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Argentina is moving to renationalize the troubled Aerolineas Argentinas -- which will add to the government's economic woes.

The Argentine government will submit to congress July 21 a proposal to renationalize Aerolineas Argentinas. With massive operating costs, capped flight prices and overwhelming debt, the company most certainly needs a bailout. Financially, the government cannot afford the bailout, but politically, the government cannot afford inaction on the matter.

Aerolineas operates about 80 percent of Argentina’s flights and employs some 9,000 people. The company was first privatized in 1997, when it was sold to Spanish company Iberia. Iberia, in turn, sold the company to fellow Spanish airline operator Marsans when the Argentine company went belly up in 2001. Constrained by price caps, Aerolineas has been unable to function effectively or cover its own costs. After years of labor disputes and a deteriorating financial situation, the Argentine government now plans to take over the beleaguered airline at an unspecified price.


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