Aerolíneas Argentinas: Positive 2024, No 2025 State Funding Plans

Aerolíneas Argentinas informed the Argentinian Ministry of Economy that it will not request fund transfers from the National State in 2025. The flag carrier describes this situation as unprecedented since its 2008 renationalization, although the company itself had already reported positive results and non-utilization of budgeted funds in 2023. According to the company's current management, this projection for 2025 is based on a series of measures implemented to improve its operating balance sheet and on the positive results reported for the year 2024. Historically, between 2008 and 2023, the airline received state transfers totaling approximately USD 8 billion. These funds were largely allocated to cover operating deficits measured by EBIT (Earnings Before Interest and Taxes), a standard indicator in the airline industry. Records cited by the company itself indicate average annual losses nearing USD 400 million during that period. It is relevant to note that towards the end of 2023, the company's previous management had already announced a projected profit of USD 32 million for that fiscal year. In that statement, dated December 2023, it was also asserted that Aerolíneas Argentinas would conclude the year without utilizing the funds allocated in the 2023 National Budget for operating expenses and highlighted a record number of passengers carried. Fabián Lombardo, current carrier's CEO, was a member of the board at the time. Under Lombardo's leadership, the company reported an operating surplus of USD 20.2 million for fiscal year 2024 and a positive economic result of ARS 156.324 billion (equivalent to over USD 150 million at the relevant exchange rate). Aerolíneas Argentinas indicated that both figures are currently being audited by the international consulting firm KPMG, with official validation expected in the coming months. The current management attributes the ongoing financial improvement to internal restructuring. This process included a 15% staff reduction, leaving the workforce at its lowest level in 15 years, involving the departure of over 1,600 employees and the elimination of 85 management positions (including 8 director-level and 20 manager-level roles). Concurrently, the company optimized its flight network, focusing on routes with better operational performance and eliminating those deemed unprofitable. Within this framework, it signed commercial cooperation agreements with Iberia and LATAM to enhance connectivity with Spain and other Southern Cone countries. As part of the reorganization, Aerolíneas Argentinas also confirmed the closure of 19 of its 21 domestic branches outside Buenos Aires. Offices in Formosa, Trelew, Santa Fe, Bariloche, Corrientes, Río Gallegos, and Río Grande ceased operations on April 30, while those in Mar del Plata and Tucumán are scheduled to close on May 30. Only the branches in Buenos Aires, Córdoba, and Mendoza will remain operational. The company justifies this decision based on the decline in in-person sales, which currently account for only 1% of total tickets issued, amid the growth of digital channels. According to the company's current statements, these adjustments signify a new phase focused on operational efficiency, cost control, and financial self-sustainability. This scenario, within the Argentine political context, could eventually pave the way for a future privatization process.

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