Argentine airline makes first profit

The airline has engaged in a fare war with rivals

Argentina's biggest airline, which was close to closure last year, is thought to have made its first monthly operating profit in 25 years.

Aerolineas Argentinas chairman Antonio Mata is reported to have told an assembly of creditors that the company made the profit - minus debt and service costs - in July and August.

It seems that the airline, which is owned by the private Spanish consortium Air Comet, might have actually benefited from Argentina's current financial crisis.

Its rivals have been struggling with financial problems and Aerolineas Argentinas has seen a big jump in its share of the domestic market.

The airline has also been earning dollars from its international routes and it has been conducting an aggressive cost-cutting campaign.

Fare war

Analysts said they were stunned by Mr Mata's reported comments because most global airlines were suffering following the 11 September attacks.

Argentina's four-year recession is expected to cut domestic air traffic to 3.3 million in 2002 - a third less than in 2001 and a shadow of the seven million who flew in 1998.

But Aerolineas has managed to increase its share of Argentina's domestic market to 75% from 17% a year earlier.

It has achieved this through an aggressive expansion of routes and a fare war with its two main competitors.

Aerolineas is currently negotiating with its competitors after being granted bankruptcy protection last year.