FLEET UPDATE: First former Austral E-190 painted in Aerolineas Argentinas color scheme

The predecessor carriers of Austral Lineas Aereas were formed in 1957 and enjoyed various moments of alternating private and state ownership over the years until the carrier was finally fully absorbed by Aerolineas Argentinas with its identity disappearing altogether.

The first of  the former 26-strong fleet of Austral E-190's, LV-CMA (c/n 445), was recently painted in Aerolineas Argentinas colors.  Austral belonged to Aerolineas Argentinas during its last 10+ years of existence so its E-190 fleet was painted in a scheme almost identical to that of the parent airline with the only differences being a red stripe on the fuselage and Austral titles.  With the stripe removed and Aerolineas Argentinas titles applied, the aircraft is ready to re-enter service sporting its new identity. 

Photos of LV-CMA were published by the excellent Argentine aviation blog  www.aviacionline.com at the following link:  

Aerolineas Argentinas E-190 painted in company colors

Aerolineas Argentinas & Austral Merger finalized on 30Nov20

Background

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. 

Sources:

https://es.wikipedia.org/wiki/Aerol%C3%ADneas_Argentinas
https://es.wikipedia.org/wiki/Austral_L%C3%ADneas_A%C3%A9reas

https://www.infobae.com/economia/2020/05/05/el-gobierno-fusionara-aerolineas-argentinas-y-austral-en-una-sola-compania-aerea/

https://www.aviacionline.com/2020/11/certificado-unico-de-operacion-se-concreto-formalmente-la-fusion-de-aerolineas-argentinas-y-austral/

Two Austral E190's each lose one nose gear wheel in two year time span

Two Austral E190's each lost one of their nose gear wheels in separate incidents in a two-year time span.  Details below.

Austral E190, LV-CID (c/n 409), lands at Buenos Aires Aeroparque (AEP) on 17Nov16.  (Phil Perry Photo)

LV-CID (c/n 409) operating from Mar del Plata (MDQ) to Buenos Aires Aeroparque (AEP) on 29Jan18 lost its left nose gear wheel as it lined up for takeoff from MDQ with the crew taxiing back to the gate after the incident.  

The Argentine aviation investigating agency JIAAC released its final report on 16Jul19 with the following conclusions:

* The investigation found evidence of fatigue failure at the rim of the wheel of the nose landing gear.

* it was determined that the origin of the stress concentrating point, that caused the fissure, was corrosion by pitting

* it could not be reliably detected why the fissure expanded undetected by non-destructive tests carried out in regular scheduled intervals until the fracture occurred

* The investigation did not find any concrete evidence that could link the fatigue failure with inadequate maintenance or metallurgical damage

* The investigation did not find any similar failures in the history of the fleet or type of aircraft 

At least one reader of the article published in The Aviation Herald questioned why non-destructive tests that are a part of regular maintenance did not detect the cracks prior to the separation:

"The wheel has failed in precisely the location which must be routinely checked during tyre changes and wheel overhaul. Non-destructive techniques (eddy current, dye penetrant) have been routinely used for 50 + years to detect cracks in wheel flange areas which is why these occurrences are indeed rare. Failures like these propagate from corrosion pits and other mechanical damage. I would not be surprised to find that the subject wheel had been cracked for a considerable time. No excuses acceptable really - this airline is a major player."

Photo of the nose gear failure:

Photo: Austral E190 LV-CID nose gear missing left wheel

  

Austral E190, LV-CHQ (c/n 397), at Buenos Aires Aeroparque (AEP) on 11Jul17.  (Phil Perry Photo)

* LV-CHQ (c/n 397) operating from Buenos Aires Ezeiza (EZE) to Rosario (ROS) lost its left nose gear wheel after landing in ROS at 2:10am on 17Feb20.  The crew was not aware of the missing wheel until the aircraft had finished taxiing to the gate.  Cause of the separation was not reported.  

Photos of the nose gear failure: 

Photos: Austral E190 LV-CHQ nose gear missing left wheel

Sources:

http://avherald.com/h?article=4b44d50f

https://www.lanacion.com.ar/economia/incidente-un-avion-austral-aterrizo-sin-rueda-nid2334527/

https://aviation-safety.net/wikibase/233016

ROUTE UPDATES: 50% of Buenos Aires Aeroparque (AEP) international flights move to Ezeiza (EZE) (except Uruguayan flights)

As announced in July 2017, all international flights operating from Buenos Aires Aeroparque (AEP) (with the exception of flights to Uruguay) will be transferred to Buenos Aires Ezeiza (EZE) in two phases, effective in 2018 and 2019.  

See posting from 18Jul17: 

ROUTE UPDATES: Buenos Aires Aeroparque (AEP) international flights to move to Ezeiza (EZE) (except Uruguayan flights)

The first phase commenced on 03May18 with the total number of international flights to Bolivia, Brazil, Chile, Paraguay operating from Aeroparque being reduced from 222 to 112 operations weekly.  Reductions by airline in terms of weekly flights: 

Aerolineas Argentinas / Austral - 120 to 60 

LATAM Argentina / Brasil / Chile - 70 to 35 

Gol Linhas Aereas - 21 to 11 

Amaszonas Paraguay - 11 to 6 

Aerolineas Argentinas transferred its flights bound for Porto Alegre (POA), Río de Janeiro Galeao (GIG), Salvador de Bahía (SSA) and Santa Cruz de la Sierra (VVI) from Aeroparque to Ezeiza.

