l etoile

Hello,

I keep reading that Milei has taken “the first step” toward privatization of AR and giving it to the unions. What are the other steps?

I’ve also read that it may be difficult to get through Congress.

Could someone familiar with Argentine politics tell me what the process is? Could he do it by decree? Realistically what’s the fastest it could happen?

I am asking out of self-interest. I have five flights booked on AR Jan-March. I keep seeing unions would likely get 6-12 month of funding to try and turn it around, but that’s conjecture.

M60_to_LGA

You'll be fine. Nothing in Argentina works that fast. And the government wouldn't let the airline stop running - it's too vital to the country's economy and transport system.

2RETIREDTRAVELERS

We are in the exact same position with 3 flights booked on AR late Jan, Feb, and March.

HIDDY

How the unions react to the privatisation plans is anyone's guess. I've not heard anything about them calling for industrial action yet though.

spainflyer

Other than the general, industry-wide protests against virtually all of Milei's proposed reforms under the DNU ("Necessary and Urgent Decree") reform plan.
The DNU proposes a 10% shareholding in the new Aerolíneas for its workers, although unions are opposing this, I suppose because then the chronic losses come out of the workers' pockets.
In related news, Aerolíneas has a new president, although he comes from within the airline's hierarchy, having been in management positions since 2008. And, In case you were thinking of taking the train, that won't work either. The Argentine train network has more "workers" than Spain's RENFE, with one-third the laid track and 1/10th the number of trains.
As "Chainsaw Javier" has said, over and over, it's not going to be easy or comfortable, but all reforms are totally necessary.

HIDDY

The tide is turning here for the better.

l etoile

I in no way want this to be a thread that discusses opinions of the changes as such a thread would belong in omni or be closed.

I would just like to know if someone here knows the process. Do other branches of government need to approve turning AR over to the unions and what are the additional steps necessary to do so? I read somewhere that the president can make decrees and they remain until they are voted on by the other branches. I have read nothing to confirm that though.

Flying Machine

While I don’t know the process specifically, this article from the Buenos Aires Times.. sheds a little bit of light: https://www.batimes.com.ar/news/econ...g-decree.phtml

l etoile

Thank you!

spainflyer

A move toward privatization will likely depend on several factors that must be resolved before any actual bidding begins:

Overstaffing, under working and underperforming, both on the ground and in the air. The new owners must get clear title to reduce, upgrade, re-train and transfer staff, as necessary.

Establishing the relative value of all assets: aircraft, routes and landing slots, ground operations. These may be valued together, as a package, or broken up and sold separately.

Withdrawal of Aerolíneas’ monopoly on certain internal and external routes.

Clean up the balance sheet to reveal the full amount of debts and future obligations, including the costs of making a portion of staff redundant, bringing aircraft up to standard, paying off any loans to the state, etc.

Once all those numbers are clear, published and agreed, both inside and outside Argentina, then the privatization process can proceed substantially as similar processes took place in Europe after the Maastricht Accords.

In Spain, for example, the government convinced / pressured certain solvent, national entities (banks, department store chain El Corte Inglés, the national, industrial holding company SEPI), to take large shareholdings in the newly privatized Iberia. Free floating shares were limited, ensuring stability and government cooperation. The privatization was successful with later entry of British Airways and American Airlines into Iberia.

That kind of scenario assumes that all will go well. If it does not, and Milei is true to his word, if a buyer(s) (including joint venture partners) cannot be found then the airline would presumably fold, as was the case in Europe with Olympic Airways (Greece), Sabena (Belgium) and others.

This is just speculation, drawing from a bit of history. And Aerolíneas is just one of at least 41 (some sources say 60), state-owned enterprises that Milea has promised to privatize. The likelihood of its getting special treatment is slim. As always, the devil is in the details, and Aerolíneas’ pilots’ and crews’ unions have already announced that they are strongly against any sort of privatization.

l etoile

Thanks @spainflyer

malagajohn

There will be no privatisation.

The shares will be gifted to the employees along with 12 months working capital - and a contract that says no more subsidies.

Marambio

AR will stay around for some time at least. I wouldn’t be worried about flights in the first half of 2024 or longer.

Opinions aside, the privatisation of state owned companies needs to be approved by Congress – the bill was only tabled yesterday and won’t be discussed in the Chamber of Deputies until late January or February, and if approved it would also require an ok from the Senate. Whether that will happen is anyone’s guess, as the government seems to enjoy popular support but does not have a majority in either chamber.

Say the bill turned into law, the government is then required to do a price appraisal process and look for potential buyers. Contrary to other state owned companies such as Arsat, Banco Nación or YPF, there don’t seem to be any prospective buyers for AR at this stage (and rightly so, as it bleeds money and the same government has established an open skies policy). If they found a buyer, contract negotiation/due diligence takes several months. If no buyer is found, the government has the options of keeping the company afloat or liquidate it (“gifting the company to its employees” as mentioned by Milei is in fact another form of liquidation as they will never get the money to run it). Insolvency processes in Argentina take a very long time.

Because Argentina is the child of Italy, of course AR is our very own Alitalia.

l etoile

@Marambio exactly the information I was seeking. Thank you.

spainflyer

If that is the solution, they might as well sell all the assets right now. Once the workers have slurped up all of the working capital gifted them, they have to start cutting costs. Serious cutting, including, probably 25% - 35% of the bloated workforce. And who among them is going to fire their fellow workers? Who will take the strategic decisions that might make Aerolíneas viable? Who (and how) will negotiate the credit that will be absolutely necessary to keep the airline going. And just who will grant that credit, if not the Argentine taxpayers?
Does not sound like a viable solution to me.