Expropriation of airlines

sergio

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An Argentine friend showed me an article from La Nacion (today I believe) to the effect that Cristina plans to expropriate Aerolineas Argentinas and Austral. EXPROPRIATE, i.e. just take them without compensation. Maybe someone has more detailed info.
 
Your right they are as the below link indicates. Actually there not much to exproriate. All but 4 or 5 aircraft are leased. I assume they intend to keep paying the leases, but with these people maybe not. This is the dumbest deal I have ever seen. This is going to cost the taxpayers hundreds of millions of dollars, an endless financial black hole.
Argentina to seize airline Aerolineas -report - Yahoo! News UK
 
I don't know if it will affect fares. I would be more concerned about safety issues. If given the choice between being a passenger on Argentine Airlines and taking a bus, I prefer the bus.
 
One would expect prices to go up. How will this affect Argentina's overall finances?
 
These words written by a fellow blogger say it the best

The Argentine population can be outraged that their government might consider buying a bankrupt and debt-laden airline for nearly US$ 1B yet there are two primary differences between this action and that of the planned bailout of the U.S. financial sector.

First, the Aerolineas Argentinas buyout represents only .38% of Argentina's GDP. The U.S. $700B bailout represents 5% of the US GDP.

Second, the Argentine population will own shares in the airline, whereas in the U.S. the government will own nothing after the proposed plan.

The U.S. government should be applauded for taking action to avoid a run on the banking system. Yet, it seems that if someone should be bailed out, it should be the consumer that may lose his or her home and not a financial institution.

The average U.S. home price is $220,000. The same $700B could buy 3.1 million homes. In 2007 there were 1.5M homes that received foreclosure notices. Obviously not all of those are actually foreclosed. And, many foreclosures are on the speculation of 2nd homes or overzealous developers and builders.

One thing is clear, whether we buy financial institutions or we buy homes, let's take a page from our Argentine neighbor and at least own something at the end. Let's leave bailouts for the World Bank.
 
allegra said:
I don't know if it will affect fares. I would be more concerned about safety issues. If given the choice between being a passenger on Argentine Airlines and taking a bus, I prefer the bus.

Yeah but the roads in Argentina for me are some of the most dangerous in the world. I've done big car trips around lots of countries from Europe to Asia, and more but nothing comes close to craziness of drivers in Argentina in my view, well perhaps India... but the pace is a lot slower so it's ok.
The other thing is that it seems no one learns here, with one of the highest rates of fatal accidents in the world, people still continue to drive like total swines... it makes driving here for me pretty unrelaxing.

Then again, an Airline being controlled by the Kirchners is not something I'd want to travel by, so i think i'll stick to the road..
 
pericles said:
Second, the Argentine population will own shares in the airline, whereas in the U.S. the government will own nothing after the proposed plan.

The U.S. government should be applauded for taking action to avoid a run on the banking system. Yet, it seems that if someone should be bailed out, it should be the consumer that may lose his or her home and not a financial institution.

The average U.S. home price is $220,000. The same $700B could buy 3.1 million homes. In 2007 there were 1.5M homes that received foreclosure notices. Obviously not all of those are actually foreclosed. And, many foreclosures are on the speculation of 2nd homes or overzealous developers and builders.
Well said pericles, this bailout is really unfair to the taxpayers,
however the taxpayers will own shares of the banks being bailed out, that is part of the agreement, if they will be worth anything is a different story.

And don't you think the people that has been paying their mortgage payments would be pretty pissed off if the government bailed out the people that didn't?
 
How is it possibe for Chistina to expropriate Aerolineas Argentinas? I thought Aerolineas Argentinas was a Spanish owned company

DQ.
 
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