Aerolineas will continue to operate from Buenos Aires Aeroparque (AEP) to Asuncion (ASU), Curitiba (CWB), Sao Paulo Guarulhos (GRU), and Santiago (SCL) until 2019. 

The remaining 50% of international flights by all carriers are due to be moved on 01Apr19.

The purpose of the big move is to free up ramp space and to a certain extent air operations capacity at Buenos Aires Aeroparque (AEP) for the increasing number of Argentine domestic flights being added by carriers under the present government's policy of doubling the number of Argentine air travelers in the foreseeable future.        

Sources:

http://www.sirchandler.com.ar/2018/05/arranco-la-desregionalizacion-de-aeroparque/  including ANAC press release
https://aviacionline.com/2018/03/la-desinternacionalizacion-de-aeroparque-asi-lo-implementaria-cada-aerolinea2/#comment-49354
http://www.sirchandler.com.ar/2018/05/popurri-de-noticias-aeronauticas/

FLEET UPDATE: Aerolineas Argentinas / Austral likely to order best financial deal between 737 MAX 8 and A320neo

Austral E190, LV-CPJ (c/n 463), taxis in at Buenos Aires Aeroparque (AEP) on 29Mar18.  Austral's E190's are expected to start leaving the fleet later this year. (Phil Perry Photo) 

Aviacion News reports that the announced four-way competition between aircraft manufacturers Airbus, Boeing, Bombardier and Embraer for Aerolineas Argentinas' order of replacement aircraft for its Austral division's 26-strong E190 fleet is really a two-way affair between Airbus' A320neo family of aircraft and Boeing's 737 MAX series, given that the airline group has repeatedly stated in recent times that the type chosen will have approx. 186 seats.

Both aircraft are comparable technically and from a performance standpoint, with Boeing's 737 MAX series considered to have the advantage given Aerolineas Argentinas' existing fleet of 31 737-800's and four 737 MAX 8's and the commonality that additional MAX series aircraft would bring.  According to Aviacion News the eventual winner of the contract (expected to be decided in June) might be the manufacturer that offers the best financing package, either through purchase of the aircraft, leasing through an aircraft lessor or a combination of both.  In any case, the winning manufacturer is expected to take Austral's existing fleet of 24-owned and two-leased E190's as part of the deal.  The first of the winning order of aircraft is expected to be delivered to Austral by the end of this year.  

Source:

http://www.siscoma.com.ar/online/aviacion/2018/avn180510/avn-180510.html

Aerolineas Argentinas: Feeder Carrier for Domestic Flights ? - Austral New Aircraft by end 2018 - Long-Haul Aircraft to Oceania - Intercon Routes to Stay

Aerolineas Argentinas President Mario Dell' Acqua spoke at the recent World Travel & Tourism Council conference held in Buenos Aires stating four particular points of interest:   

* FEEDER AIRLINE PARTNER ? 

With Aerolineas Argentinas / Austral steadily transitioning to larger aircraft, service to many of the Argentine domestic airports currently served by the group will no longer be commercially viable, not being able to produce enough passengers to operate larger aircraft profitably.  To remedy this situation, the Aerolineas group is looking to organize a network of feeder routes with "a serious and solvent" carrier operating smaller aircraft, presumably connecting smaller cities to Buenos Aires and AR's Cordoba (COR) hub. 

There has been speculation in at least one Argentine blog about which carrier this might be:

Flyest with its CRJ-200's is possible with its connection to the well-established Spanish commuter carrier Air Nostrum but Flyest is also a reincarnation of the now-defunct Sol Lineas Aereas that had a feeder agreement with Aerolineas' management under the previous Argentine presidency that was widely regarded as a sham.

LASA, the new Neuquen-based carrier that is scheduled to start service soon with EMB-145's is also possible. 

Avianca Argentina with its two ATR-72-600's, with more expected to be added to the fleet soon, would seem like a natural candidate to be a feeder carrier fro Aerolineas, both because it is "serious and solvent", having a major corporation as its backer, and operating an appropriate type of aircraft for feeder operations
possessing both a moderate number of seats and fuel-efficient propeller engines.       

* AUSTRAL NEW AIRCRAFT TYPE BY END 2018

Similar to what Aerolineas Argentinas has been saying recently, the new aircraft type that will eventually replace all of Austral's 26-strong E190 fleet is planned to have 180 seats, which appears to eliminate the E195 E2 new-generation jet from Embraer that is replacing the corresponding first generation E170/175/190/195 series of aircraft.       

The first example of the new type will likely be flying for Austral before the end of 2018, which suggests that a contract to buy or lease the type will be agreed to soon.  How long it will take to replace all 26 E190's is still unknown but previously it was suggested that the process would conclude in about 2-3 years time.  

