MercoPress. South Atlantic News Agency

Aerolineas half grounded and edging to become Argentine

The Argentine government asked on Thursday a judge to appoint an administrator for the country's main airline and flag carrier Aerolineas Argentinas, a move seen as a possible step toward a state takeover of the company and a potential controversy with the Spanish government.

Aerolineas controlled by privately held Spanish tourism group Marsans is currently behind on June salary and other benefit payments and has been plagued by strikes and complaints about poor service. The company has been forced to operate under state-controlled fares and despite subsidized jet fuel it has accumulated growing debts. Aerolineas declared operating losses of 100 million US dollars in the first half of the year. A court-appointed administrator would approve any major company decisions. Local media said the government sought an administrator who could negotiate loans from government owned bank Banco Nacion to pay salaries. According to press reports the company and the Argentine government have been summoned to deliver their cases in court next Tuesday. Leaders of pilot and airline crew unions met with government officials on Wednesday and pledged not to go on strike for 60 days while the government seeks the court action. Argentine Transportation Secretary Ricardo Jaime told local radio the company had racked up 360 million US dollars in debt and "half their fleet is grounded". However Argentine analysts said the government step could signal another move toward what Buenos Aires media call the "Argentinization" of Aerolineas, meaning it could be bought by the state or by an investor considered an ally of President Cristina Fernandez de Kirchner and her husband and predecessor as president, Nestor Kirchner. Marsans purchased Aerolineas in 2001 when the Argentine company was bankrupt. Aerolineas has 80% of the domestic flights in the country, and its main competitor is Chile's LAN Airlines LAN. In 2005 it admitted the possibility of letting Argentine partners into the company. Earlier this year Marsans reached a preliminary agreement to cut its stake in Aerolineas to 35% from 95% including a local private investor (35%) and greater participation of the Argentine state and provinces. From Spain Economy minister Pedro Solbes, said that "clear rules of the game" and legal respect for contracts was essential for the private sector and no one should be surprised if in circumstances these are absent "private investors opt for other alternatives or other countries". Other Buenos Aires sources insist that President Cristina Fernandez de Kirchner and Spanish president Jose Luis Rodriguez Zapatero have been on the phone twice this week and that a visit by the Argentine leader this week to Madrid and Zaragoza had been cancelled precisely because of the Aerolineas incident. The Spanish Socialist government is under increasing pressure from the private sector because of the Kirchner attitude towards foreign investors, particularly from Spain. Repsol-YPF recently accepted to return back to Argentine private investors a percentage of YPF. Reliable sources from the Marsans groups allege that the administered air fares and constant labor strife is part of a plan by the Kirchners to recover the Argentine flag air carrier.