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Argentine Airline Seeks Protection

June 22, 2001

BUENOS AIRES, Argentina (AP) _ Aerolineas Argentinas filed for protection from its creditors Thursday, a sign the Spanish government may be ready to sell the troubled airline to private owners.

Saddled with nearly $1 billion in debt and facing bankruptcy, Aerolineas has been embroiled in a protracted labor dispute with airline unions over a cost-cutting plan to keep the air carrier afloat.

But talks between unions and the Spanish government, Aerolineas’ largest shareholder, have stalled over the plan, which calls for large-scale layoffs. The airline is losing $20 million to $30 million a month.

Spanish holding company SEPI has warned it might be forced to close Aerolineas if the airline’s seven unions don’t agree to an austerity plan setting new worker rules, lower salaries and layoffs.

To date, only five of the company’s seven unions have backed the plan.

On Thursday, Aerolineas’ board of directors announced its latest move to file for bankruptcy protection in a statement. Analysts said the company wanted to protect its interests ahead of a possible sale.

``We deeply regret reaching this situation due to the uncompromising attitude of two unions that have put their jobs at risk,″ the statement read.

Privatized by the Argentine government in 1991, Areolineas is now 90 percent- owned by SEPI. The government, which owns 5 percent of the airline, has intervened a number of times to mediate labor disputes between the companies’ unions and SEPI.

Both the Spanish and Argentine governments have refused to pour any more money into the fledgling airline.

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