Mario Fonseca/RIO DE JANEIRO
The Argentine air transport industry has run into severe turbulence this month with LAPA filing for Chapter 11 bankruptcy protection in the face of mounting debts and Aerolineas Argentinas and Austral operations disrupted by strike action.
Rising fuel costs, taxes and the deepening Argentinian recession have pushed LAPA's debts above $130 million, which includes almost $52 million owed to fuel suppliers, Boeing Capital and the Argentine air force.
Despite the aggressive strategy that allowed it to take 28% of the domestic market, LAPA was forced to make cuts after a 5% fall in load factor, which had decreased by 15% during first quarter 2001. Most noticeable was the suspension of its Buenos Aires-Atlanta services. LAPA returned its sole Boeing 767-300ER to the lessor and postponed the launch of services to Los Angeles, Miami and New York.
A strike that paralysed Aerolineas Argentinas and Austral in early May, giving LAPA over 80% load factor, could not prevent it from filing for bankruptcy protection.
Aerolineas Argentinas and Austral flights were suspended for nine days in May due to the strike, which followed a recovery plan initiated by Spanish owner SEPI that called for nearly 500 layoffs. SEPI, which controls 85% of both airlines, has been injecting funds to reduce the $1.6 billion debt that the carriers had accumulated since privatisation in 1990.
The Argentine Government, which has a 5% share in the airlines and which was forced to cover last month's employee salaries, was in Madrid in late May to talk with SEPI and try to resolve the crisis.
Source: Flight International