* NEW LONG-HAUL TYPE REQUIREMENT TO OPERATE PROFITABLY TO OCEANIA

Aerolineas is actively considering the new type that will replace its current long-haul fleet of 10 A330-200's and 2 A340-300's with a decision expected before the end of the year.  A newly-revealed requirement is that the new type must be able to operate profitably to Australia and New Zealand, which would suggest that the aircraft chosen will need to fly long distances nonstop with a full payload.

* INTERCONTINENTAL ROUTES TO STAY    

There has been much speculation in recent years that Aerolineas would dump its intercontinental routes due to their lack of profitability but the airline's flights from Buenos Aires Ezeiza (EZE) to Miami (MIA), New York Kennedy (JFK), Madrid (MAD) and Rome Fiumicino (FCO) will apparently continue. 

Sources:

https://aviacionline.com/2018/04/aerolineas-argentinas-en-la-wttc-2018-tarifas-mas-bajas-y-comentarios-sobre-flota-long-haul-y-alianzas-en-cabotaje/
https://aviacionline.com/2018/04/aerolineas-argentinas-analiza-hacer-una-alianza-con-una-compania-de-cabotaje/
http://www.sirchandler.com.ar/2018/04/aerolineas-argentinas-hablo-de-una-premium-economy-para-los-vuelos-internacionales/

ROUTE UPDATES: Aerolineas Argentinas Route Changes - Pursuit of Profitability & Direct Domestic Connections - Part 2

* Cordoba (COR) - Bahia Blanca (BHI) - eff 03Apr18 - 5x/weekly

Flights to be operated by Austral E190's.  Bahia Blanca (BHI) is scheduled to be the 16th destination operated year-round by the Aerolineas Argentinas / Austral group from its Cordaba (COR) hub, and the 17th when counting Mar del Plata (MDQ), which is served on a seasonal summer basis. 

* Cordoba (COR) - Rio de Janeiro Galeao (GIG) - eff XXApr18 - Route Cancelled

Suspended due to end of summer season. 

* Cordoba (COR) - Porto Seguro (BPS) - eff XXApr18 - Route Cancelled

Suspended due to the end of the summer season despite having continued 1x/weekly after the summer in 2017.

* Cordoba (COR) - Salvador (SSA) - eff XXApr18 - Route Cancelled

Suspended due to the end of the summer season despite having continued 1x/weekly after the summer in 2017.

* Buenos Aires Ezeiza (EZE) - Punta Cana (PUJ) - eff 01May18 - increase from 4x/weekly to 1x/daily

This route is currently operated 4x/weekly with A330's but will pass to 1x/daily service using Aerolineas' new 737 MAX 8's.  The long range of the MAX series allows for routes like EZE-PUJ to be served by smaller aircraft more frequently and will make routes that are too "thin" on passenger traffic to support  traditional long-range aircraft, economically viable (see Cordoba (COR) to Punta Cana (PUJ) below).

Long-range aircraft are generally large so that they can carry a lot of fuel but their size makes them burn a lot of fuel too, which means that they have to carry a large payload of passengers, cargo, or combination of both to be profitable.  But the new generation of 737 MAX aircraft burn a lot less fuel than their predecessors, the 737 NG series, so they can fly farther on the same amount of gas while only needing to fill 150-180 seats.

* Buenos Aires Ezeiza (EZE) - Madrid (MAD) - eff XXJun18 - increase from 7x to 10x/weekly

This route is currently served mainly with A340-300's but the new flights will be operated by A330-200's. 

* Cordoba (COR) - Punta Cana (PUJ) - eff XXJul18 - 1x/weekly

This route, which is relatively "thin" on passenger traffic, is now economically viable using the long-range smaller 737 MAX 8 instead of a larger aircraft like the A330, which was previously necessary for a route of this length.   

* Cordoba (COR) - San Martin de los Andes (CPC) - eff July to September

  

This is a seasonal flight for the winter ski season.  

Sources:

http://aeropuertocordoba.blogspot.com.ar/2017/11/bahia-blanca-el-nuevo-destino-del-hub.html

http://aeropuertocordoba.blogspot.com.ar/2018/03/novedades-aeronauticas-para-cordoba.html

https://www.routesonline.com/news/38/airlineroute/276564/aerolineas-argentinas-punta-cana-service-changes-from-may-2018/ via Eric Trum

http://www.siscoma.com.ar/online/aviacion/2018/avn180215/avn-180215.html

http://aeropuertocordoba.blogspot.com.ar/2018/03/novedades-aeronauticas-para-cordoba.html

ROUTE UPDATES: Aerolineas Argentinas Route Changes - Pursuit of Profitability & Direct Domestic Connections - Part 1

* Buenos Aires Ezeiza (EZE) - Caracas (CCS) - eff 28Jul17 - Route Cancelled

Aerolineas Airbus A330-200, LV-FNK (c/n 358), operated the carrier's last service to Caracas (CCS) on 28Jul17, flying the return sector on 29Jul17.  Like many other airlines, Aerolineas has suspended service indefinitely to the Venezuelan capital due to political unrest in the country and the retention by the self-proclaimed Bolivaran government of hard-currency ticket sales that collectively have cost foreign carriers several billions (thousand millions) of lost USD revenue in the last few years.     

