ROUTE UPDATE: Austral operated its first Buenos Aires Aeroparque (AEP) to Rio de Janeiro (GIG) Service on 01Jun12

Austral EMB-190 LV-CHR operated the carrier's first AEP to GIG service on 01Jun12. It is pictured above finishing its landing roll on runway 13 on 25May12, a foggy day at AEP.

As part of the expansion of Austral's service to regional international destinations outside of Argentina, the carrier flew its first Embraer 190 service from Buenos Aires Aeroparque (AEP) to Rio de Janeiro (GIG) on 01Jun12. The airline also flies from Buenos Aires' Ezeiza (EZE) airport to Rio de Janeiro (GIG).

Traditionally, Austral, sister airline to Aerolineas Argentinas, has only flown domestic services with a few exceptions such as flights to Montevideo, Uruguay (MVD) with NAMC YS-11 aircraft in the 1970's. The new GIG service joins Austral flights from Aeroparque to Sao Paulo (GRU) and both Aeroparque and Ezeiza to Montevideo (MVD) and Santiago (SCL).

Sources: Aviacion News 07Jun12
             www.aerolineas.com.ar

Photo: Phil Perry

PLUNA Cancels Flights for 48-Hours due to Employee Strike

PLUNA's administrative staff union announced a strike to begin tonight, July 3 at 21:20 Montevideo time lasting until Friday, July 6 at 12:00 hours.  The strike action is being taken to protest the proposed layoffs / redundancies of 200 staff as part of the negotiation with Juan Carlos Lopez Mena, owner of BQB Lineas Aereas, to purchase the 75% shareholding formerly held by the Jazz/Leadgate partnership.  

Other concerns include the lack of information from government officials on actions being taken to capitalize PLUNA.  The union is also said to be considering participating in the new capitalization of the carrier once Jazz's 30-day option to purchase the 75% shareholding expires on July 15.     

PLUNA's management decided to cancel all flights for 48 hours to avoid uncertainty and confusion among passengers regarding their flight status and have been asked to contact the carrier about flight possibilities on other airlines or to rebook travel for future dates.

Source: El Pais Uruguay 03Jul12

ROUTE UPDATES: Bariloche (BRC) Sharp Increase in Flights for Winter Ski Season

Bariloche Profile

Bariloche is a city of 108,000 people located on the shores of Lake Nahuel Huapi in the central western Patagonia region of Argentina near the Chilean border. It is a year-round tourist destination and the number one winter ski resort in Argentina in terms of number of skiiers taking advantage of the nearby Cerro Catedral mountain. Argentines and Brazilians are the main visitors but many Europeans and Americans visit Bariloche too.

Aerolineas Argentinas 737-700, LV-CBF, at AEP on 17Sep10

Aerolineas Argentinas / Austral  

Aerolineas Argentinas increased the number of flights it operated from Buenos Aires to Bariloche (BRC) in June to 35 weekly with 28 being from Aeroparque (AEP) and 7 from Ezeiza (EZE).  The carrier will further increase its flights between the two cities to 45 per week for the peak ski season of July and August.  Flights to Bariloche (BRC) will also be increased from Cordoba (COR), Argentina's second-largest city and Mendoza (MDZ) its fourth-largest metropolis.  Aerolineas will also operate thrice-weekly scheduled flights from Sao Paulo, Brazil (GRU) to Bariloche (BRC).    

       LAN Argentina A320, LV-BHU. landing at AEP on 03Oct10 

LAN Argentina

Starting in July, LAN Argentina will fly up to five daily flights from Buenos Aires Aeroparque (AEP) ro Bariloche (BRC) and nine daily flights on weekends using the carrier's Airbus A320 aircraft. 

