Thursday, December 10, 2020

Aerolineas Argentinas & Austral Merger finalized on 30Nov20


Aerolineas Argentinas and Austral Lineas Aereas completed their long-anticipated merger on 30Nov20.  The carriers had been effectively owned by the same parties since 1990, when Iberia Spanish Airlines bought them both from the Argentine state, from which they passed into the hands of the Grupo Marsans Spanish tourism consortium in 2001 and finally renationalized by the Argentine national government in 2008.  

Throughout these years, there was often talk of formally merging Aerolineas and Austral but differences between the labor unions of the two carriers kept this from happening, leading to the inefficiencies of effectively one airline being run by duplicate corporate and operating structures.   

Full Merger Go-Ahead

Finally, on 05May20, taking advantage of the almost total suspension of operations by the two carriers due to the COVID-19 pandemic, the government of Argentine president Alberto Fernandez started the process of formally merging the two carriers, opening the way to a complete merger of their operations. 

The legal restructuring of the two companies so that they could be merged took several months to complete with the formal complete merger of Austral into Aerolineas Argentinas being completed on 30Nov20.

With the merger, the Austral brand has disappeared with all company operations and marketing taking place under the Aerolineas Argentinas name.  

Financial Benefits of Merger
The main benefit of the merger is expected to be improved efficiencies leading to an initial savings of US$ 100 million per year in the following areas:    

* Pilot and cabin crew union mergers allowing for one operation and presumably crews being qualified to operate the entire fleet of the newly-merged carrier, whereas previously only Aerolineas crews could fly the Airbus / Boeing aircraft and the Austral crews the Embraers.

Merger of the maintenance operations that were previously run separately.

* Reduced maintenance time of aircraft due to increased efficiencies, allowing planes to fly more hours generating increased revenues and the opening up of hangar slots for more third-party maintenance and the additional income resulting from that. 

* Elimination of many duplicate head office and field management functions.
* Merger of administrative and financial processes. 


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