* Buenos Aires Ezeiza (EZE) - Bogota (BOG) - eff 09Aug17 - increase from 4x to 5x/weekly but back to 4x !

The suspension of the 1x/weekly service to Caracas freed up an A330 to be deployed on the EZE-BOG route allowing for one additional weekly flight on the sector.  However, it was announced in February that this route would go back to 4x/weekly.   

* Cordoba (COR) - Posadas (PSS) - eff 26Dec17 - 3x/weekly

Flights operated by Austral E190's.  Posadas (PSS) is the 15th destination operated year-round by the Aerolineas Argentinas / Austral group from its Cordaba (COR) hub, and the 16th when counting Mar del Plata (MDQ), which is served on a seasonal summer basis. 

* Buenos Aires Ezeiza (EZE) - Barcelona (BCN) - eff 01Feb18 - Route Cancelled

The cancellation of this service was controversial as it was, according to Aerolineas Argentinas' president Mario Dell' Acqua, due to the weak financial performance of the route (presumably in the face of competition from new LCC Level on the route) and also the "lack of cooperation" from the carrier's labor unions that "aggravated" the situation.

* Bahia Blanca (BHI) - Neuquen (NQN) - eff 05Mar18 - 4x/weekly

Flights to be operated by Austral E190's.  This route was already operated in September and December 2017.  The airline has established a pattern where it will be operated most months of the year but will be replaced by Bahia Blanca (BHI) to Bariloche (BRC) during the summer and winter months (Bariloche is a lake and mountain resort).  

With this flight, Bahia Blanca (BHI) now has nonstop service to seven Argentine airports; Buenos Aires Aeroparque (AEP) and Ezeiza (EZE), Comodoro Rivadavia (CRD), Mar del Plata (MDQ), Neuquen (NQN), Trelew (REL) and Ushuaia (USH) with Cordoba (COR) to be added in April.   

Neuquen (NQN) now has nonstop flights to Bahia Blanca (BHI), Buenos Aires Aeroparque (AEP), Comodoro Rivadavia (CRD), Cordoba (COR) and Mendoza (MDZ). 

Aerolineas Argentinas / Austral continues to implement the Argentine national government's air transportation policy of connecting "internal" cities directly with each other without having to connect through Buenos Aires.    

* Buenos Aires Aeroparque (AEP) - Parana (PRA) - eff 06Mar18 - increase from 6x to 11x/weekly

All 11 flights operated by Austral E190's. 

* Jujuy (JUJ) - Sao Paulo Guarulhos (GRU) - eff 24Mar18 - 30Jun18 - 1x/weekly

This flight was operated for a tour operator during the 2018 summer season and is now being flown again, at least until 30Jun18, with seats being sold directly to the general public.  The main purpose of the route is to promote inbound tourism to the high mountain desert region of northwest Argentina.  Flights operated by Aerolineas Argentinas 737-800's. 

* Buenos Aires Ezeiza (EZE) - Porto Alegre (POA) - eff 03Apr18 - increase from 7x to 14x/weekly

Additional flights to be operated by Austral E190's complementing the existing 737-800 flights that depart EZE but return to Buenos Aires Aeroparque (AEP).

Sources:

https://aviacionline.com/2017/10/aerolineas-argentinas-suma-un-nuevo-vuelo-a-bogota-y-abandona-definitivamente-caracas/

https://aviacionline.com/2017/11/aerolineas-argentinas-confirma-a-posadas-como-nuevo-destino-del-hub-cordoba/

https://www.routesonline.com/news/38/airlineroute/275981/aerolineas-argentinas-ends-barcelona-service-in-jan-2018/ via Eric Trum

http://www.siscoma.com.ar/online/aviacion/2017/avn171130/avn-171130.html

https://aviacionline.com/2018/02/aerolineas-argentinas-reanuda-sus-vuelos-entre-neuquen-y-bahia-blanca/

https://aviacionline.com/2018/03/aerolineas-argentinas-ya-opera-11-vuelos-semanales-entre-parana-y-buenos-aires/

https://aviacionline.com/2018/03/aerolineas-argentinas-extiende-y-abre-la-comercializacion-de-sus-vuelos-entre-jujuy-y-san-pablo/

https://aviacionline.com/2018/03/aerolineas-argentinas-duplica-sus-vuelos-entre-buenos-aires-y-porto-alegre/

ROUTE UPDATES: Aerolineas Argentinas Seasonal Summer Service

* Seasonal Summer Service 

Aerolineas Argentinas / Austral were reported by various news outlets to be planning the following routes during the southern hemisphere summer months and presumably operated them though planned service occasionally does not materialize as announced:

* Cordoba (COR) - Mar del Plata (MDQ) - eff 10Dec17 - seasonal summer service

Flights were scheduled to be operated by Austral E190's 3x/weekly which transitioned to 7x/weekly when the peak summer arrived, presumably in January.

* Cordoba (COR) - Punta del Este (PDP) - eff 25Dec17 - seasonal summer service

Flights were scheduled to be operated by Austral E190's and Aerolineas Argentinas 737 series aircraft 4x/weekly. 