 

TAM A320, PR-MBB, preparing for takeoff at AEP on 11Feb12

GOL 737-800, PR-GGA, at AEP on 11Feb12

TAM & GOL

Reflecting the strong Brazilian interest in skiing at Bariloche, the two main Brazilian airlines, TAM and GOL have been authorized by the Argentine National Civil Aviation Administration (ANAC by its Spanish initials) to operate 140 charters from Brazil to Bariloche (BRC) during July and August.  The originating airports will be Belo Horizonte (CNF), Porto Alegre (POA), Rio de Janeiro (GIG), and Sao Paulo (GRU) with the services being flown by GOL 737-700's and -800's plus TAM A320's (plus possibly TAM A330's as BRC's 2,348 meter / 7,703 ft. runway can probably handle them when they only carry enough fuel to fly to GIG, the furthest away of the aforementioned Brazilian airports). 

Sources:  Aviacion News 31May12, 07Jun12, 14Jun12
              http://www.airwaysim.com/forum/index.php?topic=6649.0
              Wikipedia

Photos: Phil Perry

BQB's Owner Negotiating to Acquire Former Leadgate Shares in PLUNA

PLUNA CRJ-900 CX-CRA landing at AEP on 24Sep10

BQB Lineas Aereas owner Juan Carlos Lopez Mena is negotiating with the Uruguayan government to acquire the PLUNA shares formerly owned by the group headed by investment company Leadgate.  Mena would pay between US$ 60-63 million for 75% of the Uruguayan national airline subject to an audit of the carrier with the main purpose being to discover any long-term obligations that Leadgate might have committed to that are not readily apparent. 

Should the negotiations be successful, the new majority owner would downsize the airline reducing PLUNA's payroll by 200 jobs and returning 3-4 aircraft to Bombardier, their manufacturer.  The reductions and return of aircraft would be partly offset by BQB's proposed expansion that would see that airline acquiring two CRJ-200's and adding 80 jobs.    

Canadian commuter airline Jazz, that was a minority partner in the ownership group headed by Leadgate, has the right to make the first offer for the shares during a 30-day period (which expires July 15) but it has been disclosed that Jazz's only interest is to pursue a business plan to recover the US$ 15 million investment it made in PLUNA in 2010 but that was subsequently lost when the Jazz/Leadgate ownership group agreed to no compensation for their shares as part of the negotiation to exit the carrier.  Once Jazz has recovered its money, it would exit PLUNA again.  With the Canadian airline apparently having no long-term interest in PLUNA, it is unlikely that any offer it makes will be accepted by the Uruguayan government. 

Stay tuned to see how things develop in the fast-changing situation of PLUNA, Uruguay's national carrier.

Source:  El Pais Uruguay 30Jun12

Photo: Phil Perry 

BQB Lineas Aereas Looking to Acquire two CRJ-200's for Regional Expansion

Blog Editor Phil Perry getting ready to board BQB Lineas Aereas ATR-72-212A CX-JPL on 16Sep11 to fly from Buenos Aires Aeroparque (AEP) to Punta del Este, Uruguay (PDP).   

BQB owner Juan Carlos Lopez Mena is evaluating making a US$ 20 million capital injection into the carrier to acquire two CRJ-200 that would be used on new routes from Montevideo (MVD) to Sao Paulo (GRU), Río de Janeiro (GIG), and Buzios (BZC) in Brazil, plus Asunción (ASU), Santiago de Chile (SCL), and Santa Cruz de la Sierra, Bolivia (VVI).  The airline's CEO, Juan Patricio López, has indicated that BQB is negotiating the purchase of the aircraft with their manufacturer Bombardier and the financing of the purchase with two international banks   It is estimated that the expansion would add 80 new jobs to the airline's payroll.  BQB currently flies a fleet of two ATR-72-200's mostly between Uruguay and Argentina. 

Source:  El Pais Uruguay 29Jun12

Photo: Laura Fernandez Perry

BQB Lineas Aereas Possible Expansion to Europe

BQB Lineas Aereas ATR-72-212A,

CX-JPL, (msn 816) at AEP on 11Oct10

Aviacion News reports that BQB Lineas Aereas of Uruguay reported US$ 150,000 profits on US$ 12 million in sales in its fiscal year which closed at the end of March 2012.  The carrier, which flies two ATR-72-200's on regional routes, especially between the Uruguayan resort of Punta del Este and Argentina, is looking to add another ATR-72 or ATR-42 to the fleet.

