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Marsans Seeks Buyer For AR

Tue Mar 15, 2005 6:41 am

Cinco Dias, the Spanish financial newspaper reports Marsans SA, AR's 97.9% shareholder, is seeking a buyer for all or substantially all of its stake in AR. Julio Scaramella, AR's public relations officer, stated Marsans has hired two investment banks [identity unknown] to market the stake and listed several reasons for Marsans' decision, including:

- Inability to proceed with a planned initial public offering [IPO] of AR due the Argentine government's refusal to endorse AR's financial statements

- Perceived lack of transparency in the Argentine aviation market. AR has stated LA's negotiations to absorb LAFSA's personnel and acquire an Argentine carrier are destabilizing the market

- Dreadful relationship between AR and the current Kirchner government

As a result of this decision to market its controlling interest in AR, the carrier will suspend a previously-announced decision to expand AR's workforce by 900 employees and will not renovate 270 temporary work contracts when they expire.

The full article [in Spanish] can be found here:

Cinco Dias AR article

Looks like the Argentine aviation market is up for a big shakeup. Any ideas on who would buy Marsans' controlling 97.9% stake in AR?
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 7:19 am


In perfect Marsans style, they try to blame everybody but themselves, I have followed them for a while and all they have done is to improve efficiencies in their operations and collect the SEPI money.
I am not familiar with Argentine politics, but I am not surprised they objected their financials, they were entering the SEPI subsidy as income from operations, therefore the books looked good. I imagine some of Enron's and Worldcom accountants were doing some work on the side and enjoying Buenos Aires.
If you follow their history as I know you do, it has been a lot of unfulfilled promises, transferring aircraft to Air Plus, spares sent to Spain, I believe they have milked as much as they could, now that SEPI is not subsidizing anymore,they figure it is time to go because with Lan's competition they might have to put some of their own money to keep up operations and that is the last thing in their minds.
It is a real shame that what it was a leading edge proud airline, always with new generation equipment from CometIV in the 60's to 742 in the late 70's has gone down the tubes, count another one on IB, the only airline in the world that has bankrupt multiple airlines without paying the price themselves.

I know the A.net members from Argentina are going to go hot and heavy on this, but I do not believe the fault is with the present government from what I hear, they are making them be accountable, I hope somebody with skills and deep pockets take them over because they have the skilled people and established procedures to run a good airline and that is the most important.
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 7:56 am

One cannot analyze Marsans' decision to market its controlling stake in AR without a clear understanding of LA's stated plan to enter the Argentine market.

AR states LA's plan to assume LAFSA's personnel and acquire an Argentine carrier will skew the marketplace:

[as stated by Scaramella, AR's public relations officer]

"Aerolíneas Argentinas fully supports market competion. However, it supports market competition on an equal playing field, without subsidies, with routes assigned to carriers by the government in a public forum, not granted directly, and where all companies pay the same taxes and fuel prices needed to operate"

Through this statement, AR is implying LA may receive direct subsidies from the Argentine state, in the form of lower taxes, fuel prices, route assignments, etc.

Now I do know A4 is currently receiving a subsidy from the state for fuel costs for assuming all of LAFSA's personnel. The big question here is: will LA continue to receive this subsidy? I do not know the answer to this question.

Also, why would the government sign an agreement with LA if it required a continuation of the fuel subsidies? Is this subsidy in consideration for LA employing LAFSA's employees [similar to the agreement with A4].

In addition, I was under the impression SEPI simply agreed to assume much of [if not all of] AR's debt when it divested its stake in AR to Marsans. I have not reviewed AR's financial statements and do not know whether AR received cash directly from SEPI to liquidate AR's obligations.

I would NOT want to be the investment banker working on this sell-side mandate for Marsans. I can only imagine what a nightmare deal this will turn out to be. I mean, who will want to acquire control in AR for any substantial value??
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 7:57 am

Wow, seems like there was something fishy from the very beggining, or are they just trying to create negative publicity towards LAN's entrace into AR's turf? It appears there is a conspiracy about to start just to give LAN the hardest time possible as it gets ready to start its operations within the Argentine domestic market.

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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 8:11 am

How much is AR worth?

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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 9:06 am

I knew it! The hot air merchants are finally beginning to reveal their true colours. After looking for some of the most used aircraft on the second hand market that can still pass for "modern", Marsans will probably jump ship and leave AR to sort themselves out, minus half their Jumbos and possibly an MD-88 too, due for transfer to Air Plus in May. Does anyone here honestly think that Marsans will procure 45 B737-300/500s for AR over the next 5 years--in fact, don't answer that: By 2009, there will be plenty of said aircraft past their 20th birthdays, in other words, perfect candidates for AR's fleet "rennovation".

