Argentina’s President Javier Milei is set to sign a decree to facilitate the privatization of the country’s flag carrier, 
Aerolíneas Argentinas
. The government seeks to revitalize the airline,
which has received several bailouts since its renationalization over 15 years ago
.
Privatizing the national carrier
Presidential Spokesperson Manuel Adorni said the head of state would sign a decree to privatize Aerolíneas Argentinas within the next few days. The announcement came on September 27, 2024, during a daily press conference at the Casa Rosada. According to Adorni, the decree will speed up the ongoing congressional debate to declare the state-owned carrier “subject to privatization.”
Photo: Carlos Yudica | Shutterstock.
As reported by the Buenos Aires Times, the decision came after the government disclosed that it had initiated negotiations with companies from neighboring countries to run the national carrier’s domestic flights. Manuel Adorni said,
“The President of the Nation is going to sign a decree declaring the company Aerolíneas Argentinas subject to privatization, as is enabled by Article Nine of Law 23696, known as the State Reform Law.”
Milei believes that the current structure of Aerolíneas Argentinas is bloated and is costing the country a lot of money. However, attempts to cut costs have been met by union protests. Since the airline’s renationalization in 2008, the state has provided over $8 billion in subsidies to cover the company’s deficits. Adorni added,
“Aerolíneas Argentinas has a chronic deficit as a result of the disastrous management of each and every one of the populist governments, which causes the need for constant transfers of public resources that put fiscal sustainability at risk.”
Backlash towards the airline’s privatization
Once the decree is published in the Official Gazette, it will be dealt with through Congress, a process that will begin as soon as possible. Meanwhile, the government is in a dispute with aviation unions, as workers have been striking and demanding higher pay. Union groups have rejected the proposed privatization of the national carrier.
Photo: Gonzalo Gacitua | Shutterstock
It has been Milei’s desire to transfer Aerolíneas Argentinas to the private sector
since he took office in December 2023. According to the Presidential Spokesperson, the state owes over $340 million “corresponding to the sentence of the International Centre for Settlement of Investment Disputes (ICSID), an arbitration tribunal of the World Bank, due to the litigation initiated by the Marsans group.”
By putting the airline up for privatization, the government aims to achieve commercial efficiency and create a competitive environment, deepening the freedom of the markets without losing national sovereignty. Furthermore, privatization will allow improved service levels and taxpayers to stop financing the airline’s debt.
A matter for congress
As reported by Reuters, the president’s previous push to privatize Aerolíneas Argentinas was removed from the text of an omnibus bill passed this year by Congress. The new decree could allow the government to take steps towards privatizing the airline, such as hiring banks or sounding out potential buyers.
Photo: Claudio Santisteban | Shutterstock.
However, Congress could still override the decree, as it has done in the past. According to Adorni, Aerolíneas Argentinas currently employs 1,204 pilots to operate a fleet of 81 active aircraft. As such, the aircraft-to-pilot ratio is about 1:15, significantly higher than that of other airlines in the region.
He further highlighted that the national carrier has an average of 125 employees per aircraft, while Brazil’s GOL Linhas Aéreas
has 97 and Panama’s Copa Airlines
has 70. Earlier this month, he stated that Aerolíneas had cut its total number of staff by about 1,500 in recent months.