Additionally, the airline confirms that it has talked with several European carriers, including Air Berlin and Virgin Atlantic, about starting joint flights to Europe.  One proposal is to fly from Montevideo (MVD) to Madrid (MAD) three-times per week in cooperation with Air Europa, which already flies from the Rio de la Plata region to Spain, with flights from Buenos Aires Ezeiza (EZE) to Madrid (MAD) with A330-200's.  There would apparently be special emphasis on carrying cargo.  

Los Cipreses S.A, which owns BQB Lineas Aereas and the very successful Buquebus ferry company between Argentina and Uruguay, was approved by the Uruguayan aviation authorities in September 2010 for flights carrying passengers, cargo and mail to Madrid.

Sources:  Aviacion News 17May12, 24May12

Photo: Phil Perry

LV-BGZ - Sole Austral MD-83 in New Colors - Photo

LV-BGZ at Buenos Aires Aeroparque (AEP) on a foggy day, 26May12

LV-BGZ was rolled out of the hangar at Aeroparque after a five-month long "C" check and repaint in Austral's new colors on 01Mar12.  Soon after the aircraft went into the hangar in October, it was decided that the MD-80's would be retired from service by April 2012 but work on the plane and repaint continued anyway.  The aircraft apparently flew at least a couple of revenue flights before Austral retired the type from its fleet on 10Apr12, such as AU2881 from Ushuaia (USH) to Rio Gallegos (RGL) on 20Mar12, presumably continuing on to AEP.

LV-BGZ (msn 49906/1786) was originally delivered to Finnair on 15Nov90 as an MD-82 with registration OH-LMX.  The aircraft went on to serve with Austrian Airlines and Air Plus Comet before being delivered to Austral on 10Dec06 at which time it was converted into an MD-83. 

For several better-quality photos, check the following links scrolling down the pages for the photos:

http://linea-ala.blogspot.com.ar/search?q=bgz

http://www.aviationcorner.net/show_photo.asp?id=252800

http://www.aeropuertosarg.com.ar/losforos/index.php?topic=21715.msg459583%3btopicseen#msg459583

Information Sources:  http://www.airfleets.net/ficheapp/plane-md80-49906.htm

                                      http://www.airliners.net

Photo:   Phil Perry

PHOTO GALLERY: Austral MD-80

All photos taken by Phil Perry at Buenos Aires Aeroparque (AEP) between 2010 and 2012. 

 LV-WFN climbs out after taking off runway 31 

LV-BHN landing on runway 13 with thrust reversers deployed

LV-BHH taxis to the terminal after landing 

LV-BEG rotates off 31

LV-VGC stored in derelict condition without engines on

AEP's east side near where the aviation museum used to be.

LV-VCB is LV-VGC's neighbor, also in outdoor "storage"

LV-WGM on final approach to 31

LV-AYD lines up for takeoff on 31

LV-WGM climbs out after taking off from 13

Goodbye MD-80's ! ! !

FLEET UPDATE: Austral Retired MD-80 Series from Service on 10Apr12

MD-83 LV-AYD prepares to take off from AEP's runway 31 on 11Feb12, about two months before it operated Austral's last MD-80 service.

Austral Lineas Aereas operated its last MD-80 service on 10Apr12 after 31 years' operations of the type.  MD-83 LV-AYD (msn 53015/1818) flew the last scheduled passenger flight AU2883 from Rio Gallegos (RGL) to Buenos Aires - Aeroparque (AEP) arriving at 6:30am that morning. 

                                       LV-WFN (originally N10027) at AEP on 11Oct10.

In late 1978, Austral received authorization from the Argentine Aviation Secretariat to acquire five MD-80 aircraft.  The first two planes, N10022 (msn 48024/948) and N10027 (msn 48025/952), departed the McDonnell Douglas factory in Long Beach, California, USA arriving at Austral's Buenos Aires Aeroparque base on 10Jan81.  The first service was operated by N10027 on 11Jan81 with the two aircraft initially flying routes from Buenos Aires to Neuquen (NQN), the resorts of Bariloche (BRC) and Mar del Plata (MDQ), plus the important cities of Córdoba (COR) and Mendoza (MDZ).  The third aircraft, N1003G (msn 48050/989), was delivered on 08Aug81.  The fourth and fifth planes, N10028 and N10029, were painted in Austral's full colors and were ready for delivery but that part of the order was cancelled.  

