Aerolineas rescue talks

Aerolineas Argentinas workers have clashed with police

Argentine and Spanish officials are meeting in an effort to rescue loss-making airline Aerolineas Argentinas, and end weeks of unrest which escalated into an inter-governmental slanging match.

Argentina's infrastructure minister Carlos Bastos is to meet Spanish foreign minister Josep Pique and bosses from the Spanish state holding company Sepi, which controls Aerolineas Argentinas, in a bid to prevent the airline collapsing under $1bn of debt.

Fernando de la Rua: Airline's privatisation "disastrous"

The talks come amid continuing labour unrest, sparked by Sepi's efforts to introduce austerity measures, including wage reductions, flexible contracts and redundancies, in an effort to cut losses estimated at $20-30m a month.

Airline workers, who in April held a nine-day strike over the proposals, have this week escalated a campaign of direct action after Sepi cancelled Aerolineas Argentinas flights to eight international destinations.

Protesters have blocked roads to Argentina's main international airport, outside Buenos Aires, clashed with police and on Wednesday attempted to block flights by Iberia, Spain's national carrier.

"Iberia flights will definitely not be leaving today," said Eduardo Llano of the Association of Airline Personnel union.

Iberia said flights had left, albeit with some delays.

Premiers clash

The protests have struck a chord outside the industry, with dozens of Argentine pop stars and celebrities holding a concert in support of the workers.

Iberia offices have been targeted by protesters

And Argentina's president, Fernando de la Rua, has called on Spain to do more to help the airline, which was privatised in 1990, allowing Sepi to build up its 93% stake.

The privatisation was "disastrous", Mr de la Rua said.

Spain's prime minister, Jose Maria Aznar, hit back at the "unjust criticisms" by stating that Madrid had injected $1.5bn into the airline, "which is more than [Spain] received from the privatisation of Iberia".

Mr de la Rua on Wednesday took a more conciliatory line, urging protesters, who have attacked Iberia offices in Buenos Aires, not to direct their anger towards Spain.

"We should not turn this into a conflict, a boycott or an anti-Spain issue," he said.

"We all love Aerolineas. I am certain that Aerolineas will continue existing."

Cash injection on hold

Sepi is delaying the injection of a further $350m into Aerolineas Argentinas until all workers have approved the austerity package.

Two of seven unions involved have refused to accept the plan, claiming that the Argentine government, which owns 5.4% of the airline, and the Spanish administration should shoulder more responsibility.

Sepi is thought to be attempting to put the 50-year-old airline on a more solid financial footing in preparation for the disposal of its holding.