* Cordoba (COR) - Florianopolis (PDP) - eff 01Jan18 - seasonal summer service

Flights were planned to be operated by Austral E190's 3x/weekly.

* General Information on Seasonal Summer Service without detailed start dates, aircraft types etc.:    

* Jujuy (JUJ) - Sao Paulo - January & February - 1x/weekly

Service was presumably to Sao Paulo Guarulhos (GRU) with type of aircraft not announced.  These were charter flights contracted by the package tour operator Badino.  This service was significant in that it was to connect northwest Argentina directly with Brazil for inbound and outbound tourism without connecting through Buenos Aires Aeroparque (AEP) or Cordoba (COR).         

* Bahia Blanca (BHI) - Bariloche (BRC) - 4x/weekly

Was probably operated with Austral E190's as they are the aircraft type most commonly used in domestic routes connecting "interior" points directly to each other. 

* Mar del Plata (MDQ) summer service

Buenos Aires (presumably Aeroparque (AEP)) increase to 30 weekly flights.

Flights from Cordoba (COR), Mendoza (MDZ), Rosario (ROS), and Tucuman (TUC) were due to start in December presumably operated mostly by Austral E190's as in the past.

* Brazil summer service

Flights to Florianopolis (FLN) from Buenos Aires (Aeroparque and/or Ezeiza?), Cordoba (COR), Mendoza (MDZ), and Rosario (ROS).  

Flights to Rio de Janeiro Galeao (GIG) from Cordoba (COR) and Rosario (ROS).  

* Uruguay summer service

Flights to Punta del Este (PDP) from Cordoba (COR) and Rosario (ROS).

Flights to Punta del Este (PDP) from Buenos Aires (mostly or exclusively from Aeroparque) increasing from the typical 1x/daily offseason service to 32x/weekly in the peak January / February summer season.

Sources:

http://aeropuertocordoba.blogspot.com.ar/2017/09/novedades-aerocomerciales-en-cordoba_14.html

http://www.siscoma.com.ar/online/aviacion/2017/avn171102/avn-171102.html

FLEET UPDATE: Aerolineas Argentinas started process of replacing entire Austral E190 fleet

Austral E190, LV-GIQ (c/n 716), taxis at Buenos Aires Aeroparque (AEP) on 08Feb18.  Austral took delivery of LV-GIQ less than two years ago on 29Jul16, the 26th and last of example of the E190 to join the airline.  It was fresh from the factory on lease from Nordic Aviation Capital.  This aircraft and its 25 E190 stablemates will apparently start exiting the Austral fleet in the next year or so.    

Aerolineas Argentinas has formally started the process of replacing the entire E190 fleet of subsidiary Austral Lineas Aereas.  

Airbus, Boeing, Bombardier and Embraer invited to bid

The airline has solicited proposals from the world's four most important commercial aircraft manufacturers, Airbus, Boeing, Bombardier and Embraer, for replacement of Austral's entire fleet of 26 E190's on a one-for-one basis.  Aerolineas' president Mario Dell' Acqua at first indicated that the carrier would seek 170-180 seat replacements, suggesting a large increase in capacity considering that they would be replacing the 96-seat E190's.  This would have also ruled out Bombardier and Embraer from the competition due to their lack of such large aircraft with no plans to build any in the foreseeable future either.  

However, Mr. Dell' Acqua has also mentioned more recently the possibility of replacements having 130 seats, suggesting that there might be a mixed fleet of smaller and larger aircraft, presumably to serve smaller markets that are not large enough to support service by 180-seat aircraft, such as the Argentine cities of Rio Cuarto, Santa Rosa and Viedma.  He also recognized that many of these smaller markets have airports that the 737-800 cannot operate into.  
This might open the door a bit for Bombardier and Embraer but this would still favor Airbus and Boeing because they could offer both 130 and 180 seaters from their A320 and 737 families, respectively.

Austral's 24 owned E190's as Partial Payment for Replacement Aircraft

One of the conditions of the Request for Proposals (RFP) that Aerolineas has made is that the winning bid for a replacement aircraft must include acceptance of Austral's 24-owned E190's (the other two are leased) as partial payment for the new airframes.  Aerolineas tried to sell the 24-owned planes as one lot but found no takers and discovered in the process that the market for used E190's is very weak with the Austral examples being seven years old on average and having an appraised value of US$ 12 million each, way below the purchase price of US$ 34.9 million per example (which was reportedly inflated, more on that below).  Further deteriorating the value of Austral's E190's is their impending need for major maintenance almost simultaneously with one another, having been delivered in a short time frame starting in 2010. 

It's all about the Costs per Seat

The main reason behind the decision to replace the E190 fleet is the low operating costs in terms of Cost per Available Seat Mile (CASM) of larger aircraft such as the 737-800, of which Aerolineas already has has 31, and especially of the new 737 MAX 8, which Aerolineas has three of so far with more on order.  

The cost difference can be seen when comparing fuel consumption of the E190 to its potential replacements.      

