Abstract
On December 17 2008 the Argentine Senate voted 42-20 to expropriate Aerolineas
Argentinas, the
country’s flagship airline owned by Spain’s
Grupo Marsans. Austral, a domestic airline 97% owned by
Marsans, was also
included in the measure. The two airlines are responsible for around 80%
of
Argentina’s domestic flights and employ 9,000 staff. Congress
removed a clause in the first draft of the
bill allowing for later
re-privatisation, and gave itself the power to determine the final sale price.
The vote
came after months of negotiations between the government and
Marsans had failed to settle a price for
selling the airline back to the
state. ‘It is the only way to ensure these two companies keep
flying’,
Transportation Secretary Ricardo Jaime told local
reporters. The government said the airline was heavily
in debt and a state
valuation court estimated it to have a negative net worth of around
US$800mn.
Officials said the most they would pay for Aerolineas would be a
nominal one peso – about US$0.30.
Marsans on the other hand argued
that the airline was worth between US$350mn and US$450mn.
Following
approval of the expropriation bill Marsans said it was filing a claim against
Argentina at the
World Bank’s International Centre for Settlement of
Investment Disputes (ICSID) in Washington. A
company spokesman described
the expropriation decision as ‘absolutely scandalous’, and said
that the
Argentine authorities were ‘behaving like Venezuelan
President Hugo Chávez’. BMI expects a period of
upheaval in the
domestic airfreight sector, which, coupled with low investor confidence and
the emerging
recession, will depress the sector’s growth. For the
2009-2013 period we are now expecting average
annual airfreight growth
measured in million tonnes-km (mntkm), of only 1.2%.
Various factors
support the core prediction. Across our 2009-2013 forecast period, we now
expect
average annual GDP growth of 0.9%, a pretty dismal performance when
compared to the 8.3% annual
average registered in the preceding five-year
period. The government of President Cristina Fernández de
Kirchner
will find it more difficult to keep the growth rates up in a less supportive
international economic
climate, and the transport sector will remain
constrained by patchy infrastructure. On the plus side, the
aviation
industry is now experiencing much more manageable jet fuel prices, but this
contribution to the
bottom line will not be enough to dispel the gloom
caused by slumping demand. We also have to say that
we are not confident
that a state-run Aerolineas will be managed significantly better than
previously.
The outlook for the overall freight industry is that it will
keep pace with, rather than lead the muchreduced
general rate of economic
expansion in the country. Road haulage will continue to be the
dominant
freight transport mode. Investment is still needed in both the highways
network and truck fleets,
but recession will ease bottlenecks. Over the
forecast period annual average growth in road freight carried
will be
1.0%, down sharply from the preceding five years. BMI now forecasts 1.2%
annual growth in rail
freight over the next five years, with some new
investments still expected to go ahead. We are forecasting
maritime
traffic to grow by an annual average of 0.9% with lower grains exports this
year playing a part.
We have awarded Argentina a freight transport rating
of 53.0 (out of a theoretical maximum of 100.0),
which places it in the
medium range of key Latin American markets that BMI monitors. Positive
factors
contributing to the country’s score include the
country’s long-term economic and political risk
assessments and
potential for growth in infrastructure. The total value of transport and
communications
GDP will rise to US$64bn in nominal terms by 2013,
representing 9.9% of Argentina’s GDP. The
transport and
communications sector employed around 666,000 people, or 7.1% of the labour
force, in
2008. We see the figure rising to 701,000 by 2013, although as a
proportion of the labour force it will
remain unchanged at 7.1%.
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