N10027 went on to be reregistered as LV-WFN in December 1993, flying its entire 31-year career for Austral until it operated its last flight on 02Feb12 to Bariloche (BRC).  The aircraft flew 70,444 hours and 60,350 cycles in its career.  On 17Mar12 the plane was ferried from Buenos Aires Aeroparque (AEP) to Cordoba (COR) for temporary storage until the airline decides what to do with it.  Given its prominent history, there is much talk of LV-WFN joining an ex-Aerolineas Argentinas 737-200 at the Argentine National Aviation Museum at the Moron Air Force Base near Buenos Aires.        

N10022 was reregistered LV-WPY.  On 20Feb04 it lost a main landing gear wheel upon takeoff from AEP and a small fire erupted in the landing gear upon making an emergency landing at Buenos Aires Ezeiza (EZE) but it was quickly put out by fire crews.  The aircraft was withdrawn from use on 16Jan07 and scrapped in April 2008.

N1003G sadly went on to crash on 12Jun88 when it hit eucalyptus trees on approach in fog to Posadas Airport in the northern Argentine province of Misiones.  All 22 passengers and crew on board perished.

Other notable aircraft in the Austral fleet with their retirement dates:

Austral took delivery of four ex-AeroMexico MD-80s in the late 2000s with only one being painted in full Austral colors.  The other three, all MD-88's, LV-BXA (msn 49928/1732), LV-BTI (msn 49927/1716), and LV-BTW (msn 49926/1715) remained in AeroMexico colors but had Austral "billboard" titles painted on the sides.

LV-BXA at AEP on 16Jan11

MD-88 LV-BXA was delivered to Austral on 19Mar09, entered service on 26Mar09 and operated its last revenue flight on 22Sep11.  It was returned to the lessor on 16Dec11, flying from AEP to Lima (LIM), San Jose, Costa Rica (SJO), Miami (MIA) enroute to Victorville, California.  The aircraft was reregistered as N372MS but this registration was cancelled on 16May12 suggesting that the aircraft will soon be scrapped. 

                                                          LV-BTI at AEP on 17Sep10

MD-88 LV-BTI was returned to the lessor on 01Oct11, flying to Goodyear, Arizona, USA.  It was reregistered as N379MS and might fly for another carrier. 

MD-88 LV-BTW was returned to the lessor on 02Sep11, reregistered N382MS and scrapped.

Two of Austral's MD-80's stayed in Argentina being transferred to Andes Lineas Aereas, LV-ARF (49252/1169) and LV-BAY (49284/1209) both of them reportedly still operational with the airline.

Austral's sister carrier, Aerolineas Argentinas, also operated MD-80's with three of the most recent ones being MD-83 LV-VAG (53117/1951) and MD-88's LV-VBX (53047/2016) and LV-VBZ (53049/2031), all of which are currently stored and no longer operating with AR.

                                                     LV-VBZ taxis at AEP on 17Sep10

                                                         LV-VAG at AEP on 29Oct10

                                 LV-VBX touches down on AEP's runway 13 on 06Feb11

Austral flew the MD-80 almost entirely on domestic Argentine service with some charters to / from neighboring countries as well. 

Austral operated 37 MD-80 series aircraft in all with Aerolineas Argentinas operating 11 MD-80s but some of these aircraft might have flown with both airlines.

The aircraft type served the Argentine market well but has now been replaced at Austral by the smaller, yet more efficient, Embraer 190 series.

Sources:  http://linea-ala.blogspot.com.ar/
               http://aerospotter.blogspot.com.ar/
               http://cabeceranorte.blogspot.com.ar/
               www.airliners.net   
               www.airfleets.net
                   http://aviation-safety.net/database/record.php?id=19880612-0

Photos:  Phil Perry

Air Class Metro CX-LAS Disappearance Update

The search for the aircraft missing after departing Montevideo's Carrasco International Airport (MVD) on the evening of Wednesday 06Jun12 continued in the days after its disappearance without a trace. 