I don't mean to jump to conclusions so soon, but I've suspected something wrong with Marsans since the very beginning. If they were serious about AR, they would acknowledge the limitations dictated by the devalued economy, and not go around announcing grandiose lies the size of the moon about the aircraft they have promised and the routes they intended to open. Granted, they resuscitated AR on their death-bed and returned them to "profitability", but they needn't have bitten-off more than they could chew.

But maybe it's just as well. Marsans had close to zero experience of running airlines prior to 2001. Air Plus in Spain, although it's a charter operation, leaves much to be desired. AR on the other hand, with half a century of history and a sizeable fleet, was always a great source of "free aircraft"--not how in addition to the 747-200 no longer wanted that joined Air Plus in 2003, 3 more have since followed, while AR's 747-400 fleet continues to comprise no more than a pair. The idea was to keep the -200s until all the -400s had arrived, and then transfer them one by one to the subsidiaries, starting with Chile.

Who knows, in the imperfect world we live in, Argentina's economy is susceptible to catastrophic collapses, and AR is prone to uninspired, inefficient and at times moronic management, whether by Argentine Government "ñoquis", SEPI or Marsans. AR has struggled to make profits or even break even for at least 20 years, even during times when their service was certifiably excellent (like the '80s). AR has had the misfortune of enduring all it has, yet ironically, the good fortune of somehow landing on their feet in the end. They have been around, pretty much uninterrupted, since 1950. The only other airline with more history in Argentina is LADE, who don't really count since they branch off the Air Force.

Argentina as a whole is a macrocosm of AR, perhaps: Everything that can go wrong, does, yet something never changes, for good and for bad, and from time to time, Argentina has an airline that does it justice and represents the hard work of so many in the business and their potential for world-class service. The nagging problem is simply inconsistency, which in all honesty, is a nationwide problem in Argentina and has been since long before I was born. In this context, whatever Marsans do will not surprise me. They are not the first to do what they have done/will do, and there will certainly be others, until Argentines opt to tune into the cold, harsh realities of the real aviation world and play the game. Until then, Argentine aviation will continue to be renowned for being as dysfunctional, timewarped and retrograde as it is.

I dream of a day when those who found and run Argentine airlines pertain to a more honest and dynamic group of individuals than some of the scum who have intentionally driven so many airlines into the ground over the course of the last two decades or so. Just as Argentina was among the first countries to take to the skies almost a century ago, Argentina also risks being among the first countries to, in aeronautical terms, fall to the ground. Hopefully, a nice, fresh thermal will blow the bird out of its decadent dive and allow it to soar, to soar like the condor she has the potential to be.

Saludos, and apologies for making this a bit "heavy"!

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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 10:00 am

I did not want to join this discussion before you, XZV, made your initial assessment. I think your posting is very eloquent and, to those of us who are not from Argentina and only know some details of the IB fiasco and the current Marsans ownership, very illustrative.

One day someone said to me that the symbol for the concept of "crisis" in one of the Chinese dialects heavily resembles the symbol for the concept of "opportunity", and probably the resemblance is on purpose. Hopefully AR is acquired, as you say, by a group of more committed entrepreneurs, who want in for the long run and who will work hard to fend off competition and to continue expanding AR in a smart, well-thought and efficient form. The "milking" of AR's fleet by Marsans is certainly a shame and a terrible thing, but the merit of the new owners will only be bigger if they are able to accomplish what I just mentioned in spite of this limitation.

I hope that as soon as AR is sold, it will seek membership in one of the major alliances (oneworld does not seem likely because of LA, and Star Alliance either because of RG, but SkyTeam would be great) or, at least, codeshare and mileage accrual/redemption agreements with leading airlines around the world (like MX), so that flying AR will become an actual alternative for more foreigners.
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 10:16 am


Very good, I agree with you 100%, they are there for the quick buck, by the way what are ñoquis?, I know the food but obviuosly it has a different meaning in your sentence
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 1:10 pm


Allow me a moment to describe the origins of this fascinating term; quite an insight into Argentine culture and cuisine. As I am sure you know, the River Plate is known for its exceptional pasta [and steaks of course] and the "ñoquis" [or gnocchi in Italian] prepared in Porteño homes and restaurants are superior [in my mind] to those potato pasta dumplings found on northern Italian tables.

