After being excluded from privatization, Aerolineas Argentinas makes adjustments: it wants to reduce its losses by 50% this year

Aerolineas Argentinas plans to reduce its losses by 50% in 2024 by making its operations more efficient, adjusting frequencies according to demand, and increasing its income. In addition, agreements are being made with municipalities to guarantee minimum occupancy on flights to certain destinations.

The flag airline was one of three public companies that the executive agreed to exclude from the privatization chapter of the Bases Law to guarantee votes in the Senate. Now the ruling party will push for its privatization in the Deputies, as the project will return to the lower house and legislators will decide whether to accept amendments or insist on the original text of half-approval.

In case this is not successful, the President’s spokesman, Manuel AdorniIn his usual press conference, he said: “There is a possibility that airlines will stop flying to certain provinces because they are unprofitable, but in such a case it will be a decision taken by people who understand the routes and the aeronautical issues themselves. Clearly the way out is for Aerolineas Argentinas, while it is in the hands of the state, to lose as little money as possible. “This is going to happen with all the companies that are in the hands of the state and that have not been privatized.”

Company sources assured infobae They lost US$390 million in 2023 and aim to be less than half that this year. He specified that of that amount, around US$190 million was lost between April and June (low season) as the supply of flights remained stagnant without adjusting to demand.

“This year we adjusted the supply to match the real demand. So we already have significant savings and that is what will allow us to reduce the losses. Going forward, we are not going to continue reducing frequencies. In fact, now in the high season we are going to increase them. The July offer will be the same as last year’s July or even slightly higher,” he explained to Aerolineas.

In this sense, the supply of seats in the domestic market will reach 1,114,000 seats from next month. Meanwhile, more than 180 thousand passengers are expected on the international network and main regional routes, which is about 15% more than the passengers transported last year.

Likewise, the objective is to improve income and not to apply a generalized reduction policy. Between October and September the routes that will be resumed are: Bariloche – El Calafate, Córdoba – El Calafate, Córdoba – Trelew, Rosario – El Calafate, Trelew – El Calafate, and Trelew – Ushuaia. In addition, in the coming months two new flights from Córdoba to Rio de Janeiro and Punta Cana and twice as many daily flights to Miami and Madrid will be launched. These are decisions that have to do with the new income generation opportunities discovered by the company.

“It’s not always a question of cuts, but of improving incomes. That’s another angle from which to attack the problem,” he said.

“This is an industry that works a lot on efficiency and we must look for points where cabotage and income can be improved in both regional and international networks. This is often misunderstood and it is thought that flights will be reduced on all those routes. Whether a route loses money or makes a profit is relative because there are some routes that do not work very well, but they serve as traffic aggregators for routes that lead to other destinations,” he explained.

In this sense, he argued that a route cannot be eliminated because it will lose money over time as there are many influencing factors such as seasonality. “There is no general policy of cutting routes. Airlines’ problems are not solved that way,” he said.

On the other hand, agreements are being made with municipalities to guarantee a minimum occupancy during the low season. In this way, the risk of whether the flight will work or not is shared. Local governments are concerned about stimulating demand or paying for the passenger floor. This is the model that is being implemented in Río Cuarto to avoid eliminating the route and Aerolíneas confirms that it is working well. It has already been offered to other provinces that were asking for more frequencies and several are studying it.