Page last updated at 04:38 GMT, Tuesday, 22 July 2008 05:38 UK

Argentina renationalises airline

By Daniel Schweimler
BBC News, Buenos Aires

An Aerolineas Argentinas jet takes off from Buenos Aires' airport (file photo)
Nearly half of the ageing fleet of 67 planes has been grounded

The Argentine government has renationalised the country's airline, Aerolineas Argentinas, nearly 20 years after it was privatised.

It is the latest major company to be renationalised in Argentina, after a wave of privatisation in the 1990s.

The Spanish group Marsans agreed to sell Aerolineas and its subsidiary Austral for an undisclosed sum.

Aerolineas now carries a debt of nearly $900m (450m) and is losing money to the tune of about $1m a day.

The deal was announced with great fanfare, and some criticism, by the Argentine President, Cristina Fernandez de Kirchner, in the presidential palace.

"The fact is that the description just given by the Planning Minister - tough, serious but true - means this government was obliged to make a decision... to guarantee a service, communication, and to guarantee the survival of our flag-carrying national airline," she said.

National pride

It is still not clear how much it will cost and a full audit is being carried out. Most analysts say that Aerolineas Argentinas was already in a poor condition when it was sold 18 years ago.

It is overstaffed and workers are represented by several different unions. More than half its ageing fleet of 67 planes are grounded.

Passengers suffer constant delays and cancellations and, given the choice, many will choose alternative companies. And like all airlines, it is being hit by rising fuel costs.

It is probably an understatement to say that making Aerolineas Argentinas profitable will be a challenge. But national pride is at stake here.

In a recent survey, 70% of passengers said they were in favour of a takeover by the Argentine government - which has already purchased several of the companies privatised in the 1990s, including the postal and water services.

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13 Jan 08 |  Americas
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