Ñoquis are traditionally prepared on the final Thursday of the month, a day which also coincides with payday for State employees. So, in typical Argentine fashion, the term, "ñoquis", refers to the vast ranks of "employees" who do nothing but collect their paychecks, thanks to the wonders of political patronage and influence peddling.

The term is also synonymous with the scam artists, hucksters, charlatans, swindlers, cheats, phonies and fraudsters that populate the ranks of Argentina's civil and commercial institutions.

LVZXV, your assessment of Marsans as a bunch of "hot air merchants" is right on the mark. AR's endless stream of grand plans to launch routes to Asia, acquire a "modern" fleet of 735's, create a regional hub in COR and hire hundreds of new employees is nothing more than petty chatter...
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RE: Marsans Seeks Buyer For AR

Tue Mar 15, 2005 8:20 pm

After what you said, there is almost nothing to be added. You hit the sot 100%. Let's see what happens with AR...

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RE: Marsans Seeks Buyer For AR

Wed Mar 16, 2005 12:52 am

Hi all,
I suspected from the beginning that something wasn't right with Antonio Mata as president of Aerolíneas. He has had some experience with airlines before, he was the president of Oasis Airlines and took it to the bankruptcy, so not a very good experience. He is a liar, and is known for that, but is also a friend of the former Minister of Interior of Spain and of Gonzalo Pascual, owner of Grupo Marsans (Air Plus Comet, Aerolíneas, Spanair, Viajes Marsans and Air Pullmantour among others).
They have been using planes of Aerolineas as they wanted, sometimes for Air Plus, sometimes for Spanair.
Gonzalo Pascual owns now only 5% of Spanair, and he has been taking production of this airline to Air Plus and Pullmantour, and Aerolíneas where he controls 100%. Why sharing benefits when you can have all of them??? That's why Spanair is now a company without any logical strategy or any efficient network. And SAS doesn't seem to realize. Flights to Rome, London and Paris used to belong to JK, but now are made by Aerolíneas, sometimes, or Air Plus some other times. Buenos Aires is now only for Aerolíneas, Cuba for Air Plus, and so on. Such a mess.
Read this link, I find it very interesting. It will give you facts about Antonio Mata's job in Aerolíneas. They have been caught again, and need to leave the airline while it still looks sane. http://www.aviones.com/archivo/com201103.htm
Really sad for Argentina and for all AA workers which will be the ones who at the end will pay for this.
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RE: Marsans Seeks Buyer For AR

Wed Mar 16, 2005 2:12 am


Once again, Marsans changes its story and announces it will NOT sell its interest in AR but, rather, continue its plan to float AR in an initial public offering [IPO] and seek alternative sources of investment capital.

Infobae is qouting AR's spokesperson [presumably, Scaramella] as saying Marsans does not want to sell AR and, instead, wants to go ahead with the IPO and find potential investors.


This is turning out to be some kind of crazy telenovela...
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RE: Marsans Seeks Buyer For AR

Wed Mar 16, 2005 5:50 am


Indeed, this is very soap opera-like! Well, to corroborate perhaps the news that Marsans will not rid themselves of AR, another 3 B737-500s have been placed on order:

B737-5Y0s B-2542/B-2544/B-2545 (MSNs 24897/24899/24900). All are 1991-build aircraft, currently flying for China Southern. Delivery dates are set for August, November and December this year. I wonder if K's wooing of China has anything to do with it.  point 

However, I don't know if these are in addition to or instead of the ex-UA machines, over which problems arose last year. If the former, then AR should be receiving at least 18 B737-500s; if the latter, then this makes 10.

Other "new" 737s earmarked for AR are Air Plus Comet's very own pair of B737-300s (EC-IPS/IZM), dating from 1987 and 1988 respectively. The idea is these aircraft will be leased to AR as of next month in exchange for AR's MD-88 LV-VCB. Although it means a quantitative increase in aircraft and capacity for AR, I do think that AR would be getting ripped-off, considering the (relative) age and condition of said 737s...


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RE: Marsans Seeks Buyer For AR

Fri Mar 18, 2005 2:48 am

A Spanish online newspaper 'elconfidencial.com' says the decision to sell AR is due to the impugn of the 2002/03 accounts. Marsans would sell 49% (100% if someone is interested).

The problem seems to be the bad relationship between Mata and some members of the government (Ricardo Cirielli particularly).

Everything is very dark...
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