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The Argentine government reported the beginning of the process of privatization or sale of Argentinian airlines facing a panorama of low operational profitability.
The recent proposal to privatize Argentinian airlines has generated an intense debate in the Argentine aeronautical sector and in the political sphere.
After the official declarations of the shipment, a decree was issued to sell Aerolíneas Argentinas, but it must be approved by Congress, many points of view have been echoed in multiple publications.
New sale and privatization of Aerolíneas Argentinas sought
It's not the first time, in their 75 years of history and connectivity, that the company has gone through several ownership changes, among which the management of Iberia for 8 years and then the last attempt was managed privately through the well-known Marsans group (Air Comet), which did not prosper and once again led the airline into a deep economic crisis., that motivated the re-nationalization of the airline 22 august 2008.
Context and background
The privatization of Argentinian airlines It is not a new issue on the Argentine political agenda. Nevertheless, the current proposal, promoted by the government of Javier Milei and supported by different political forces, has become more relevant in recent months and was already confirmed by the Casa Rosada itself in a press conference: Aerolíneas Argentinas wants to sell.
Will it be able to sell? That is the main question, since due to the known and million-dollar losses and accumulated liabilities, the airline on paper, It should not be attractive at all for any large airline company.
In this publication and partially, I am going to show the different points of view that I have been able to gather and also the implications that this state movement could bring..
According to the sources consulted, The main arguments in favor of privatization are the following:
- Greater efficiency: It is expected that the private management of the airline will allow greater efficiency in the operation, reducing costs and improving service quality.
- Increased competition: The entry of new players in the market could generate greater competition, which would benefit consumers through reduced fares and increased flight options, This is said from the concept that there is a protectionist state in favor of Airlines.
- Reduction of the fiscal deficit: Privatization would allow the State to stop subsidizing the airline, freeing resources for other priorities so demanded by Argentines.
On the other hand, Opponents of privatization argue that:
- Loss of sovereignty: Privatization could imply a loss of state control over a strategic asset such as a flag airline.
- Layoffs and loss of labor rights: There are fears that privatization could lead to a restructuring process that negatively affects the airline's workers., which currently employs more than 10.800 workers.
- Decrease in connectivity in regional destinations: There is a risk that new companies will prioritize the most profitable routes, leaving aside regional destinations. Aerolíneas Argentinas as a state entity prioritizes unprofitable and low demand routes, but that guarantees access to air transport in remote regions of Argentina.
Implications for the aeronautical sector
The privatization of Aerolíneas Argentinas will have a significant impact on the Argentine aeronautical sector as well as its possible closure if a sale is not achieved and the government cuts off access to fiscal resources.. Some of the possible effects are:
- Market restructuring: The entry of new players into the market could lead to its restructuring., with the appearance of new alliances and the disappearance of others.
- Changes in working conditions: Airline workers must adapt to the new working conditions imposed by the private company.
- Modifications in the flight offer: Changes in flight offerings are likely, with the appearance of new routes and the disappearance of others.
Future perspectives
The privatization of Aerolíneas Argentinas is a complex process that will require extensive debate and political consensus. The final result will depend on how this process is managed and the conditions established for the sale of the company..
in the coming months, The National Congress is expected to debate and vote on the corresponding bill. It will be essential that the actors involved in the aeronautical sector actively participate in this debate, contributing their knowledge and experience to ensure that privatization is carried out in a transparent manner and for the benefit of all Argentines.
Yes it is approved in Congress, It is not the end of the process, since the most complicated part will come, sell it as such, which is not seen as an easy task, even more, If the economic balances are as negative as they have been saying for years.
Is it interesting to buy Aerolíneas Argentinas? The answer must come from a complete analysis of the market, supply and economics of the country. Yes, a large group buys it, It won't necessarily be because of your assets., but also, in case AOC and the fastest process of entering a market of more than 46 millions of inhabitants.
Do you think it will sell?? I read them in the comments.
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