David Knibb/SEATTLE
Shortly before a critical meeting of all Aerolineas shareholders, Spain's King Juan Carlos told Argentina's new ambassador that he expected a fast and successful conclusion to the crisis.
Following this, Spain's economics and industry minister, Rodrigo Rato, visited Buenos Aires, met Argentina's President De la R£a, and gave assurances that Spain would inject more money into Aerolineas, if needed, after approval of the restructuring plan. Rato likened Aerolineas to Iberia, which recovered after similar restructuring.
The plan, prepared by the Spanish holding company responsible for Aerolineas management, calls for a $650 million capital injection, the workforce to be cut from 6,700 to 5,500 people, pay to be cut by 20%, leased jets to be returned, routes dropped, and some domestic routes to be transferred to other carriers.
The plan has been thoroughly unpopular in Argentina, with unions railing against it. Even president De la R£a has criticised it because of the proposed salary and staff cuts and a $65 million capital contribution required from the government.
Nonetheless, the president's cabinet has few options now and has reluctantly endorsed the plan on condition that staff cutbacks do not involve lay-offs.
The widely held view in Argentina is that the flag carrier's crisis is due to a decade of Spanish mismanagement, so Spain should fix it.
When asked about this by a local newspaper, Rato said the focus now should be on saving the airline rather than starting "a political battle about responsibilities".
No Spanish official will concede as much, but Madrid's apparent assessment is that a pragmatic approach is needed in view of the $30 billion of Spanish interests invested in Argentina.
Spain is Argentina's biggest source of foreign investment.
Source: Airline Business
