Page last updated at 10:52 GMT, Thursday, 18 December 2008

Argentina renationalises airline

Aerolineas Argentinas plane at Buenos Aires airp
Aerolineas Argentinas is to be government-owned once more

Argentina is set finally to renationalise the Spanish-owned airline, Aerolineas Argentinas (AA).

AA and its Austral subsidiary have been under state control since November when a court gave the government management control in order to secure services.

Now, Argentina's parliament has given the go-ahead for a full state takeover.

This followed the earlier failure of talks with owner, Spanish travel group Marsans. Originally state-owned, Aerolineas was privatised 18 years ago.

Marsans agreed in July to sell Aerolineas and Austral to the government, but talks then collapsed after auditors gave widely differing values for the company.

Marsans has said it will appeal against the nationalisation decision.

Industrial disputes

Aerolineas and Austral employ about 9,000 workers and operate about 80% of domestic flights in Argentina.

After 18 years Aerolineas once again belongs to all Argentineans and is on the road to resuming its place as the nation's pride
Senator Ariel Basteiro

Aerolineas was on the verge of bankruptcy in 2001 when Marsans bought it from a group controlled by the Spanish government.

However, the carrier has been plagued by industrial disputes and flight cancellations for months, and the government says it has run up debts of up to $900m.

The government has accused Marsans of mismanaging the airline, a charge which the company denies.

Hector Bateiro, Aerolineas' union leader said: "There is a strong and serious commitment from the workers and the government and the airline passengers to put the company back in the position that it should have never have ceased to hold - one of pride for each and every worker and everybody in general."

Nationalisation moves

Argentina's parliament set the nationalisation process in motion in September, with the Chamber of Deputies giving the go-ahead earlier this month. Now the Senate has also approved the measure.

As President Kirchner's ruling coalition controls both houses, the nationalisation bill is set to pass into law.

Senator Ariel Basteiro, speaking after the Senate vote, said: "Nothing lasts a lifetime, and after 18 years Aerolineas once again belongs to all Argentineans and is on the road to resuming its place as the nation's pride."

Marsans said on Wednesday that it had taken its complaint to the Washington-based International Centre for Settlement of Investment Disputes (ICSID).

The nationalisation move has upset business leaders in Spain and threatens to disrupt the normally good relations between the two countries.

The government takeover is part of the nationalisation trend which began under President Kirchner's predecessor and husband, Nestor Kirchner.

Between 2003 and 2007, Mr Kirchner oversaw the nationalisation of the railways, water companies and telecommunications firms.

Opposition parties and business leaders have warned that nationalisation moves could scare off investors.



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