MercoPress. South Atlantic News Agency

Uruguay flag carrier: a repeat of Aerolíneas soap-opera?

Uruguayan flag air carrier Pluna is facing financial turbulences, a story which seems a repeat of Latinamerican government airlines in the brink of having to ground overwhelmed by debts, unachieved objectives and sheer planning incompetence.

Only 15 months ago Pluna found a new associate, investment group Leadgate which promised business expertise, a long term investment plan and an injection of fresh funds, 25 million US dollars, while the Uruguayan government would be the guarantor up to 152 million US dollars for the acquisition of 15 new Canadian built mid range Bombardier CRJ-900. Pluna is and has been basically a regional airline which flies a monopoly air shuttle to Buenos Aires from Montevideo and has regular flights to Sao Paulo, Rio do Janeiro, Santiago de Chile and other mid distance destinations. However it now appears Pluna has accumulated a fuel debt of six million US dollars, has cancelled the only out of continent flight to Spain (where thousands of Uruguayans have migrated), has a list of redundancies ready and wants to drastically prune the original business plan. Leadgate alleges that international conditions for the air industry have changed completely in the last twelve months. Economy and Transport ministers, Danilo Astori and Victor Rossi have been summoned to Congress to explain the situation of the airline, and its mounting debts and maturities. Uruguay's flag air carrier history is not a proud one. Created in the 1930s, debt strapped and highly subsidized it was partially sold in the nineties to another Jurassic example of the same species, Brazil's flag air carrier VARIG which went bankrupt. Returned to the Uruguayan government and convinced that commercial flying was not its business the search for an entirely private associate began, until the relatively known investment group Leadgate emerged and an agreement was reached July 2007. Opposition parties and the unions were unconvinced about the deal given the scarce credentials of the investment group, but with a comfortable majority in Congress the association and business plan was approved. So far what has emerged is that of the promised 15 new aircrafts only five have been delivered and the six million US dollars fuel bill. The supplier is the government owned fuel company Ancap. Mr Astori and Mr Rossi will have much explaining to do in Congress. Another solution would be for Pluna to be again taken over by the Uruguayan government, in a move similar to that of Aerolineas Argentinas from neighboring Argentina. Leadgate group has said it is willing to end the association, according to reports in the Montevideo press.