Wikipedia reports the following fuel consumption data on the listed aircraft on typical 550-600 mile sectors without specific mention of wind / weather conditions or operating weights, but presumably with loads taking advantage of each aircraft's capabilities:

The E190 typically consumes 2.98 kg/km (10.6 lb/mile), which with 96 seats = 3.81 liters/100km/seat

The planned E190 replacement, the E190-E2 with geared turbofan engines and many other improvements, burns 2.83 kg/km (10.04 lb/mile), which with its 106 seats = 3.32 liters/100km/seat, a 12.9% improvement compared to the E190.  

Similarly, the 737-800 consumes 3.59 kg/km (12.7 lb/mile), which divided by its 162 seats = 2.77 liters/100km/seat, 27.3% less than the E190.

Finally, the new 737 MAX 8 uses 3.04 kg/km (10.8 lb/mile), which with 166 seats = 2.28 liters/100km/seat, a whopping 40.2% less than the E190.

Most other costs, such as ground handing and flight crew expenses are about the same for all of the above aircraft.      

Flight Frequency not a Priority in Argentina

Of course, if the only consideration for airlines was the operating cost per seat, then they would all fly the A380 !  The aircraft that they fly to each city need to be the appropriate size for the number of passengers that the local market can generate plus even large markets do not want to be served exclusively by large aircraft even though they can support them.  Larger aircraft = fewer flights while smaller aircraft allow for more frequent flights, which is important in city pairs with a lot of business traffic. 

For example, New York to Boston, Chicago, London, Los Angeles, San Francisco and Washington are all markets where business travelers demand frequent flights so that they can fly when it is convenient for them.  Other examples include Los Angeles - San Francisco, Dallas - Houston, Toronto - Montreal, London - Paris, Tokyo - Osaka, Beijing - Shanghai, and Sydney - Melbourne.

New York - Boston is served primarily by shuttle flights operated by Delta 717's and American E-190's, both with approx. 100 seats.

However, Argentina is different in that the only frequency-sensitive market is between the nation's two largest cities, Buenos Aires - Cordoba, with approx. 10-12 daily flights between Buenos Aires Aeroparque (AEP) and Cordoba (COR) supplemented by a few flights from Buenos Aires Ezeiza (EZE) and now Buenos Aires El Palomar (EPA) to Cordoba too.  With frequency being relatively unimportant, larger aircraft with lower CASM's become more attractive for Aerolineas Argentinas / Austral, especially with the incipient competition from Flybondi and Norwegian Air Argentina, both of which are using or plan to use the 737-800 and/or the 737 MAX 8 with low CASM's, allowing them to offer low fares true to their mission as Argentina's first LCC's.       

New Aircraft Timings     

At one time it was suggested that Aerolineas might take Austral's E190's out of service at an accelerated rate but it has been suggested more recently that the pace would probably be 4-5 aircraft per year divided in two stages of 12 aircraft followed by the remaining 14 airframes.  

The speed of delivery of the new planes will likely be determined at least partly by the chosen manufacturer's ability to deliver new aircraft given its commitments to other airlines and the rate at which Aerolineas' can train new pilots to fly them. 

E190 Disposal = Large Cash & Accounting Losses     

Aerolineas hesitated over the last few months on its decision to retire Austral's E190 fleet because of the likely heavy financial losses such a move would incur. 

The remaining debt on the aircraft will likely exceed the value that the airline group will be credited towards the purchase / lease of new aircraft plus the E190's have apparently been depreciated much more slowly in Aerolineas' accounting books than the rate at which the aircraft have lost market value,
which will result in an accounting loss as well as the actual cash loss. 

Stating the situation in actual numbers, Aerolineas purchased Austral's initial batch of 22 E190's for US$ 34.9 million each (approx. US$ 4.9 million more than E190's were typically being sold for at that time but that would be the subject of another posting !).

22 aircraft x US$ 34.9 million = US$ 768 million paid for with a 15% deposit with the remaining 85%, US$ 653 million, financed by the Bndes Brazilian government development bank at an interest rate of 7.45%.  Until recently, Aerolineas still owed US$ 360 million of that loan.  With the market value of Austral's E190's currently estimated at US$ 12 million each x 22 aircraft = US$ 264 million, the carrier would have been US$ 96 million short of paying off the debt with the proceeds from the sale of the planes.               

Aerolineas tried to renegotiate the terms of the debt with the Bndes to no avail, choosing instead to take a commercial loan at 4% to retire the debt, thereby saving considerable interest expense in the process.  While the loss is reduced it is still considerable.

Aerolineas stands to also take a large accounting loss from the sale of Austral's E190's because they have been depreciated at a rate slower then their decline in market value.  They are said to each have a value of US$ 24 million on the company's books, which while being worth US$ 12 million as mentioned above would mean a staggering 22 x US$ 12 million = US$ 264 million extraordinary accounting loss, just as the airline has successfully reduced losses from approx. US$ 1 thousand million (billion) earlier in this decade to an expected US$ 90 million in 2018.  

The political cost to the administration of Argentine president Mauricio Macri of such a large financial step backwards by the state-owned carrier could be considerable.          
  
