Mariano Recalde keeps track of flights from his office in downtown Buenos Aires.
By S.L. and Fermin Koop
Herald Staff
Herald Staff
Aerolíneas Argentinas President Mariano Recalde tells Herald the airline has too many workers
Aerolíneas Argentinas chief executive Mariano Recalde is tired of those who say the state-owned airline subsidizes international air travel, insisting to the Herald that more planes in the air help the company’s balance sheet.
Recalde does not hide his political leanings. His office is plastered with posters of Néstor Kirchner, Cristina Fernández de Kirchner, Juan Domingo Perón and Evita. It is in his office that Recalde dreams of ending the company’s persistent financial deficits as well as thinking up possible new routes the company could take on with a larger fleet of modern planes. Yet for now Recalde’s biggest headache of all is the unions, perhaps an ironic turn of events for a man whose father has historic ties to the country’s workers’ movement.
What has been the result of the company’s decision to start flying to New York again?
We’ve seen very good results in terms of ticket sales. It’s a high-quality product because we have new planes that always leave on time and offer a good service. We brought more people from the United States to Argentina than Argentines to the US. This is good news for us and for the country.
Are you planning to add more flights to other cities in the United States?
No, we are now stable with the flights to Miami and New York
Is the route to New York profitable?
All international routes make a positive contribution to our margins. Flying more allows us to decrease our deficit. The company doesn’t cover all of its costs but we have decreased the gap between costs and revenue a lot. No airline has grown as much as Aerolíneas Argentinas.
Are you thinking of adding new routes to other countries outside Latin America?
No, we aren’t. We called off the route to Oceania because Argentines don’t fly to Australia and Australians don’t come to the country. It was a flight used only by Brazilians and it wasn’t profitable. The only plane that could do that route was the Airbus 340, which is no longer manufactured.
And to other countries in Latin America?
Yes, to Ecuador which is the only country in the region we’re now missing. We also want to have more flights to the Caribbean. Other companies sell lots of tickets to that region. We’re working on a new network that we will be announcing soon.
When do you expect the company could start making a profit?
We wrote up a business plan at the end of 2009 that goes from 2010 to 2014. It has projections based on some factors we thought would remain constant but ended up changing. Wages and fuel rose much more than we thought and the volcano near Villa La Angostura forced us to cancel 4,000 flights. Our projections changed, as can happen to any company. But they criticized us for not fulfilling the plan so I’d rather not make projections. Now if all variables stay stable, we could reach a balance with 12 million passengers.
Several airlines have cut salaries and laid workers off recently. What is the situation in Aerolíneas?
Many, including TAM, GOL and LAN did indeed do that. We, as a state company, don’t use that variable to have better economic results. Aerolíneas has one of the highest labour costs in the world. The average is 20 percent and we are at 35 percent. The other variable that we don’t use is the flight network, replacing unprofitable flights.
Why?
When airlines are not doing well on a specific route, they cancel it and use the planes on more successful routes. Or they reduce frequency in the low season and then increase it again during high season. We can’t stop flying to La Rioja or Catamarca to sell more tickets to Iguazú, which is more expensive. We continuously increase the frequency of our flights.
Do governors ask for this?
Yes, all of them ask us all the time. But there’s no province that hasn’t seen an enormous increase in connectivity. Some didn’t even have flights and now have two per day, for example.
You’ve mentioned that Aerolíneas has more employees than it needs. Why?
We have many more employees than the rest of the airlines. It’s one of the reasons that explain why we can’t reach an equilibrium. Our labour costs are high and we can’t cut them. Other companies with the structure of Aerolíneas would have fired many people long ago. But we also have another problem. As we expand our operations, we need to hire more people in certain areas but at the same time we have more people than we need in other areas.
Can’t you transfer people from one area to another?
No, we can’t. We can’t send a mechanic from Ezeiza to handle luggage in Formosa or a pilot to do passenger check-in.
How many people have you hired since the state took over the company?
The staff grew 10 percent and operations rose 88 percent so productivity increased a lot.
Even if you don’t consider laying people off, how can you prevent workers taking advantage of that situation?
We have moments in which our staff is on our side and others when it seems workers don’t understand the effort the state is doing to keep their jobs and they ask us for unreasonable things. Like now, we are discussing wage increases and they are asking for a 45 percent raise even though they know other state workers received smaller increases.
Is there a union you have better relations with?
There are six unions in total and we talk with all of them but there’s a lot of irrationality. They are tough with us, even though we are doing things well. They behaved better under Marsans.
What do you mean by irrationality?
Besides the wage negotiation, there have been many examples. We caught workers stealing luggage so the police stopped them and they will now face trial. The union is opposed to their dismissal. They put up obstacles all the time. We had been working well with them but they have now taken on an irrational stance.
Is the company sustainable in the medium-term considering the scenario you’re describing?No, it’s not with this level of irrationality. We aren’t asking them to accept lower wages. But they need to think things over to get their relations with us back to normal.
What future do you see for the company after the 2015 presidential elections?
It depends on who wins. If somebody who wants to continue the current policies wins, I see a bright future. We have a business plan until 2020 and we have a plan to renew our fleet by 2018. We have already rented the new planes that will replace the old ones. Our idea is to have 83 planes in 2018 instead of the current 71.
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