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- LAN Argentina S.A.
Av. Rafael Obligado 1221
- Main hub
- Buenos Aires Aeroparque Jorge Newbery Airport
- Business model
- Full Service Carrier
- Joined Alliance
- Association Membership
- Codeshare Partners
- American Airlines
LAN Argentina is an affiliate of LAN Airlines, based at Ministro Pistarini International Airport (EZE) and Aeroparque Jorge Newbery (AEP). It operates both domestic and international flights, dominating the domestic market in Argentina. The airline is minority owned by LAN Airlines.
Location of LAN Argentina main hub (Buenos Aires Aeroparque Jorge Newbery Airport)
114 total articles
5 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.
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.
LAN turned a net profit of only USD16 million in 2Q2011, a 74% decrease compared with the USD61 million profit from 2Q2010 and the airline group’s lowest profit for any quarter since 2Q2009. LAN, which over the past several years has had one of highest airline profit margins in the world, also recorded its lowest operating profit margin in five years. The Chile-based airline group said its 2Q2011 results were impacted by higher fuel prices, operational disruptions caused by volcanic ash and losses at new Colombian subsidiary Aires.
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.
LAN remains optimistic it can continue posting double-digit profit margins throughout 2011 despite rising fuel costs, losses at its new Colombian operation and delays in proceeding with its proposed merger with TAM. The merger transaction, which would bring together Latin America’s two largest airline groups, is now not likely to be completed until early 2012.
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