The Argentine Government is set to decide on a management decision to merge Aerolíneas Argentinas (AR, Buenos Aires Jorge Newbery) with its Austral (Buenos Aires Jorge Newbery) sister carrier to improve their viability by increasing cost-savings through the removal of unnecessary duplication.
In a statement, Aerolineas president Luis Pablo Ceriani said the COVID-19 crisis had magnified the need to end the two state-owned carriers' endless dependency on the fiscus.
"The effort that the Government has to make to sustain the company verges on the impossible. That effort is to save a company that urgently needs state aid to survive in the face of this pandemic that plagues humanity. The State has invested in its flag carrier because it generates economic and social benefits that multiply with the investment made. But in the face of such a deep crisis, even beneficial investments have to be prioritised," he said.
Among the areas of role duplication Ceriani highlighted include the fact that Aerolineas Argentinas and Austral use separate MRO facilities for aircraft servicing. Also, flight and cabin crew and, to a lesser extent, ground personnel, are part of one of the two companies, thereby leading to duplication in organisational structures.
"This company has to operate at its maximum efficiency. In some areas, we have achieved it, and in others, we still retain inefficiencies that we have not been able to resolve; structural unproductivity that we have had for many years. We have to attack that waste, operate with an industry-standard efficiency while adopting its best practices. This is each and every one of our's moral duty."
The merger will, therefore, see the creation of a new MRO business unit which will cater to both airlines' needs and will also market its services to third-party carriers. In tandem with this, a separate cargo business unit will also be established.
Ceriani said the merger process would begin once a shareholders' meeting had been convened and the motion approved. This he expects to have concluded by the end of the year.
Austral was formed in 1957 and operates twenty-six E190s on scheduled passenger flights throughout Argentina as well as to Paraguay, Brazil, Uruguay, Chile, and Bolivia. Aerolineas Argentinas, for its part, operates ten A330-200s, eight B737-700s, five B737-8s, and thirty-one B737-800s on scheduled domestic Argentine flights as well as internationally throughout South America, North America, the Caribbean, and Europe.
