Aerolineas Argentinas: the Rise and Fall of a National Symbol
September 27, 2024 could be remembered as a hinge date in Argentine economic policy. In an official statement, the National Government announced that it will promote the privatization of Aerolíneas Argentinas, declaring the company as a "Public Company Subject to Privatization" under the framework of Law No. 23,696. This announcement formalizes what many consider to be a long-delayed decision in the face of an unsustainable financial scenario. But is this an inevitable solution or the beginning of a mistake that will cost dearly?
The History of Aerolineas: From Expropriation to Privatization
Aerolíneas Argentinas was re-established in 2008 by the government of Cristina Fernández de Kirchner under the pretext of "recovering sovereignty in the skies". The official argument was that the airline, in the hands of the Spanish Marsans, was being emptied and that the State should intervene to save it. Thus, the expropriation of the company was presented as a patriotic act, as a reconquest of what was ours.
Since then, Aerolineas has not stopped accumulating losses. In the official communiqué of 2024, it is stated that "the contributions of the National State to cover its deficit already exceed 8 billion dollars". In other words, the State has had to inject that gigantic sum of money to keep the company afloat during the last 15 years, despite the fact that the company was never profitable.
What is most alarming is that the company's negative balance sheet is not only a question of numbers, but also of operational inefficiency. According to the statement, Aerolíneas Argentinas has "approximately 15 pilots per operating aircraft", an unusual figure that is not repeated in any other company in the sector. In addition, pilots' salaries range between "between 3 and 10 million pesos per month", regardless of the hours flown. Meanwhile, bonuses are paid in dollars and transfers, as well as tickets for family and friends, are part of the privileges of a unionized sector which, according to the Government, has made the maintenance of its benefits its only priority.
The Social Cost: An Unsustainable Expense?
The economic context in which this announcement takes place cannot be ignored. Argentina is going through an unprecedented socioeconomic crisis, with 52.9% of the population below the poverty line and 66% of children in a situation of vulnerability. In this scenario, maintaining an airline with millionaire losses seems, in the Government's eyes, an act of irresponsibility.
The President's statement is blunt: "It is unacceptable that the National State continues to finance the deficit and the privileges of a few with the taxes of those who cannot make ends meet". In other words, the privatization of Aerolíneas Argentinas is not only a matter of economic efficiency, but also of social justice. The Government argues that every peso spent to maintain the airline is a peso that could be allocated to social programs, education or health, sectors that, in a country with more than half of its population living in poverty, desperately need those resources.
However, this reasoning, pragmatic as it may be, does not convince everyone. For many, Aerolineas Argentinas is more than a loss-making company: it is a symbol of national sovereignty. In a country with a history of controversial privatizations, some sectors consider it an attack on the public patrimony to cede control of the flag carrier to private hands.
The strikes affected thousands of users. Photo: Fernando de la Orden Image
The Pilots Union and the Trade Union Power
One of the most severe criticisms of Aerolíneas Argentinas is directed at the pilots' union, whose members have benefited from working conditions that, according to the Government, have no place in any other airline in the world. Union management has historically been one of the biggest obstacles to any attempt to reform the company. Exorbitant salaries, dollar bonuses and benefits such as free transfers and tickets for family and friends have turned the company into an accumulation of privileges.
The Government's communiqué points out that the conflict with the unions has been an insurmountable barrier to any attempt to make the company profitable. By mentioning that "the company has approximately 15 pilots per operating aircraft", the message is clear: Aerolineas' internal structure is inflated, disproportionate and unsustainable in a context of global competition. While private airlines manage to operate with a minimum margin of personnel and maximize the efficiency of their resources, Aerolíneas Argentinas seems to have become a machine to generate profits for a few, at the expense of the State and, therefore, of the taxpayers.
Pablo Biró, Secretary General of APLA
Privatization or Dismantling?
The privatization of Aerolíneas Argentinas opens a debate on the role of the State in the economy. For some sectors, it is a necessary measure to free the country from unsustainable spending. "Privatization is a fundamental step on the road to freeing the country from unsustainable spending", the official communiqué states. For others, however, the move represents a direct attack on Argentina's sovereignty and the idea that certain services should be guaranteed by the state.
Critics argue that handing over Aerolíneas Argentinas to the private sector means opening the doors to a process of dismantling, in which unprofitable routes will be abandoned and the service will be concentrated only on those routes that generate profits. If this were to happen, many provinces of the country could be left without air connections, which would seriously affect their economic development and integration with the rest of the country.
Furthermore, privatizations in Argentina have a complicated history. During the 1990s, under the presidency of Carlos Menem, many state-owned companies were privatized in what was seen by many as a corrupt process that led to the loss of thousands of jobs. Although the current context is different, the shadows of those failed privatizations still haunt public opinion.
Congress and the Political Battle
Although the presidential decree has already been issued, the privatization of Aerolineas Argentinas must still pass through the National Congress, where the measure will be debated in the coming months. The government is confident that the project will be approved as a priority, as required by Law No. 23,696, but the Kirchnerist bloc, which still has an important weight in both chambers, is not likely to support the project.
For Kirchnerism, the re-establishment of Aerolíneas in 2008 was one of the pillars of its legacy, one of the flags that they proudly raised as a symbol of their fight for national sovereignty. It is not surprising, then, that its leaders see this privatization as a betrayal of those ideals.
Future of Aerolíneas Argentinas
The privatization of Aerolíneas Argentinas is a complex issue, loaded with economic, social and political implications. On the one hand, it is clear that the company, as it operates today, is unsustainable. Millionaire deficits, overstaffing and union privileges have made the airline an impossible burden to sustain in the context of an economic crisis.
On the other hand, privatization does not guarantee that these problems will be solved in the best way. The history of privatizations in Argentina is turbulent, and many fear that the handover of Aerolineas to the private sector will result in the loss of routes essential to the country's connectivity and in the reduction of jobs.
What is certain is that Aerolineas, as it operates today, is unsustainable. Privatization may be a logical solution from a financial point of view, but its success will depend on how it is implemented. With the discussion already in the hands of Congress, the future of the company and the country is, once again, at stake.
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