point for LAN to want AR, it would be a waste of money for them.



"...stay hungry, stay foolish" -Steve Jobs
User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2358 posts, RR: 1
Reply 7, posted (2 years 2 months 3 weeks 6 days 7 hours ago) and read 2206 times:

Quoting iFlyLOTs (Reply 6):
Why would LAN want it?

Looking at AR, I can't think of anything the airline possesses that would be desirable to 4M.

Unless 4M wants to operate A340's, none of AR's fleet would be compatible. Maybe LAN would be interested in their two flight simulators or possibly some gates/ticket counters at various airports. Does AR operate their own lounges?



The 747: The hands who designed it were guided by god.
User currently offlinejfk777 From United States of America, joined Aug 2006, 8324 posts, RR: 7
Reply 8, posted (2 years 2 months 3 weeks 6 days 6 hours ago) and read 2112 times:
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Quoting iFlyLOTs (Reply 6):
Why would LAN want it? Unless the Gov't actually shuts down LAN Argentina, there is really no point for LAN to want AR, it would be a waste of money for them.

There are many ways LAN could takeover AR or any other airline, Cash and stock are not the only way. Who in there right mind would pay for AR ? Not LAN. But what if the Argentine Government took all the debt and allowed employee buyouts and layoffs there may be something there. The Argentine government will one day realize that "saving" AR in a lots cause. Even if the Government's mind is 30 years behind the times eventually they will have to have a cash flow positive AR.


User currently offlineiFlyLOTs From United States of America, joined Apr 2012, 471 posts, RR: 0
Reply 9, posted (2 years 2 months 3 weeks 6 days 2 hours ago) and read 1964 times:

Quoting jfk777 (Reply 8):
Who in there right mind would pay for AR ? Not LAN.

  
They already have an Argentine subsidiary, LAN Argentina, which while I don't know the details of the company or how much money they're losing (or making) I think I can safely assume that it's not losing $2.2 million a day. So if the gov't runs out of money then a assume that AR is truly a lost cause, LAN won't want to touch them with a 10 foot pole



"...stay hungry, stay foolish" -Steve Jobs
User currently offlinejfk777 From United States of America, joined Aug 2006, 8324 posts, RR: 7
Reply 10, posted (2 years 2 months 3 weeks 6 days ago) and read 1948 times:
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Quoting iFlyLOTs (Reply 9):
They already have an Argentine subsidiary, LAN Argentina, which while I don't know the details of the company or how much money they're losing (or making) I think I can safely assume that it's not losing $2.2 million a day. So if the gov't runs out of money then a assume that AR is truly a lost cause, LAN won't want to touch them with a 10 foot pole

I have been quite aware of LAN Argentina for years, but they are a small fish in AR's pond. LAN's only major route outside the region is Miami - EZE. NO EZE to Madrid.


User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2358 posts, RR: 1
Reply 11, posted (2 years 2 months 3 weeks 5 days 23 hours ago) and read 1938 times:

Quoting jfk777 (Reply 8):
But what if the Argentine Government took all the debt and allowed employee buyouts and layoffs there may be something there.

After doing more research on AR, the only thing I can see of value to 4M would be AU and its 20 E-190's. I'm sure LAN wouldn't mind getting its hands on AU's jets, but not its unions.



The 747: The hands who designed it were guided by god.
User currently offlineGonzalo From Chile, joined Aug 2005, 1985 posts, RR: 2
Reply 12, posted (2 years 2 months 3 weeks 3 days ago) and read 1347 times:

Another measure against the travellers, and by extension, against AR    http://news.yahoo.com/argentina-more...s-buying-us-dollars-180240507.html

I feel really sorry for the people in Argentina, it seems that they are loosing freedom day by day.

G.



80 Knots...V1...Rotate...Gear Up...DC-3 / EMB-110 / Fairchild-227 / Ab318-19-20 / B732 / B763
User currently offlinesciurusmdg From Argentina, joined Apr 2012, 60 posts, RR: 0
Reply 13, posted (2 years 2 months 3 weeks 2 days 21 hours ago) and read 1190 times:

Am currently writing an article on this exact topic, if anyone has any very good theories/ideas/hypothesis then would be very interested and grateful to hear them!

User currently offlineSCL767 From Chile, joined Feb 2006, 8801 posts, RR: 5
Reply 14, posted (2 years 2 months 3 weeks 2 days 20 hours ago) and read 1106 times:
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Quoting jfk777 (Reply 10):
I have been quite aware of LAN Argentina for years, but they are a small fish in AR's pond. LAN's only major route outside the region is Miami - EZE. NO EZE to Madrid.

Recently, LAN Argentina wanted to increase frequency on the EZE-MIA route but the ANAC rejected that request. LAN Argentina was also forced to move its regional flights from AEP back to EZE. However, LAN Airlines simply took over the SCL-AEP route, which operates 3x daily. Unlike AR, LAN and TAM operate actual hubs. LA/JJ operate GRU-EZE 8x daily, LAN operates SCL-EZE up to 50x weekly and LIM-EZE 3x daily, TAM will soon operate the GIG-EZE route 3x daily, etc. LAN offers pax traveling to/from COR connections via both SCL and LIM. LAN offers pax traveling to/from MDZ connections via SCL. Starting in July, LAN will increase frequency and capacity on the SCL-COR route and the SCL-MDZ route will operate 3x daily with the A-320s. LAN Argentina will offer connections to BRC via EZE starting in July for international pax, (mostly pax originating in Brazil). LAN Argentina actually had a positive Q1 due to the increase in domestic airfares; which are regulated by the government.

Quoting Byrdluvs747 (Reply 11):
I'm sure LAN wouldn't mind getting its hands on AU's jets, but not its unions.

LAN would not want AU's jets since bringing in a new type of a/c into the fleet would only increase LAN's operating costs.


User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2358 posts, RR: 1
Reply 15, posted (2 years 2 months 3 weeks 2 days 15 hours ago) and read 924 times:

Quoting Gonzalo (Reply 12):
I feel really sorry for the people in Argentina, it seems that they are loosing freedom day by day

No sympathy here. If they feel they are suffering then Argentinians need to throw crazy Christina out of office. Why are there no protests?

Quoting SCL767 (Reply 14):
LAN would not want AU's jets since bringing in a new type of a/c into the fleet would only increase LAN's operating costs.

In a post-AR environment, how would 4M operate intra-Argentina routes that don't require the 168 seats of an A320?



The 747: The hands who designed it were guided by god.
User currently offlineSCL767 From Chile, joined Feb 2006, 8801 posts, RR: 5
Reply 16, posted (2 years 2 months 3 weeks 2 days 14 hours ago) and read 846 times:
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Quoting Byrdluvs747 (Reply 15):

Quoting SCL767 (Reply 14):
LAN would not want AU's jets since bringing in a new type of a/c into the fleet would only increase LAN's operating costs.

In a post-AR environment, how would 4M operate intra-Argentina routes that don't require the 168 seats of an A320?

In a "post-AR environment" where domestic airfares are not dictated by the government, LAN Argentina would operate intra-Argentina routes with A320 family a/c.


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