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Pluna’s seven Bombardiers to be auctioned next 3 September says government

Saturday, July 28th 2012 - 11:05 UTC
Full article 3 comments
Vice President Astori, enthusiastic sponsor of the Pluna connectivity project Vice President Astori, enthusiastic sponsor of the Pluna connectivity project
Pluna’s Bombardiers to be auctioned next 3 September Pluna’s Bombardiers to be auctioned next 3 September

The Uruguayan government announced it will auction next 3 September the seven Bombardier aircraft from the collapsed flag air-carrier Pluna, which was definitively grounded last July 5, announced Public Works and Transport minister Enrique Pintado.

The minister said the auction will have a starting price of 135 million dollars for the seven aircraft and in case there are no interested parties, a second auction will take place but with a floor price of 100 million dollars.

The 75 year old Uruguayan flag carrier Pluna since 2007 was 75% private and 25% government and under the management of a financial group LeadGate headed by CEO Matías Campiani who last May-June warned the company was on the verge of bankruptcy unless it received funding from the government.

When funds were denied and LeadGate did not come up with its share of support as agreed in the 2007 contract, and having exhausted the fuel credit (30 million dollars) with Uruguay’s government fuel refining company, Pluna was grounded leaving thousands of passengers stranded, another few thousand with tickets paid and little chance of refunding, 900 staff redundant as well as leaving a long list of local providers and creditors in the dark.

Losses are estimated at over 380 million dollars, but could be even larger once the data on the company’s books becomes available something which the Uruguayan ruling coalition is reluctant to deliver given the magnitude of what is clearly becoming a major financial and political scandal.

Pluna actually became a pet project for the current and previous Broad Front governments intent in having the Uruguayan flag fully back in the air and increasing connectivity in the region based on the new airport of Carrasco which was to become an air hub given its privileged location between Argentina and Brazil.

With the enthusiastic support of then Finance minister and now Vice President Danilo Astori and the full backing of former president Tabare Vazquez the project was launched with a private partner, the financial group LeadGate with no experience in the air industry.

The new management quickly purchased Canadian Bombardiers with the guarantee from the Uruguayan government but somehow numbers never levelled in spite of the regional expansion.

Furthermore the parliamentary opposition began repeatedly warning about the poor management of Mr. Campiani, the dubious background of the Leadgate group, but the ample majority in congress plus an aggressive media campaign prevented any investigation or auditing for that matter, since balances were absent.

Come July and happened what had to happen. Argentine born Campiani and Leadgate delivered their 75% of shares to the Uruguayan securities commission; he then signed a document with the Uruguayan government by which neither side would sue the other and left the country following a huge celebration party, according to the Uruguayan media.

The ruling coalition immediately had a bill voted by which it changed certain articles of the bankruptcies legislation, which now limits creditors’ claims and created a custodial trust with the aircraft to be auctioned hopefully with Pluna’s lines, particularly lucrative the air bridge to Buenos Aires and Sao Paulo.

The government majority closed the way for a parliamentary investigation with political responsibilities in the case, and sent the available information to the courts. But at the same time added to the original bill an article limiting access to the Pluna information until the judiciary inquest is over.

Nevertheless the whole process is being appealed at civil and criminal courts and the latest news is that whoever buys the aircraft next September 3 will have to be responsible for the tickets sold or refunding and contract part of the original Pluna staff.

With so many uncertainties and pending demands, it’s hard to see how the auction will take place and if there are interested parties in trying to find a way out of the mess.

The most that can be expected is another similar open letter from the sponsor of the whole Pluna deal Astori, in which he admits “I was wrong” and describes his good intentions but also naivety in the whole process. Former president Vazquez two days later published a letter in similar terms basically saying that if Astori was wrong “so was I since I was president” at the time.
 

Top Comments

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  • ChrisR

    Like taking candy from a baby. Does no-one in 'power' in Uruguay understand the term 'due diligence'.

    To take a deal from a company with NO airline operating experience simply to 'keep the flag flying' is gross incompetence and Astori should resign his post in shame.

    AND, they are at it again! You can have the seven planes (but probably not the airbridge) for a starting price of 135 million dollars. BUT if everybody sits on their hands it will soon be 100 million dollars. Anybody heard of an auction ring? AND THEY WANT THE BUYER TO HONOUR THE TICKETS!

    This is just infantile. Has anybody even bothered looking at what the market price for seven secondhand Bombardier jets is? The brand new ex-factory price for seven the 900s planes is 308 million dollars (source Bombardier March 2012).

    How many cycles have these planes been subjected to? How many structural repairs have been required? I could go on and on.

    I would hope that the price realised would be close to 100 Million dollars, but no-one knows until someone wants TO BUY and they will need to know the outstanding liabilities upfront (hope they haven't lost the accounts).

    It is absolute lunacy setting a price on anything of this nature in the current world economic situation, and by a government who has proven it does not know what it is doing in commercial aircraft it is ridiculous.

    Jul 28th, 2012 - 08:25 pm 0
  • Frank

    Dutch Auction......

    Jul 29th, 2012 - 09:45 am 0
  • JohnN

    Canadian taxpayers who foot the bill for our Export Development Corporation to loan big money to airplane buyers like Pluna so they can by Bombardier products are also losing a lot too. Serves us right for voting for politicians who want to preserve jobs in unprofitable industries in their ridings.

    Jul 30th, 2012 - 12:06 am 0
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