Aerolíneas Argentinas S.A.
Aerolineas Argentinas is the national flag-carrier of Argentina and is also the parent company of Aerolineas Argentinas Cargo, Austral Lineas Aereas and JetPaq S.A. Originally founded in 1949, the airline and its subsidiaries operate an extensive domestic and regional network as well as international services. The group is also involved in related industry sectors including ground handling and tour operations.
Headquartered in Buenos Aires, Parent company Aerolineas Argentinas is majority owned by the Argentine government while all subsidiaries are wholly owned by Aerolineas Argentinas. Subsidiaries include:
- JetPaq S.A (since 1995)
- Austral Lineas Aereas (since 2008)
461 total articles
12 total articles
Aerolineas Argentinas is focusing on further expansion in the short-haul market, where it continues to benefit from protectionism. The government-owned carrier has committed to purchasing 20 additional 737-800s, growing a narrowbody fleet which has already been renewed since renationalisation in 2008.
The flag carrier has incurred stiff losses since renationalisation despite trying to improve its position through network adjustments, fleet renewal and new partnerships including membership of SkyTeam. Aerolineas continues to work on improving its highly unprofitable long-haul operation but the carrier is now primarily focusing growth in the domestic and – to a lesser extent – the regional international sectors.
Domestically Aerolineas benefits from a lack of competition as Argentina is not open to new entrants including low-cost carriers. Its only main domestic competitor, LAN Argentina, has been unable to expand and has had to overcome numerous challenges, including a recent attempt to evict the carrier from its maintenance base which could have forced it to withdraw from the domestic market.
Aerolineas Argentinas is aiming to turn around its unprofitable long-haul operation by renewing its widebody fleet, adding capacity to several existing destinations and implementing codeshares with its SkyTeam partners. The airline plans to acquire 12 A330-200s over the next four years, allowing it to replace most of its A340s – the only widebody type in its current fleet.
Aerolineas remains unprofitable, an exception in a Latin American industry which has one of the highest profit margins and growth rates in the global industry. Aerolineas and its highly protectionist government owner are often criticised by more successful Latin American airline groups, with a particularly hostile backlash against Argentina taking place at the recent ALTA 2012 Airline Leaders Forum. But Aerolineas has improved its outlook significantly since renationalising and embarking on a restructuring at the end of 2008.
Fixing the long-haul network remains a challenge but the airline’s management team is putting in place the right strategies to give Aerolineas a chance to turn around - and hopefully give the government the confidence to loosen its unhelpfully protective aviation policies.
Aerolineas Argentinas formally joined the SkyTeam Alliance on 29-Aug-2012, completing an important component in the flag carrier’s strategy to reverse several years of unprofitability and lacklustre service standards. SkyTeam will allow Aerolineas to virtually expand its relatively small and highly unprofitable international network as the carrier aims to quickly start codesharing with several current and prospective members. But the alliance alone will not fix Aerolineas’ deep-rooted problems and the government-owned flag carrier still has to overcome several challenges to achieve sustained profitability.
For SkyTeam, Aerolineas Argentinas fills an important white spot in South America, a fast-growing region where the alliance previously lacked any local members. But SkyTeam still badly lags behind oneworld and Star in the increasingly important Latin American market. The alliance is now striving to woo Brazil’s Gol as a new member, which would allow SkyTeam to close the gap with its rivals.
The demise of Pluna has left a large void in the Uruguayan market that will be partially filled through expansion by carriers from neighbouring Argentina, Brazil and Paraguay as well as by tiny Uruguayan regional carrier BQB Air. The Uruguayan Government has opted against bailing out Pluna, which ceased operations on 05-Jul-2012, and is instead now trying to find another carrier (either new or existing) to take over its routes and, potentially, its employees and fleet.
But the end result will almost certainly be the the lack of a network carrier for Uruguay and the sale of Pluna’s 13 Bombardier CRJ900 regional jets to overseas buyers. While some of Pluna routes could be taken over by other carriers, there will almost certainly be a steep reduction in traffic at Montevideo’s Carrasco International Airport as the Uruguayan market is too small to support more than a handful of point-to-point routes.
Argentina’s aviation market has taken another step backwards as the country’s Government continues to come up with new measures aimed at protecting struggling flag carrier Aerolineas Argentinas. Aerolineas, which has not yet completed the restructuring it started three years ago after the carrier was renationalised, faces another challenging year while Latin America’s other leading carriers prosper without any government subsidies or protection.
In the latest example of protectionism, Argentinean civil aviation authorities last month decided to revoke LAN Argentina’s permits to operate international flights from Buenos Aires’ downtown airport, Aeroparque Jorge Newbery. LAN is vehemently protesting the decision on the grounds the Chile-based airline group, which has had an affiliate in Argentina since 2005, is being unfairly discriminated against. LAN currently operates two important international business routes from Aeroparque, Santiago and Sao Paulo Guarulhos.
Aerolineas Argentinas plans to pursue further capacity and fleet expansion as the renationalised carrier enters the next phase of its transformation. Aerolineas, however, has had to push back expectations for returning to profitability until at least 2H2012. With a highly unprofitable international operation and a roughly break-even domestic business, Aerolineas now stands alone in Latin America as the only loss-making major carrier in the region.
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