Sources:

http://www.airfleets.net/ficheapp/plane-e190-716.htm  http://www.siscoma.com.ar/online/aviacion/2017/avn171005/avn-171005.html
http://www.siscoma.com.ar/online/aviacion/2017/avn171207/avn-171207.html
http://www.lanacion.com.ar/2094329-la-venta-de-los-embraer-podria-ocasionarle-una-gran-perdida-a-aerolineas
http://www.lanacion.com.ar/2103867-aerolineas-inicio-el-proceso-para-reemplazar-los-aviones-embraer
https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft
http://www.siscoma.com.ar/online/aviacion/2018/avn180201/avn-180201.html
http://www.siscoma.com.ar/online/aviacion/2018/avn180215/avn-180215.html

FLEET UPDATE: More details on possible replacement of Austral E190 fleet

Austral E190, LV-CMB (c/n 448), turns off Buenos Aires Aeroparque's runway 31 after landing at the airport on 17Mar16. (Phil Perry Photo)  

Following up on two posts in late August regarding Aerolineas Argentinas / Austral's plans to possibly replace Austral's 26-strong Embraer 190 fleet, it is now being reported that the airline is looking to sell 20 of the 24 company-owned E190's while keeping the remaining four owned aircraft plus the two leased planes for "thinner" less-traveled routes to smaller cities.  The airline would acquire 20 new aircraft to replace the 20 departing E190's on a like-for-like basis with no net fleet reduction for its shorter-range routes.  

However, keeping only six E190's might be an expensive proposition that would more than offset the operational savings from flying an aircraft that is correctly-sized for the routes that it would fly.  It might be better to dispose of the entire E190 fleet and acquire more of the larger-than-necessary 737-800's, 737 MAX 8's (or whichever aircraft is chosen to replace the 20 E190's) to also serve the "thinner" routes, thereby gaining the economic efficiencies of operating a single type on short-range routes.                  

According to the May 2016 issue of Airways magazine, Oman Air came to this same conclusion when it kept four of its E190's for less-traveled routes but found that the overhead costs of training crews and maintaining a spares supply for such a small fleet were prohibitive even though the aircraft was ideal for many of its destinations.  The planes were put up for sale in June 2016.    
The aircraft types reportedly being considered to replace the E190's are the Embraer E195-E2 (new generation of this series that can carry up to 140 passengers in single-class configuration), the Airbus A320neo and the 737 MAX series, which Aerolineas Argentinas will already start taking delivery of later this year. 

Expanding upon the reasons already given in previous posts for replacing the E190's with larger jets, Aerolineas Argentinas / Austral's passenger numbers are higher than ever with load factors on the increase plus many Argentine airports have limited infrastructure (such as ramp space) limiting their ability to take on more aircraft but they can accommodate larger aircraft.   

The decision on the future of Austral's E190 fleet will likely be made in the coming months.  

Two previous posts on this subject in late August contain further background and details:

"Aerolineas Argentinas to reduce or dispose of Austral's E190 fleet ? - Part 1 - Rationales"

"Aerolineas Argentinas to reduce or dispose of Austral's E190 fleet ? - Part 2 - Bad Idea ?"

Sources:

http://www.sirchandler.com.ar/2017/08/va-pasar-los-embraer-190-austral/comment-page-1/#comments
Airways magazine, May 2016 issue

Aerolineas Argentinas to reduce or dispose of Austral's E190 fleet ? - Part 2 - Bad Idea ?

Blog Editor's Opinion

The answer to the question posed in the title of this posting largely depends on the mission of Aerolineas Argentinas / Austral.    

National Connectivity

As the state-owned national flag carrier of Argentina, Aerolineas Argentinas / Austral's main mission is presumably to contribute to the well-being of the national economy in the most effective way possible. 

As an airline, this would be accomplished by facilitating the movement of people and goods; whether they be business people traveling to close business deals, tourists traveling to enjoy a vacation or individuals visiting friends and relatives; all of these activities generate economic activity and create employment.

Profitability          

Aerolineas Argentinas / Austral could be run like a commercial enterprise to generate a return on investment for shareholders that provide its operating capital.  This would mean operating in a way that would not always be in the greater national interest as the connectivity described in the above paragraph would not be profitable in the case of smaller cities with light passenger traffic volumes that would not allow for sufficient economies of scale to achieve profitable operations at market-level airfares.  

Blog Editor's Perspective

It is the view of this blog's editor that a state-owned carrier should not operate with the primary objective of being a profit-making entity, although if it makes profits while providing a beneficial level of national connectivity, all the better !
  
With this in mind, the editor suspects that many routes currently operated with Australs' 96-seat E190's would be heavy loss makers if operated with 737-800's as has been proposed.  The choice would then be for the carrier to absorb these losses or abandon these routes with the consequential loss of connectivity and damage to local economies.   

Austral E190 Route Analysis

The editor analyzed Austral's route system based on a snapshot of the carrier's flights on Friday, 04Aug17 to identify sectors flown exclusively by its E190's with no service by Aerolineas 737-800's, which would suggest that these routes are too "thin" (lightly traveled) to justify the operation of the larger aircraft. 