Some plastic bags washed ashore near Carrasco and it was thought that maybe they were the type used by the airline to wrap cargo but this hypothesis was discarded when Air Class confirmed that the bags were of a different material than what they use.  Hopes were raised when long streaks of a fluid were spotted on the surface of the Rio de la Plata some six miles southwest of Isla de Flores, near where the aircraft is thought to have gone down.  Samples of the liquid were taken for testing to see if it was a petroleum-based or similar product, such as hydraulic fluid or the jet fuel used to power the Metro's turbine engines but the substance was too diluted to determine definitively what it was.   

On Saturday, 09Jun12, three days after the plane went missing, the Uruguayan Air Force performed a demonstration flight with a twin-engined turboprop similar to the Metro seeking to recreate its flight path to possibly gain insights on what happened.  The first objective was to determine if the radar used to track the Metro was working properly to make sure the trackings that it showed of the Metro's flight were accurate.  This exercise confirmed that the radar was functioning normally.  

Following the Metro's tracks, the air force plane made several abrupt moves emulating the final seconds that the Metro was on radar, first with a sharp left turn going out of its planned flight path, then back on to its routing, followed by a sharp right turn and another to the left before disappearing from the radar.  The air force plane traced this routing simulating the Metro's flight with the exception of some maneuvers that were so extreme that they could have endangered the air force crew.  Further analysis led to the conclusion that the Metro crew executed maneuvers that were unsafe but appeared to be in an attempt to recover from a critical flight situation.  The Metro disappeared from radar when it was at 2,400 ft. and is presumed to have taken 5-10 seconds to hit the surface of the water reinforcing the earlier assumption that it went down very near Isla de Flores, some 10-12 miles off the coast of Uruguay.

Another theory that was considered was the possibility of a hijack since no trace of the plane has been found.  One motivation for hijack would be drug dealers stealing a plane to use it for transporting drugs, especially because one such attempt took place at Montevideo's Melilla Airport in 2003.  However, reviews of security cameras at MVD in the two hours prior to the Metro's departure revealed no one boarding the plane except the flight crew.  

Also considered was the possibility that cargo of a hazardous nature might have been boarded, such as flammable or explosive materials, but a review of the freight manifests for the flight revealed little likelihood of "hazmat" making it onboard the Metro. 

As of this writing, it appears that the Metro crashed into the sea with the loss of both crewmembers, Captain Walter Rigo (63) and First Officer Martin Riva (34).  Both men became pilots because they loved to fly.  "Walter disappeared doing one of the things he most loved: flying." said his family members.  Martin's father, Julio Riva, said that his son had always wanted to fly.  He worked at different jobs but always pursued his desire to become a professional pilot until he was hired by DHL three months before the Metro's disappearance.  Martin commented that before being hired he paid to fly but now they were paying him to fly !  "He couldn't have been happier" commented the elder Riva.  

Assuming that both men perished in the aircraft's disappearance, may they both rest in peace.  

Sources:  El Pais (Uruguay), 09Jun12, 11Jun12, 12Jun12, 15Jun12

PLUNA: Leadgate to Exit Ownership & Management of Carrier

PLUNA CRJ-900, CX-CRM, c/c 15274, delivered 29Oct11.

Spotted at Buenos Aires Aeroparque (AEP)

on 11Feb12 preparing to take off Runway 31. 

AGREEMENT

The Uruguayan government, led by Transport Minister Enrique Pintado and Economy Minister Fernando Lorenzo came to an agreement with Leadgate, the main partners in Sociedad Aeronautica Oriental (SAO), on Friday, June 16, for SAO to give up its 75% shareholding in PLUNA without any renumeration and with the shares to be placed in a trust called a "fideicomiso" until new investors are found that will purchase the shares.  Representing Leadgate were executives from the company that also acted as PLUNA senior management, Matias Campiani (then CEO of PLUNA), Sebastian Hirsch, and Arturo Alvarez Demalde.

PREVIOUS OWNERSHIP STRUCTURE

Until the recent agreement, PLUNA was 25% owned by the Uruguayan government and 75% owned by SAO, comprised of Leadgate holding 66.6% of the shares and Canadian commuter airline Jazz, which paid US$ 15.1 million for its 33.3% stake in SAO in 2009.

