MercoPress. South Atlantic News Agency

Argentina's Lower House votes purchase of flag air carrier

Argentina's Lower House approved early Friday following twelve hours debate the government's purchase of the flag air carrier Aerolineas Argentinas and its subsidiary Austral from Spanish travel conglomerate Marsans. The bill must be approved by the Senate before becoming law.

The measure which was passed by 167 votes and 79 against, says that Congress will set the purchase price and requires the state to hold the majority of the company's shares. However the original draft from the Executive said the airline eventually would again be privatized, but the clause had to be eliminated. The company was privatized in 1991 and is struggling with financial woes and labor conflicts. It would return to state control with an estimated 900 million US dollars debt. The two carriers account for about 85% of Argentina's domestic air traffic. Marsans group alleges that the poor financial situation of the company can only be attributed to the Kirchners' government frozen air rates policy, higher fuel costs and continuous labor strife which hampered the reputation of Aerolineas. The Spanish businessmen also suspect that the purpose of these policies was the ultimate goal of the Kirchners to takeover (recover) the Argentine flag air carrier, as has happened. Last July the Argentine government agreed with the Marsans group to takeover the company which has a staff of 9.000 and is saddled with both operationally and accumulated debts. Congressional opposition proposed that Aerolineas Argentinas should declare bankruptcy forcing the Spanish group to face creditors. Later the government would move in and purchase the aircrafts and air routes. This is the second time in just over a month that the Argentine Congress has played a leading role in controversial issues with sharp debates. Until just a few weeks ago the government had a comfortable majority in both houses. But it all changed on July 17 when the government initiative to hike farm export taxes was defeated with many legislators crossing the line thus splitting the ruling Partido Justicialista and the hegemony of the Kirchner couple.