The results can be divided into routes based on five criteria:

* Buenos Aires Aeroparque (AEP) to 7 domestic and 3 international points

The following smaller Argentine cities had service on 04Aug17 from Aeroparque exclusively with E190's, typically on a 2x/daily roundtrip basis:

AEP - Corrientes (CNQ)      
AEP - Formosa (FMA)            

AEP - Rio Cuarto (RCU) 

AEP - San Luis (LUQ) 

AEP - San Rafael (AFA)  

AEP - Santa Rosa (RSA)

AEP - Santiago del Estero (SDE) 

The following international routes from Aeroparque are apparently not able to support operations by larger aircraft profitably and are served only with E190's: 

AEP - Asuncion (ASU)

AEP - Curitiba (CWB)

AEP - Punta del Este (PDP) at least in the low season (non-summer) 

* Buenos Aires Ezeiza (EZE) to 4 domestic and 2 international points

These routes from Ezeiza are presumably for feed to/from international flights with special emphasis on longer-range South American regional routes and intercontinental routes to Italy, Spain, and the United States.

Domestic:

EZE - Cordoba (COR)

EZE - Iguazu

EZE - Mendoza (MDZ)

EZE - Rosario (ROS)

International:

EZE - Asuncion (ASU)

EZE - Montevideo

* Cordoba (COR) Hub-and-Spoke System

8 out of 10 flights departing from the Cordoba (COR) hub on 04Aug17 were operated with E190's, which is not surprising since connecting different points of the Argentine "Interior" without going through Buenos Aires is probably not a high-volume proposition.  

The following cities were served by Austral's E190's: 

COR - Bariloche (BRC)

COR - Neuquen (NQN)

COR - Comodoro Rivadavia (CRD)

COR - Mendoza (MDZ) - 2x/daily

COR - Jujuy (JUJ)

COR - Resistencia (RES)

COR - Rio Hondo (RHD) - temporarily replacing Tucuman (TUC) which is currently closed undergoing upgrades

Only two cities were served by Aerolineas 737-800's - Salta (SLA) and Ushuaia (USH) - with the latter not necessarily being a higher traffic destination as it is in the extreme south of Tierra del Fuego and probably beyond the range of the E190 from Cordoba (COR) with a full payload so the 737-800 is the only type that can be deployed on the route.  

* "Corredor" Routes connecting Argentine "Interior" Cities directly with each other

Aerolineas Argentinas / Austral's operates four "Corredor" routes with each one flown in a linear or circuitous path stopping in several cities and generally also flying the same route in reverse, without ever connecting via Buenos Aires, saving passengers a lot of time.  

The "Corredor Federal - Norte" and the "Corredor Federal - Sur" are both used to connect points of touristic interest directly to each other in northern and southern Argentina. 

The "Corredor Atlantico" runs from Buenos Aires Ezeiza (EZE) south along Argentina's Atlantic seaboard to Mar del Plata (MDQ) - Bahia Blanca (BHI) - Trelew (REL) - Comodoro Rivadavia (CRD) with the last stop being Rio Gallegos (RGL) or Ushuaia (USH).

The "Corredor Petrolero" connects points important to Argentina's oil industry; Rosario (ROS) - Cordoba (COR) - Mendoza (MDZ) - Neuquen (NQN) - Comodoro Rivadavia (CRD) - Rio Gallegos (RGL). 

The "Correder Atlantico" is operated by Austral E190's and the "Corredor Petrolero" appears to be also.  The other two might also be operated with this aircraft type.  With the amount of traffic flying between these smaller cities being somewhat limited, it would appear to make sense that they would be connected with a smaller aircraft like the E190 instead of the larger 737-800.   

* Lightly-Traveled Individual Route Segments

There are many route segments that do not fall into the above categories that are operated by Austral E190's, such as:

Rosario (ROS) - Mendoza (MDZ) - 4x/weekly connecting Argentina's third and fourth largest cities, respectively.    

Other point-to-point flights that allow passengers to avoid connecting through Buenos Aires that appear to have too little traffic to support 737-800 service include:

Rosario (ROS) - Salta (SLA)
Rosario (ROS) - Bariloche (BRC)
Bariloche (BRC) - Bahia Blanca (BHI)
Bariloche (BRC) - Viedma (VDM)  

* Airports not equipped to handle 737-800 Operations

In addition to light traffic levels, some airports currently served with Austral
E190's are not equipped to handle 737-800 class aircraft in terms of runway length, maximum allowable aircraft weight, and other flight operations criteria.

For example, the blog Aeropuerto Formosa (unofficial) notes that Formosa's Aeropuerto El Pucu's 1800m (5900 ft) runway is not long enough for the 737-800 and it cannot support the weight of such an aircraft either. 

* Conclusion

If Aerolineas Argentinas disposes of Austral's E190's and replaces them with larger aircraft, many routes connecting smaller cities with flights to Buenos Aires Aeroparque (AEP) and through the airline group's hub in Cordoba (COR) will likely become economically unviable.

Sources:

www.aa2000.com.ar
www.flightstats.com
http://www.aerolineas.com.ar/es-ar/prensa/comunicadoprensainterno/4182_aerolineas-argentinas-inaugura-su-cuarto-corredor-federal
http://www.aerolineas.com.ar/landingsespeciales/landings/4_mas-destinos-mas-frecuencias-corredores-federales
http://aeropuertoformosa.blogspot.com.ar/2017/08/adios-los-embraer-190.html