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Aerolíneas to replace subsidies with debt financing by 2020, says CEO

Aerolíneas will receive US$82 million in subsidies this year, a significant drop from the US$180 million it took in last year.

Wednesday 30 May, 2018
An Aerolineas Argentinas jet.
An Aerolineas Argentinas jet. Foto:Aerolineas Argentinas

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Argentina’s national airline Aerolíneas Argentinas will phase out its reliance on state subsidies by next year, as it looks to cover its shrinking deficit with debt financing, the company’s CEO confirmed.

Aerolíneas will receive US$82 million in subsidies this year, a significant drop from the US$180 million it took in last year.

“Today, Aerolíneas (Argentinas) and Austral earn US$2.6 billion, which means that if our deficit this year is between $US20 and 30 million it will be the equivalent of two percent of our earnings”, CEO Mario Dell'Acqua said during a press conference on Tuesday.

“It’s no longer necessary for us to continue requesting money from the Argentine taxpayers with this level of loss. We can cover it by taking on debt”, he added.

Transport Minister Guillermo Dietrich last year insisted that the national carrier was operating “more competitively on less subsidies".

CHANGES

Since January, the domestic air travel market – dominated up to almost 80 percent by Aerolíneas Argentinas, followed by Chile’s LATAM with less than 20 percent and a handful of other companies – saw the entry of low-cost carriers like Flybondi and Norwegian Air.

A total of 85 new routes have been assigned to low-cost airlines, both local and international, since 2017.

The government’s aim is for domestic flights to double the number of passengers by 2019, President Mauricio Macri announced when presenting his national aviation plan in March, 2017. 

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