MercoPress. South Atlantic News Agency

Argentine government taking back airports

The Argentine government has given a first long stride to recover control over the country's 32 main airports which for the last eight years have been under private administration, Aeropuertos Argentina 2000, AA2000, belonging to businessman Eduardo Eurnekian.

Under the agreement up to 35% of the company is taken over by the government; however it must still be considered by Congress.

The new deal, which respects the original term of the contract ? 2028 ? will lead to changes in the composition of AA2000's board since the Argentine government will be represented by a director and a syndic. At the same time, the company will float 20% of its share capital on the Buenos Aires Stock Exchange.

The sources added that negotiations had been tough, especially since both the government and the company alleged that the other had failed to live up to its part of the concession contract, leading to unpaid royalties by the company and unpaid subsidies by the government.

Negotiations set the amount owed the government by the company for unpaid royalties at 1.2 billion pesos while the amount owed by the government was set at 350 million pesos.

The resulting 850 million pesos owed the government by AA2000 will be paid through the issue of debt and stock that will enable the government to gain a seat on the board.

But, according to the Argentine press the deal disappointed international carriers which have been demanding a 30% reduction in current landing fees and were expecting a clause on the issue to be included in the new package.

"We still haven't had access to the agreement. But we are hoping a rebate has been included. You can't leave airlines and passengers out of a deal of such importance", said Patricio Sepulveda, a IATA representative who visited Buenos Aires but was unable to establish any contact with Argentine authorities involved in the discussion and drafting of the new contract.

Apparently the new licence to be paid by AA2000 to the Argentine government ceases to be a fixed lump of money and becomes 15% of the company's revenues.

An estimated 330 million US dollars will be invested in upgrading some of the airports.

In a brief release, AA2000 stated that the deal "renews the eight year old commitment", and points out to the refurbishment of several airports, Ezeiza, Aeroparque, Rio Gallegos, Cordoba, Mar del Plata, Mendoza, Iguazu and Bariloche, which are evidence that "the investment program was honoured in spite of the difficulties"

AA2000 and Mr. Eunerkian among other things also helped finance the Argentine Memorial in the Falkland Islands which has been completed but is waiting to be officially inaugurated.