Canada and US closely monitoring Uruguay’s flag air carrier in the brink of default
The governments of Canada and the US are “concerned” and “closely following” events in Uruguay’s flag air carrier Pluna since banks and an investment fund from the two countries are heavily involved in the running of the money-loosing company is spite of repeated financial support from the Uruguayan government.
Canadian banks have an exposure of over 260 million dollars in Pluna’s purchase of Bombardier aircraft and the US LeadGate investment fund holds a 50% stake in the company jointly owned by the Uruguayan government.
The issue has been addressed “at the highest level” by Canadian diplomats with Uruguayan officials who are trying to find a solution which avoids the closure of the air carrier which was founded in 1936 but has had a rather erratic evolution both under government and private management.
Apparently Pluna has a pending debt with Canada’s Scotiabank of 140 million dollars which was invested in the purchase of seven of Pluna’s thirteen Canadian manufactured Bombardier CRJ-900 delivered between 2008 and 2011.
The credit has a guarantee from the Uruguayan government equivalent to 203 million dollars with a mortgage on the aircraft.
There’s an additional guarantee on a leasing equivalent to 120 million dollars for the purchase of the remaining six CRJ-900s with Canada’s Export Development bank, 100% property of the Canadian government.
There is an unclosed debt with Bombardier the supplier of the aircraft and the necessary spares and maintenance jobs. Finally a Canadian airline Jazz in 2010 injected an additional 10 million dollars in Pluna to take over a 25% stake.
Last week the airline was almost grounded because of debts with Uruguay’s government owned oil and refining company totalling 10 million dollars.
Finally Pluna presented a 600.000 dollars check and fuel was supplied but only for the next thirty days.
The financial situation of Pluna has also been closely followed by Uruguay’s opposition in Parliament which was never convinced of the current stake distribution in the company, but did not have the necessary votes to prevent the operation going ahead.
However now given the abundant evidence of the ‘misuse of Pluna’s assets” the “permissiveness of government regulators” which opened the way for the current financial situation, particularly since the incorporation of LeadGate in 2007 with CEO Matias Campiani, Uruguay’s main opposition presented charges before a criminal court in Montevideo
“There has been a long chronology of irregular actions with systematic violations of the contract signed by the private side with the government in 2007 when the new society composition of the air carrier Pluna was reached”, said Senator Carlos Moreira.
He added that the current administrators of the air carrier “have abusively sold company assets, spares and there has been a significant increase of liabilities to over 300 million dollars. We are also questioning the former members of Pluna’s board and the former Minister of Public Works and Transport who made some of the crucial decisions in this matter”.
“CEO Campiani says they’ve put 30 million dollars in Pluna. Actually it was only 15 million while the other 15 million belong to the Canadian group Jazz. We are still waiting for the other 152 million of the 177 million promised in the original contract”, underlined Senator Moreira.
Furthermore the charges include claims that in spite of the financial stress and money loosing situation in 2011 payments and benefits to the leading posts in Pluna jumped from 3 million dollars to 4.3 million including a management advisory bill for 600.000 dollars and legal counselling of 800.000 dollars.
CEO Campiani has admitted the company needs a capitalization of 30 million dollars to overcome the current ‘liquidity crunch’ created by the Argentine restrictions on the purchase of US dollars, the cheaper fuel supplied by Argentina to its airlines and a slowdown of the Brazilian economy.
Pluna is a regional airline with scheduled flights to Argentina, Brazil, Chile and Paraguay.