LATAM Leaves Argentina Through the Backdoor


Final week LATAM Argentina utilized for the native model of Chapter 11 and concurrently introduced its agency determination to depart the nation. The corporate’s CEO Rosario Altgelt hinted on the intransigence of the unions to simply accept wage cuts in Covid-times, however the unions say they by no means heard any proposal. 

“We’re in a gray zone,” says Union consultant Sergio Giménez of the USTARA union, which represents 80% of the technical and operations personnel of the 1700 workers. LATAM Argentina is the native subsidiary of the airline, originated in 2012 after Chilean LAN and Brazilian TAM merged. 

“LATAM Argentina utilized for the Preventive Disaster Process (PPC) which is one thing much like Chapter 11, which allows the corporate to maintain on working whereas restructuring its debt. However on the similar time, LATAM says it determined to stop operations in Argentina, which implies they don’t wish to function in any respect.” 

A 50% pay minimize.

Giménez says over the past three months – throughout which the Argentinian airspace has been closed attributable to Covid  – the staff didn’t obtain any information from the corporate, whereas solely 50% of the salaries had been deposited. 

“It´s unusual that the CEO of the corporate is now saying that LATAM has to depart the nation as a result of stubbornness of the Unions of not accepting wage cuts, whereas the corporate has precisely been doing that over the previous months,” says Giménez. “Within the meantime, many technical operators and upkeep personnel stored on working and they’re personally accountable for the protection of the plane.” 

“We had round seven conferences on the Ministry of Labor, however LATAM by no means ship an official of any weight,” confirms Juan Pablo Mazzieri, the spokesperson of the pilot union APLA. “LATAM by no means actually talked to the Unions throughout the previous months to succeed in an settlement to decrease operative prices. We really proposed scaled wage cuts, however by no means acquired a solution to that. I’ve the impression that LATAM already had ready their exit,” says Mazzieri. “It´s throughout the tune of their international technique, to chop down on the subsidiaries to save lots of the holding. Or to make working circumstances extra versatile.”

The monopoly of Aerolíneas Argentinas

The approaching exit of LATAM from Argentina shouldn’t be solely brought on by the Corona-crisis however can be linked to the political context. It was not a coincidence that LATAM introduced to shut store after the federal government of Mr. Alberto Fernández pressured LATAM Argentina to pay 100% of the contractual wages to its workers. 

Earlier in June, the staff of Aerolíneas Argentinas, the largest home airline in Argentina, had been reassured by their unions, that they’d be receiving their full wage till September 1st. On that date, predictably, Argentinian airspace will open up once more and air journey will resume. 

Aerolíneas Argentinas shouldn’t be solely state-owned, however most unions throughout the airline are managed by pro-government factions. This makes the flag-carrier crucial participant on the home routes.

Whereas the previous conservative authorities of Mauricio Macri, tried to interrupt the home monopoly of Aerolíneas, by introducing low-cost airways like Norwegian and Flybondi, the present authorities has clearly a extra nationalistic strategy. The dearth of native competitors might be worsened by the exit of LATAM, which accounted for nearly 20% of home flights. 

Lack of market share

LATAM has been shedding lots of market share over the past decade, partially as a result of competitors of those new low-cost carriers and but in addition due to strategic selections of the LATAM holding. “Over the past years, many worldwide routes that had been operated by LATAM Argentina, had been taking up by different LATAM subsidiaries in Peru or Brazil, for example,” says Juan Pablo Mazzieri of APLA. 

“So there appears to have been a choice to scale down the operations of LATAM Argentina.”

Proof of the truth that COVID shouldn’t be the one offender within the exit of LATAM Argentina, is the truth that the corporate, though a small operation, has been shedding some huge cash of the final two years: greater than 260 million {dollars}. 

“I feel if there hadn´t been a virus this 12 months, LATAM might need closed store anyway on the finish of the 12 months,” says USTARA’s consultant Giménez. “We don’t perceive how this exit technique and potential chapter will unravel. It’s a authorized quagmire. However now we have to talk 1700 households that they are going to be out of labor.”

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