New Internationalist

Going Public

March 2009

Unions’ fight brings flagship airline back to Argentina

Today we are all Aerolíneas Argentinas,’ exclaimed Hugo Moyano, Secretary General of Argentina’s labour federation, from the steps of the National Congress. The crowd responded with a cacophony of triumphant cheers and drum-pounding. Moyano’s proclamation, delivered on 21 August last year, gave a sense of finality to the countless stickers and leaflets decorating Buenos Aires signposts and sidewalks with the assertion: ‘We are all Aerolíneas’. The House of Deputies authorized the Government to purchase the struggling airline several hours later.

Argentina’s four airworkers’ unions, with the support of the National Confederation of Labour, began their campaign to expropriate the nation’s flagship airline in June, after the Spanish travel company Grupo Marsans announced that it could no longer meet the company’s payroll. The unions have traditionally maintained a hostile posture to foreign ownership, striking repeatedly since 2005 and calling on the State to take back its leading role.

The Cristina Fernández de Kirchner Government listened. The President herself, whose Justicialist Party maintains close ties to Argentina’s powerful unions, spearheaded the drive to nationalize the company, claiming in a speech on 21 July that the company’s poor performance had obliged ‘the State to take the decision to guarantee service’.

Grupo Marsans’ directors initially responded warmly, but soon found themselves embroiled in a dispute over the airline’s value. Grupo Marsans insisted it was worth between U$330 and $546 million, while an Argentine Senate Investigative committee declared that the airline’s debts had pushed it $832 million into the red. Charting a middle course, the Argentine Congress valued the airline as worthless, declared it a ‘public utility’ and authorized the expropriation of its foreign-owned shares on 17 December. Grupo Marsans have since responded by filing an arbitration claim with the World Bank.

The Nationalist Government of Juan Perón first formed Aerolíneas Argentinas as a state enterprise in 1950. It was privatized by his successor Carlos Menem 40 years later as part of a structural adjustment plan that de-nationalized the Argentine economy, transferring everything from public utilities to the postal service into private (and generally foreign) hands.

The downward spiral of the company’s finances over the next 18 years made a mockery of the proposition that private ownership leads to greater efficiency. The company changed hands three times before Grupo Marsans purchased it for one symbolic euro in 2001. By that time, all of its 33 routes were operating at a loss.

Whether it will fare better in its nationalized form remains to be seen – especially in the light of concerns about climate change, which the Argentine Government has so far failed to acknowledge. Critics are already faulting the Government for maintaining the airline at the taxpayers’ expense. The company currently eats up a million dollars a day of Argentina’s national budget, according to a report by La Nación. Supporters counter that the investment serves the public interest by integrating the national territory – Aerolíneas Argentinas currently serves 80 per cent of the domestic market of South America’s second largest country – and by providing much-needed employment.

Roque Planas

This column was published in the March 2009 issue of New Internationalist. To read more, buy this issue or subscribe.

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This article was originally published in issue 420

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