“The outlook is complicated, but not just for us, it’s for all the airlines,” says Julio Scaramella, spokesman for Aerolíneas Argentinas, which in the first quarter of the year had an average occupancy coefficient of 51% on their flights to the US, of 48.8% to South America and of 45.8% on their destinations to Oceania.

Already in April, the three weekly flights Buenos Aires-New York were 63% sold out, while on the return trip there were only 39.8% seats occupied.

“We will recover this route and we must continue to stake on it,” says Scaramella. Neither do we have so many weekly frequencies so as to say we are losing a great deal of money,” he adds.

Miami, the other North American destination covered by Aerolíneas displayed a rate of occupancy even lower in April: 39.9% and 45% on the single and the return journeys respectively. Both on the Miami and the New York routes we are just coming even. We neither win nor lose,” assures us the spokesman.

It has always been said that for an operation to be profitable, at least 70% of the seats on the plane should be sold, but Scaramella explains that “while it is important to have occupied seats, an air operation is not calculated simply on this. One must also analyze what plane you are flying, what the consumption of oil is, and how many frequencies are offered, amongst other things. Flight operation consists in a global economic calculation”.

The Aerolíneas Argentinas officer insists on saying that the airline does not lose any money on its flights to the country in the north. “That we lose no money on a flight to New York is very good, especially because we are competing with two other very powerful companies,” he says referring to United and American Airlines.

United, however, has just suspended its flights between Buenos Aires and New York on account of the very small demand for tickets on that route.

Another destination that a priori shows no great benefits for the company is that joining Ezeiza with Sydney in Australia, with a stop at Auckland, New Zealand.

During the month of April the average sale of tickets for the two weekly flights of Aerolíneas to Auckland was of only 30.1%, though from the capital of New Zealand to Sydney, this rate rose to 59.8%. The most profitable leg, however, is the first part of the return: from Sydney to Auckland the Airbus 340 flew with 69.4% of occupancy, but from Auckland to Ezeiza, the rate was only 28%.

“It’s true that figures are not very good, but we have to keep in mind that the people who fly between Sydney and Auckland pay for their tickets in dollars, which makes the operation more profitable,” explains Scaramella. It is worth recalling that Argentine passengers departing from Ezeiza pay for their tickets in pesos and though the figure is considerably higher than that published by other companies in dollars, because of the exchange it becomes up to 30% cheaper.

The Aerolíneas flights whose destination was Europe were the most profitable for the first quarter in 2002. Between January and March they reached an average occupancy rate of 65.6%.

A matter of figures

While Antonio Mata, president of the Executive Committee of Aerolíneas Argentinas, insists to anybody who is willing to listen, that the coefficient of average occupancy on international flights is 72%, the latest figures of the company do not seem to support his words.

During the past month of April, for instance, the only routes that exceeded or equaled that average were those of Ezeiza-Madrid (79.9%) and Ezeiza-Rome (87.4%). In some cases, the routes Ezeiza-Santa Cruz de la Sierra (89.5%), Ezeiza-Sao Paulo (81.9%) and Sao Paulo-Ezeiza (82.7%) also responded satisfactorily, though they depended on the fact that they were legs of a route that extended beyond the mentioned destinations.

“The market situation is disastrous for everyone, but we can’t complain,” said Julio Scaramella. “Although we are not dancing wildly with joy, we feel quite happy,” he adds.

According to Antonio Mata’s announcement from Madrid at the end of May, Aerolíneas Argentinas was able to reduce by 55% the losses registered in the first four months of the year with respect to the same period last year. During that period in 2001 the company was 88 million dollars in the red and when April closed, the deficit fell to some 39 million dollars.

Of course last year, with the disappearing peso-dollar exchange parity, those 88 million American dollars were equivalent to the same amount in pesos, while these 39 million dollars, according to the current rate of exchange when this article closed, translate into over 138 million pesos.

In any case, Mata assured us that “the company foresees the closing of the 2002 fiscal year as balanced or just showing slight losses” and trusted that “profits would be made within the coming eight or nine months”.

At the same time, the president of the Executive Committee of Aerolíneas informed that “toward the month of October or November we will enlarge the capital by 50 million dollars through the entry of new shareholders that comply with the conditions of suitability and capital of Argentine origin, if possible. If this cannot be achieved, we ourselves will underwrite that extension of capital through one of the companies of the Group”.

The Group to which Mata was referring comprises Spanair, Air Plus Comet and Air Plus Argentina, besides the tourist companies Viajes Marsans and Trapsatur, amongst others.

With reference to other matters, Aerolíneas Argentinas sources pointed out that negotiations for closing an agreement of shared code with the US Continental Airlines have gone far ahead and that it would probably be signed shortly. At the same time, besides the flights to London and Paris which will take off on June 16 next through a hub in Madrid, using their own planes (MD88s), future links with Germany (either Frankfurt or Munich, as yet undecided), Tunis, Austria, Turkey and Greece are already foreseen.