Topic Author
Posts: 139
Joined: Thu Aug 19, 1999 8:06 pm

AR Strike. The End Of AR?

Thu Apr 26, 2001 5:22 pm

Hi all !

Aerolineas Argentinas and Austral (a local partner) are on strike last 3 days.
According to argentinian newspapers (clarin.com and lanacion.com ) IB is tired of AR loses, around U$ 30 mil. monthly.
Whats nexts?

Posts: 219
Joined: Wed Feb 02, 2000 1:44 pm

RE: AR Strike. The End Of AR?

Thu Apr 26, 2001 11:51 pm

The solution is to change everything in AR,from planes,FFP rules,images,administration etc.It is not easy after 10 years to recover passengers from international carries that offer more flights,better services,newest planes,internationals alliaces etc.The future it is not really easy for Aerolineas Argentinas.I really wish to see an international airline,with an excellent service flying worldwide.

RE: AR Strike. The End Of AR?

Fri Apr 27, 2001 12:33 am

Ohhh, doesn't sound very good
Posts: 190
Joined: Tue May 08, 2001 4:28 am

RE: AR Strike. The End Of AR?

Tue May 08, 2001 6:16 am

It doesn't look very good but the Argentine govt does seem to be supporting the employees which is good. The strike is over for now with the employees reinstated. Anyways the Spanish govt wants to get rid of the airline (after they were the ones that have almost destroyed it) and sell it to the owner of the aiports in Argentina (this is still very tentative) with the local govt more involved. Anyways I hope it stays alive as it is a big airline with lots of unused potential. I personally would be very upset if it went bankrupt as I am a big fan.

RE: AR Strike. The End Of AR?

Tue May 08, 2001 7:20 am

I have to agree with Argento on this one.

AR, in its present state, is going nowhere. There needs to be a radical change in strategy (if they even have a strategy!)

That means (obviously) doing whatever possible to lift them out of debt, and start earning money.

I have to admit, that even though I am half-Argentine, I have lost faith in AR-thus I am not entirely sure what is, or has, been going on there.

I have heard *rumours* that part of their problem, is that they are overstaffed. Solution=get rid of uneccessary employees, strip the airline down to the bare minimum number of staff needed to run the airline properly.

Every other company I know of, has always adopted this strategy.

Secondly-route structure. Which are the most lucrative routes?-keep them. What's performing badly?-drop it/them immediately. Code-share if necesary.

.....etc. etc. etc. This is all common sense, it doesn't take a genius to figure it out-find the problem, devise a solution.

To be honest with you, I think the Argentine Gov't is part of the problem. Why do they keep pumping money into AR? It's not making any difference to their problems, and is actually probably making things a lot worse.

If the Gov't keeps sinking money into AR, what incentive has AR got, to improve & start changing things? None. The attitude is probably one of "no worrys, the Gov't will bail us out again soon, everybody relax".

How do we expect anything to improve?

My own personal belief, is that AR & the Gov't are too scared to face the truth; the truth probably means a complete restructuring of the company, and this in turn will probably involve massive layoffs and unemployment.

I know there is already a massive unemployment problem in Argentina, but unless they are willing to make big (and painful) changes to the way in which the company is run, it's strategy, and it's future (in terms of competition), the problems at AR will not go away.

Sorry if I sound pessimistic, but I felt it was time for a "reality check", as they say in the US.

As far as Iberia's involvement in AR goes, I just don't know enough to justify any commentry on their effect on the airline.

However, one would have thought that if they had a true interest in the airline, they would themselves have put some real effort into making some changes.

As the situation stands, I beleive they might well have wanted to change things at AR for the better, but that the Argentine Gov't prevented them from carrying out "essential surgery" on AR.

Unless the attitude changes, I'm not very hopeful. What a shame.


RE: AR Strike. The End Of AR?

Tue May 08, 2001 8:12 am

Soon this is from my post on LAPA Miami/LA/New York routes....

Topic: RE: Lapa To Los Angeles, Miami
Username: LV-7772

Posted 2001-05-08 00:25:36 and read 0 times.

