Wednesday, August 1, 2012

Aerolineas Argentinas Financial Losses Continue to Grow

Through the first half of 2012, the Aerolineas Argentinas / Austral airline group already used 76.4% of the subsidies budgeted by the Argentine Congress to cover its operating deficits for the entire calendar year 2012.  AR$ 2.48 billion (US$ 550 million at the official exchange rate) was budgeted with AR$ 1.9 billion (US$ 420 million) already spent by the end of June.  Much of the money was spent to cover June salaries and the 1/2 "aguinaldo" (two bonuses equal to 1/2 monthly salary, one paid in June and the other in December).

At this rate, as in recent years, Aerolineas will need further subsidies from the Congress to stay solvent through the end of the calendar year.  The government (read taxpayer) subsidies to the airline totalled US$ 804 million in 2011.       

The airline's DAILY losses have grown from AR$ 5.32 million in 2010 to AR$ 7.32 million in 2011 and AR$ 13.07 million so far in 2012.  Projecting current losses for the rest of the year, Aerolineas will close out 2012 with a AR$ 4.64 billion loss or US$ 989 million at the official exchange rate, surpassing 2011's loss by over 20%.  Calculated on a per passenger basis, government/taxpayer subsidies to Aerolineas have cost AR$ 702 / US$ 159 for every boarding.

Editor's Opinion:  It seems like common sense that as long as the government covers losses at Aerolineas, that there will be little incentive for the airline's management and employees to run an efficient operation.  They can relax knowing that they will be protected and the airline will not be allowed to close down.  As long as those are the rules they operate by, the losses will likely continue to grow.              

Source:  Clarin through Aviacion News 21Jun12
            La Nacion through Aviacion News 26Jul12

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