Uruguay takes over bankrupt national airline

MONTEVIDEO: The Uruguayan government has reassumed control of Pluna, the nation's flag carrier after the airline’s controlling shareholder Leadgate announced that it will withdraw from the ownership structure of the company.

After several weeks of growing tensions between the Uruguayan government and Leadgate over the urgent need to recapitalise the Montevideo-based airline, Pluna CEO Matias Campiani finally announced his resignation last Fri June 15 after it became clear that Leadgate would not inject further funds into the company.

President Jose Mujica said that “the problem will be solved” and guaranteed the jobs of the company and the Minister of Transport Enrique Pintado pressed by the media said he could not reveal any details about possible interested parties.

However the opposition has announced it wants a full investigation into the whole process of handing the country’s airline to a group which consistently did not abide by the clauses of the contract, and on several occasion the government was warned about the “improvisation” of the whole privatisation project and Campiani’s total lack of experience in the air industry.

“We have been warning for the last three years and now we are saddled with a bankrupt airline, a US$300 million debt of unpaid aircraft, over US$20 million in fuel from the government’s oil and gas company. It’s a huge scandal which undoubtedly has links to government officials and some local banks” said Senator Carlos Moreira.

Pluna Ente Autonomo, the autonomous state body that manages the government's 25% stake in the airline, confirmed the appointment of former CFO Sebastian Hirsch as Pluna's new interim CEO on Mon June 18 in an attempt to assure a smooth transition for the airline.

While Pluna was unavailable for comment, a source at the Uruguayan ministry of Transport confirms that Leadgate transferred its 75% stake to the Uruguayan Stock Exchange, which will “act as fiduciary” until the government determines a game plan.

Leadgate's departure took place after the government agreed to sign a contract under which “both sides renounce [plans] to pursue any legal processes against each other”.

The ministerial source quantifies the immediate recapitalisation needs as being “in the range of US$30 to 35 million,” while the total debt load has reached “around US$300 million.”  Most of the financing for the airline's 13 Bombardier CRJ900s, which were acquired by Pluna under Leadgate's management, has been guaranteed directly by the Uruguayan state, while Export Canada provided guarantees for Pluna's aircraft purchases in 2010 and 2011 that were no longer covered by the Uruguayan state.

The Canadian airline holding company Chorus, which owns up to a 35% stake in Leadgate as well as Jazz, has the rights to acquire the remaining Leadgate shares. If this occurred, the holding company would have 30 days to reverse the decision to exit the stake in Pluna.

However, Chorus has been quoted saying that it has “no intention to invest additional funds,” according to local Canadian reports.

The source at the Uruguayan ministry of transport says, that it will “respect Jazz' [Chorus'] 30 day exclusivity period” to acquire the share package before beginning negotiations with other potential investors.

Uruguayan sources familiar with the process say that the government has contacted both Spain's Air Europa and Argentina's Buquebus, which owns Uruguayan ATR operator BQB Air.  However, Air Europa denies having any interest in Pluna, leaving Buquebus-BQB, which has an excellent relationship with the Uruguayan government according to reports, as a potential bidder for the Leadgate package.

A senior source at Buequebus' Buenos Aires headquarters expresses doubts that the carrier's owner Juan Carlos Lopez Mena “would want to pour US$30 million into a loss-making carrier and shoulder a more than US$200 million share in Pluna's debt load only to acquire an airline in a country in which he already runs an airline.”

However, Lopez Mena might want to help the government as his ferry and Montevideo port terminal concessions have proven vastly profitable. He has also repeatedly tried to become a major player in the airline market in the southern cone with several failed bids for Aerolineas Argentineas.

Another interested party could be one of the collaterals of another rich Argentine entrepreneur Eduardo Eneurkian who already manages Uruguay’s main airport Carrasco and has control over Aeropuertos 2000 which manages most of Argentina’s air terminals. -- BERNAMA-NNN-MERCOPRESS