I think SEPI will finish AR like... VIASA. There is no solution to AR's problems, and
who would want to buy an airline with such a debt... created by SEPI & Iberia.
This is who it happened. In 1990 AR was sold to a group led by IBERIA (SEPI came later), that's when the new livery that most of us love to hate came to life.
AR had no debts. It employed 11,500 people, made 1.6 million dollars per year and contrary to popular belief that AR has never ever made a profit, it was...
90 milllion. It had a fleet of 29 airplanes (Austral was not part of AR yet) which 28 were owned by AR.
Now we're at 5,000 employees? A fleet of 44 which 43 are leases with options to
buy. This is how it
all started. The transfer ordained by the "dork" of a president we had back then (Menem, whom btw is now wanted by the FBI because of drug money laundering and selling guns to Croatia). This transfer contract established that the "group" IBERIA-Cielos del Sur (once again not SEPI) had to pay 260 million in cash and 1.6 in debts due to the title. At that time they were quoting at 14% of it's nominal
value, to be able to hold the 85% stock of AR. A clause in the contract authorized IBERIA to cause AR to fall into debt and pay for its own privatization. So in 1991, just a year after, AR had a debt of over 390 millions dollars. SEPI came later when IB was asking for help and the government of Spain refused because they didn't agree that an airline who was having financial difficulties of it's own (at the
time) and already getting help from the Spanish government should be giving more help for outside
interests. Then SEPI came in, IBERIA was no longer the owner and Austral was
added to the blend.
And here we are 900 million in debt and leaving more Argentinos with jobs…. which I should have to tell you, but this is not good. Who can or who would want to get involved in this! IBERIA started it and SEPI didn't help. I still don't see a solution.

Any ideas? As far as LAPA goes… if that's going to be our national flag carrier… fine by me but I
agree with everyone else. With what are they planning to operate these flights? The 767 is gone. So they need to get planes.
At one time I remember talks of LAPA ordering 777s, which would be a beautiful
bird with LAPA's livery. Also if they are going to start flying to other international
destinations, does anyone else think
that they should add "Argentina" to the titles or spell out Lineas Aereas Privadas
Argentinas somewhere in the fuselage? Though the sun on the tail lets most of us
know that its Argentina… I don't think many other people would recognize where
LAPA is from.

Peter Hans

RE: AR Strike. The End Of AR?

Tue May 08, 2001 8:25 am

Thanks for filling the gaps in my knowledge; I spoke from a point of relevant ignorance, so at least I now know what the alleged situation is.

The privatization seems to have been bodged up. Is the Argentine Gov't still pumping money into AR? Do they still have a stake in AR?

If IB and SEPI are clearly not interested in AR (and would like to get rid of it), and no other major investors are interested, I can only see two "solutions".

1) Dissolve the airline--->transfer some assets to LAPA (including routes & staff).

2) Re-nationalize the airline, undertake major restructuring etc. Can the Gov't afford this? Does the Gov't want this?

Doesn't look to good to me.



RE: AR Strike. The End Of AR?

Tue May 08, 2001 9:07 am

To answer your questions... the Government does not put any money into AR, they see it as SEPI's responsability since they only have 5% stake of AR. Of course IB and SEPI don't want it...they totally screwed it up and now they want to leave everybody @ AR un-employed. The Government is on the Unions side but can't do much to help.

As far as your ideas... 1 is the most favorable, I think. LAPA A340's would be cool. But as stated AR has no assets they no longer own any of their planes. Like they did before this drama. It's a shame... I'd hate to lose AR but it's time to move on.

Peter Hans
Posts: 190
Joined: Tue May 08, 2001 4:28 am

RE: AR Strike. The End Of AR?

Thu May 10, 2001 4:11 pm

You definately know your information on AR. I have read the same things and at the moment nothing looks good. The Spanish are the ones who messed most everything up. The airline was sold to them with no debt and know it has almost USD 1 billion (granted the Argentine govt allowed them to commit this fraud). Now they want to get rid of it with without assuming their debt. I think the course of action is for the Argentine govt to become more involved along with the employees and local businessmen having investments in the airline (I know local investments are scare in Argentina but this is my ideal situation). I see nothing wrong with govt interaction as many of the European giants have huge govt subsidies (AF is 58% of the French govt). If AR is gone there will be a huge void in the market which will be devoured by all the US airlines. LAPA does not have the immediate capital to compete with the big boys. Anyways with Latin air traffic increasing so much there is no reason why a Latin American airline can't work (look at Grupo TACA and LanChile). They just aren't making it work. The airline has always had an impressive safety record and had large assets worldwide before being privatized. The answer is not to cut back and lose employees and all your routes. They need to get capital and become a true flag-carrier again that flies to destinations all over Europe, the Americas, and Australia. I remeber as a little kid seeing the huge 747's in Europe and at EZE. It was so impressive and it is a pride for a govt to have an airline representing it all over the world. I know hopes are slim, but lets hope for the best as this would be so embarrasing for Argentina. AR was great and maybe it will be great again.

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