UPDATE 1-Argentine govt asks court to intervene in Aerolineas

Thu Jul 10, 2008 8:55pm EDT
 
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(Updates with comment from transportation secretary and government representative on company's board)

By Cesar Illiano

BUENOS AIRES, July 10 (Reuters) - The Argentine government on Thursday asked a judge to appoint an administrator at the country's main airline, Aerolineas Argentinas, in what was seen as a possible step toward a state takeover of the company.

Aerolineas, controlled by privately held Spanish tourism group Marsans, is behind on June salary payments, is plagued by strikes and complaints about poor service, and faces growing debt under state-controlled fares despite subsidized jet fuel.

A spokesman for the Transportation Secretariat told Reuters the government asked the courts to appoint an administrator and said a judge would analyze the petition.

A court-appointed administrator would approve any major company decisions. Local media said the government sought an administrator who could negotiate loans from state-owned bank Banco Nacion to pay salaries.

Leaders of pilot and airline crew unions met with government officials on Wednesday and pledged not to go on strike for 60 days while the government seeks the court action.

Transportation Secretary Ricardo Jaime told local radio the company had racked up $860 million in debt.

"Investment is lacking, there are no replacement parts and they aren't working at full operational capacity," Jaime said. "Half of their fleet is grounded."

Analysts said the government step could signal another move toward what Argentine media dub the "Argentinization" of Aerolineas, meaning it could be bought by the state or by an investor considered an ally of President Cristina Fernandez and her husband and predecessor as president, Nestor Kirchner.

In the past, foreign companies such as Brazil's Petrobras (PETR4.SA) (PBR.N), Spain's Repsol (REP.MC) and France's Electricite de France have sold their stakes in Argentine companies to business leaders seen as close to the first couple.

"It's a classic Kirchner maneuver, to pin the foreign owner into a corner then say, 'You'd really like to sell this to us.' It expedites the transaction every time," said Christopher Ecclestone, an analyst with New York-based Hallgarten and Co consultancy.

A spokesman for Aerolineas Argentinas said the company would not comment on the situation.

Late on Thursday, however, Julio Alak, one of the government's representatives on the board of directors, said the Argentine treasury had contributed 50 million pesos ($16.3 million) to pay the overdue wages and keep flights operating.

ARGENTINIZATION

During his administration, Kirchner nationalized the postal system, the country's largest water and sewage company, a train company and the administration of the airwaves.  Continued...

 

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