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Aerolineas Argentinas Furloughs 7,000+ Employees

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Aerolineas Argentinas Furloughs 7,000+ Employees

Aerolineas Argentinas Furloughs 7,000+ Employees
June 02
16:36 2020

MIAMI – Aerolineas Argentinas (AR) has announced a furlough of 7,000-8,000 employees, representing a reduction of up to two-thirds of their 12,000-strong workforce.

The furlough is expected to last the months of June and July, after which it will be re-evaluated. Pursuant to local laws, all furloughed employees will continue to receive around 75% of their salary in the form of social security, medical insurance, and one-off payments.

The airline has reported a decrease in revenue of 97% since the start of the coronavirus outbreak. Even prior to the pandemic, Aerolineas Argentinas reported significant losses year over year since they were re-nationalized in 2008.

Fortunately, the state-backed airline received large subsidies from the federal government and favorable loans from the national banks of both Argentina and Brazil.

At the start of May, the Argentinian Government announced that it would merge AR and Austral (UU) into a single flag carrier due to the pandemic impact in both companies.

The decision to merge the airlines was made a way to ensure the survival, development, and growth of the AR. Consequently, 1,700 workers of UU are now part of the 12,000 Aerolineas Group payroll.

However, though the South American airline has been able to prevent layoffs by postponing payments and renegotiating debts, this has become an impossibility in light of the sustained decrease in demand.

Focusing on maintenance and repairs


The cost savings will be directed at fleet maintenance and repairs, such that the airline can be ready when air travel resumes. In the meantime, all 56 aircraft are grounded until further notice, with exceptions for repatriation and emergency flights directed by the government.

The airline joins dozens of others worldwide grounding their fleets, furloughing the majority of their workers, and restructuring debt. In addition, other airlines in the region, like LATAM (LA) and Avianca (AV) have filed Chapter 11 bankruptcy in the United States.

Given the substantial state funding given to AR, it is unlikely that they will file for bankruptcy in the near term.

Argentina has maintained one of the strongest border protection policies in the wake of the COVID-19 pandemic, banning all international arrivals until at least September 1, 2020.

Domestic travel and commercial ticket sales have also been suspended until the same date.

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About Author

Jeremy Chesney

Jeremy Chesney

Jeremy is a corporate travel consultant and aviation content creator. He reflects on his 100,000+ flown miles per year through the "Travel Tales from the #nerdbirds" podcast and guest posts for a variety of aviation websites.

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