Aerolíneas Argentinas S.A. | Acquisition by Marsans in 2001
Acquisition by Marsans in 2001
American Airlines stopped managing the airline in 2000. By the end of the year, Aerolíneas Argentinas had accumulated debts of nearly $1 billion. In October 2000, the Spanish government agreed to invest an additional $650 million in the airline.
SEPI proffered a restructuring plan that focused on cutting costs through scaling back services and cutting jobs and wages. Most of the airline's unions, reported Airline Business, preferred to have AR recapitalized and an international strategic partner enlisted, while expanding routes.
The fate of 6,700 employees at stake made the airline's fate a contentious political issue. As negotiations between the governments of Argentina and Spain dragged on, AR focused on preserving enough cash to keep flying. By the middle of 2001, AR was operating only half its scheduled international routes.
SEPI decided to sell off the airline, first placing it in bankruptcy protection, and in October 2001 chose Air Comet, a partial subsidiary of privately owned Spanish tour operator Grupo Marsans, from a field of several bidders. As part of the deal, Air Comet/Marsans agreed to keep all of the airline's employees on the payroll for two years. Marsans was acquiring 92 percent of shares in exchange for assuming half of AR's $1.8 billion debt. Marsans was planning to raise additional capital from private investors in Argentina, as well as through eventual international stock offerings.
LatinFinance remarked that this was AR's second privatization, by a second government. The publication also noted that the timing of the deal, after the September 11 terrorist attacks on the United States, was challenging. According to Latin Trade, however, Antonio Mata, AR's new head, was able to negotiate an average 60 percent discount with suppliers in the degraded aviation market. Mata was a veteran of Spain's tourism industry and founder of Air Comet.
The devaluation of the Argentine peso in 2001 boosted tourism, observed Latin Trade. The next year, Aerolíneas Argentinas was able to post its first operating profit in a quarter-century, about $22 million. AR had an 85 percent market share on domestic routes.
Passenger count rose 40 percent to 5.1 million in 2003. To help ward off competition from upstart airlines catering to the business crowd, a new "Executive Jet" service was unveiled during the year. This program used a fleet of three Boeing 737s modified to carry just 30 passengers in an extra level of comfort.
In 2004, the company began an ambitious $557 million fleet renewal plan that would see 49 aircraft acquired in three years. New aircraft included the most advanced Boeing 747 variant.
At the same time, the airline was adding a $3 million flight simulator to train Boeing 737 pilots for Aerolíneas Argentinas and other local airlines. AR had become more self-reliant in maintenance work.
A new $100 million headquarters called "Ciudad Aerolineas" was being built. The company was expanding throughout the South American region, adding service to Chile, Bolivia, Paraguay, and Uruguay. Parent company Marsans was creating a new Chilean airline, Aerolineas del Sur, to operate in Aerolíneas Argentinas colors. A plan to acquire Pluna, a Uruguayan airline controlled by VARIG, was canceled.