FINANCIAL PROBLEMS 

PLUNA has been accumulating debt for many years, including since Leadgate's purchase of 75% of the company in 2007 for US$ 15 million.   In the two years prior to Leadgate acquiring an equity interest in the Uruguayan airline and taking over its management, PLUNA was 100% owned and managed by the Uruguayan government racking up losses totalling US$ 41.7 million.  Since Leadgate entered the picture in 2007 through February 2012, the airline has lost an additional US$ 85.7 million with US$ 11.8 million of that coming in the period July 2011 through February 2012.  Losses have apparently been accumulating at an even faster rate since then due to a number of factors, including a sharp drop in traffic resulting from Argentine government currency restrictions on Argentines acquiring foreign currency, including for travel outside the country.    

The accumulated losses have taken a toll on PLUNA's balance sheet with 2011 showing Assets of  US$ 290 million and Liabilities of US$ 301 million for a debt / assets ratio of 1.04 and a negative equity situation.  By Uruguayan law the company is considered insolvent. 

The company has also been suffering cash-flow problems not even being able to pay ANCAP, the Uruguayan state-owned oil company, for the fuel it has supplied.  On May 31, PLUNA paid ANCAP US$ 600,000 but missed the deadline on at least one payment since then.  In all, the carrier owes ANCAP US$ 25 million for past fuel deliveries.  Additionally, a US$ 9 million payment to Canadian bank Scotiabank for seven CRJ-900 aircraft purchased in 2007 is due in August, putting further strain on the airline's finances.

    PLUNA CRJ-900, CX-CRK, c/n 15239, delivery date 30Oct10

    landing at Buenos Aires Aeroparque (AEP) with thrust reversers deployed on 06Feb11.

URUGUAYAN GOVERNMENT PROPOSED SOLUTION & LEADGATE OBJECTIONS

This dire financial picture lead the Uruguayan government to recently determine that a capital injection of US$ 30 million was required to keep the airline operating and solvent while a solution could be found to make the airline viable in the longer term.  In accordance with its ownership stake, the government was to supply 25% of this amount, US$ 7.5 million, with the SAO partners to provide the US$ 22.5  million balance.   However, the private partners declined to invest further in the carrier under the current operating conditions, which they consider not conducive to turning around the carrier's finances. 

They cited several factors as being damaging to PLUNA's prospects, including:

1) High fuel prices.

2) Argentine government restrictions on foreign currency acquisitions by
    Argentines, discouraging travel.

3) Drop in demand due to slowing regional economies around South America.

4) The denial by the Argentine government of route rights to cities such as
    Bariloche (BRC) and Mendoza (MDZ), which are essential to the carrier's
    Montevideo (MVD) -based hub with primary spokes in Argentina and   
    Brazil.  To illustrate the extent of the restrictions, Argentina allows PLUNA to
    fly to only three airports in its territory while Brazil allows service to nine
    different airports.

5) Argentine government subsidies to Aerolineas Argentinas of approx. US$ 750
    million annually giving the carrier an unfair competitive advantage . 

Editor's Note:  Other airlines in Mercosur all have to deal with the above conditions but the route denials into Argentina probably hurt PLUNA the most because its MVD hub requires traffic flowing between Argentine and Brazilian cities.   

Some of the first consequences of this situation were PLUNA dropping Montevideo (MVD) to Campinas, Brazil (VCP) service, reduction of frequencies from MVD to Curitiba (CWB), Belo Horizonte (CNF) and Porto Alegre (POA) all in Brazil plus Asuncion (ASU) in Paraguay.  Its recently started venture into the Chilean domestic market flying from Santiago (SCL) to Concepcion (CCP) was also dropped.

PLUNA CRJ-900, CX-CRI, c/n 15234, delivery date 29Sep10

at Buenos Aires Aeroparque (AEP) on 20Mar11. 

