State-Owned Aerolineas Argentinas Buys 20 Jets from Brazil’s Embraer

Brazilian Embraer E 190 jet Argentina signed Thursday, May 21, a contract to purchase 20 mid range Embraer 190 aircraft from Brazilian manufacturer Embraer for recently nationalized flag carrier Aerolineas Argentinas. President Cristina Fernandez de Kirchner said these will be the first new aircrafts for Aerolineas in 16 years.

The agreement was signed at a ceremony in Argentina's Government House (Casa Rosada) and involved US$ 700 million, of which US$ 585 million are from a loan extended by Brazil's development bank, BNDES.

The first of the Embraer 190 jets, which seat up to 114 people, would be delivered to Aerolineas Argentinas next April 2010 and from then on two per month. The deal stipulates that future repairs on the aircraft must be carried out in Argentinean workshops.

"The fact that after 16 years, Aerolineas Argentinas is buying new planes isn't just economic news it's also about getting back some of our national pride," President Cristina Kirchner said in a speech to mark the signing.

The airlines, (Aerolineas and subsidiary Austral) which have a debt-load of about US$ 900 million, were plagued by strikes and cancellations before the state takeover. At the time, only 26 of their 85 aircraft were operating.

Earlier this year, the Argentine government announced it would also buy 12 planes from US manufacturer Boeing.

Aerolineas Argentinas and Austral Lineas Aereas dominate virtually the whole of Argentina's domestic market. After a bitter struggle with the Spanish group Marsans Aerolineas was taken over by the Kirchner administration with the support of the unions. Marsans complained that with frozen air fares, soaring fuel costs and striking unions the company was forced into bankruptcy.

According to the Buenos Aires press, Aerolineas is accumulating significant monthly operational deficits.

The contract signing ceremony was held in Argentina's Presidential Palace, and was attended by Argentina's President, Cristina Fernandez de Kirchner; the Minister of Defense, Nilda Garre; the Minister of Planning, Julio De Vido; the Secretary of Transportation, Ricardo Jaime; the President of the Aerolineas Argentinas/Austral Group, Julio Alak; and Brazil's Ambassador to Argentina, Mauro Vieira.

Embraer was represented by its Executive Vice President – Airline Market, Mauro Kern, and Vice President, Contracts – Airline Market, Eduardo Munhoz de Campos.

"We are very proud to premiere our E-Jets in Argentina and to participate in the renovation of the fleet of this internationally renowned airline," said Mauro Kern, Embraer Executive Vice President, Airline Market. "We expect to establish a long-term relationship with this important airline, supporting its operations with the modern and comfortable Embraer 190 jets."

The airplanes will be the AR (Advanced Range) model, which allows flights of up to 2,400 nautical miles (4,400 km), and will have a comfortable dual-class 96-seat configuration. Passengers will have available to them an onboard entertainment system with individual monitors.

Austral plans to use the EMBRAER 190 jets mainly to ramp up its frequencies on domestic routes, with the potential of opening new markets, thus allowing the airline to fly nonstop routes inside Argentina, as well as destinations in South America.

Parallel to and independently of negotiating the aircraft for Austral, Embraer and the Argentine government, through its Minister of Defense, signed a Memorandum of Understanding (MoU) in support of the development and technological enabling of Area Material Cordoba (AMC), for the purpose of supplying services and parts for Embraer aircraft in the future, according to market and competition practices.

MP/Bzz

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