Big changes are afoot at the flag carrier of Argentina ahead of privatization and a potential full-fledged buy-out of the nationalized airline.
Photo: claudiosantisteban | Shutterstock
Popular, yet unpopular decisions
In the past year, 
Aerolíneas Argentinas
management fired 13% of the airline’s staff and cut down on unpopular domestic routes to smaller cities in Argentina. Presumably inspired by 
American Airlines
removal of one olive from first-class salads that saved the carrier $40,000 a year in the 1980s, Aerolíneas Argentinas also removed freesnacks previously offered to passengers during shorter flights.
In late 2024, the airline shut some of its ticketing offices in Ushaia in the Tierra Del Fuego province and El Calafate in the province of Santa Cruz. In response to the concerns of the employees at these now-shuttered offices, the airline said that they would transition the office employees into new positions at their local airports.
Photo: Vincenzo Pace | Simple Flying
These decisions, made in the past year at the directive of a new libertarian government under President Javier Milei, aim to “…trim the airline’s burden on the state…” President Milei’s party, which has been in power since December 2023, wants to fix long-standing problems with the Argentinian economy such as rampant inflation, and a large public (government) debt through withdrawing funding, selling off, and privatization of many state enterprises and functions.
While popular, President Milei’s pro-market radical reforms are not without their pushback. In October, thousands of transport workers along with their unions (including pilots and flight attendants at Aerolíneas Argentinas) went on a 24 hour strike to protest Milei’s policies. Employees at other Argentinian airlines followed suit in unity with the transport workers.
While the carrier is not due to release its full-year results until sometime next week, preliminary figures suggest that the airline is set to rake in record profit margins. More than the $32 million the carrier made in 2023.
Photo: Lukas Souza | Simple Flying.
Codeshare agreements ahead of privatization
In a bid to increase the appeal of the airline to potential buyers later this year, the Argentinian flag carrier has negotiated a codeshare agreement with LATAM Airlines Group
to “…connect their respective countries’ domestic and regional routes…” The agreement stipulates that customers flying with one airline (say LATAM) will be able to earn and redeem miles on the other airline(Aerolíneas Argentinas).
According to speculation by news agency iprofesional.com, the codeshare agreement “…seems to revive the possibility of LATAM participating in the competition for future private control of the state-owned company…”
Not to be outdone, Avianca
may too sign a codeshare agreement with the Argentine flag carrier so if and when the time does come to buy the airline, the agreements that Aerolíneas Argentinas with its competitor LATAM, won’t put Avianca at a disadvantage for future growth.
Currently, Avianca is attempting to grow its marketshare in the South American airline market, and if LATAM were to buy a significant stake in the Argentine flag carrier, this would put Avianca at a serious disadvantage in the South American market.
Unlike LATAM, the Colombian airline already has a history with the airline dating back to October 2023, when Abra Group (Avianca + GOL) signed a Memorandum of Understanding (MoU) regarding the cooperation of the two airline groups. Of the three Abra Group Airlines, currently GOL Linhas Aéreas
is the only airline to have any form of a code-share agreement with Aerolíneas Argentinas.
Photo: Matheus Obst I Shutterstock
This is not the first time the Argentinian government has attempted to nationalize its state-run airline. For a short period between 1990 and 2008, the flag carrier was privatized, with shareholders in the airline comprising a consortium of different management companies and airlines.
However, by 2008, Aerolíneas Argentinas was running woefully short on cash following years of mismanagement and labor disputes among other problems. At the time, the Argentinian government under President Kirchner was pursuing an agenda that prioritized protecting the national interests and companies of Argentina. Thus, the airline was re-nationalized in 2008.
So what is current president Milei’s motivation behind re-privatizing Argentina’s national airline? Well, according to the Argentinian president on a radio show in November, “…since its a re-establishment, carried out by [supporters of] Kirchnerism [the president] in 2008, the company has never closed a year with a positive balance sheet and the contributions of…[the national budget] to cover its deficit already exceed $8 billion…”
Will privatizing Aerolíneas Argentinas fix the underlying economic problems in Argentina? The next few years will be crucial to the success of the Argentine flag carrier.