TERMS OF FINAL AGREEMENT

The Uruguayan government's response to SAO's refusal to invest more was that the private investor  group could no longer contribute to the carrier's success and must abandon its management role and ownership in the airline.  Leadgate agreed to move in this direction and negotiations between the government and Leadgate as majority investor in SAO started around Friday, June 8.

Leadgate asked for the government to purchase its shares for US$ 18 million but the government indicated that it was not going to pay anything for them, apparently alleging mismanagement of the carrier by Leadgate.  In turn, Leadgate requested that the government agree not to bring any lawsuits against them and that one of Leadgate's senior executives, Sebastian Hirsch, be allowed to stay on for 90 days to make sure that nobody remaining at the carrier tried to paint a "revised" picture of what transpired under the private group's management.   After resisting these two conditions for several days, Mr. Pintado of the Transport Ministry and Mr. Lorenzo of the Economy Ministry both agreed to include them as part of the final agreement on Friday, June 15.  

SAO's 75% share, held by Leadgate and Jazz, will be deposited by the two private entities into a "fideicomiso" (trust) managed by the Montevideo Stock Market until their sale to a future private investor.   Neither Leadgate nor Jazz will receive the proceeds of the sale of the stock, Jazz already having written off this investment as a loss.  Presumably the cash generated from the stock will be used by PLUNA as operating capital.  The state made it clear that it does not want to be the sole owner of PLUNA so it will not acquire the shares.

It was also determined that Jazz, that has expressed an interest in acquiring SAO's interest, will be given 30 days to bid on the shares and the government will approve the sale if it believes that the amount offered is adequate.  Otherwise, the 75% shares will be opened to public bid.  Note that it appears that with Jazz having written off its 33.3% share of SAO (equal to 25% of all of PLUNA's shares), many of the shares that it would buy would in effect be shares that it previously owned !

Should Jazz not end up with the 75% equity stake another possible buyer would be Juan Carlos Lopez Mena, owner of the Buquebus ferry lines operating between Argentina and Uruguay and also of BQB Lineas Aereas, a Uruguayan airline and competitor of PLUNA on some routes.

OBJECTIVES

The Uruguayan government's main objectives throughout this process were:

1)  Assure PLUNA's long-term viability.
2)  Guarantee no service interruption.
3)  Preserve the jobs of 900 PLUNA employees.

Another party interested in the negotiations was the Canadian government because four Canadian companies have a stake in the future success of PLUNA:

1) PLUNA still owes Scotiabank US$ 140 million of the original US$ 203 million
    purchase price of seven Bombardier CRJ-900's in 2007.  The Uruguayan
    government guaranteed the purchase.  Payments are made each February
    and August.   

2) US$ 120 million is owed to Export Development Canada for the lease of six
    other CRJ-900's. 

3) The CRJ-900's manufacturer, Bombardier, supplies spare parts for the aircraft.

4) Jazz, which has invested US$ 15 million so far and would like to see a return
    on that investment.

CONCERNS OF POSSIBLE FRAUD

On a closing note, legislators from opposition parties to the current Uruguayan President, Jose Mujica, of the Frente Amplio party, have initiated preocedings to audit PLUNA's finances under Leadgate, alleging the payment of high fees to consulting companies and possible excessive compensation to PLUNA executives.  

They have especially objected to the clause in the agreement granting immunity from lawsuits and that a Leadgate executive will stay on for 90 days, apparently concerned that this may lead to a coverup of possible dishonest practices by management.      

Sources:   Aviacion News: 07Jun12, 14Jun12
               El Observador: 12Jun12
               El Pais Uruguay: 13Jun12, 14Jun12, 15Jun12, 16Jun12

ROUTE UPDATE: TAM dropping Buenos Aires Aeroparque (AEP) - Porto Alegre (POA) Route

Effective 02Jul12, TAM is dropping Buenos Aires Aeroparque (AEP) - Porto Alegre (POA) service after operating the route on a once-daily basis with A320's since late 2010.  On the same day, the carrier is transferring three of its five daily Buenos Aires - Rio de Janeiro flights from Ezeiza (EZE) to Aeroparque (see 10Jun12 posting).

Source:  http://airlineroute.net/2012/06/15/jj-poaaep-jul12/ via Eric Trum