A report from the General Audit Office revealed the deficit that Aerolineas Argentinas and Austral generated during 2011 and the first half of 2012 and stressed that "if the overspending in pilots would cease then the end result would be $580 million instead of the actual $969 million.”

The "staff cost per ASO (seat per kilometer offered) is 1.7 times that of similar companies in the airline industry."

It’s important to point out that when the Audit Management compares this administration with others, it does it with the same design model used by Argentine Airlines back in their Business Plan of 2010-2014. They are LAN, AeroMexico, LATAM, South Africa Airlines and Air New Zealand.

Returning to the staff and more specifically on the pilots, on average Aerolineas Argentinas has 33.4 pilots per aircraft while competitors have 13.2. In total, the National Airline increased the number of flight technicians from 21 to 24 between 2010 and the first half of 2012.

According to the Collective Bargaining Agreement signed with the Association of Airline Pilots (APLA), airlines must have "a crew of aircraft of 20.5" and above. This stop "is 55% above that recorded by the other companies in the industry" and is a limitation when deciding on the addition of personnel to the fleet which, by convention, is already greater than necessary.

When analyzing Aerolineas Argentinas the AGN team concluded that, "by June 2012 with the amount of operating and observing the conditions of APLA signed with the collective labor agreement, the company needed to have 614 pilots and co-pilots." But staffing was 1004, 390 more than strictly necessary. This is one of the essential points that explain the high deficit of the National Airline.

Recruitment and distribution of aviation technical staff is inefficient. At the closing of the audit, "the company had 1365 pilots." Of these, "216 were incorporated Airlines in 2011 to work on a fleet that was deprogrammed in June 2012." These contracts "accounted for six new planes, planes that were never bought.”

On Austral’s side of the story, "23 pilots joined the staff for a fleet that suffered the same fate in April of that year."

Unions and Conventions

Added to this is that "the salary structure of the company is not designed to boost productivity of cockpit personnel." The current agreement provides several concepts based on guaranteed hours in the air that cause "the difference between a pilot flying or not is very insignificant."

In fact, in June 2012 of almost $ 50 million that was paid to pilots 60% belongs to hours not flown.

Between Aerolineas Argentinas and Austral are six unions with which 14 collective agreements were signed. This situation implies for the AGN a "constant negotiation and dispersion of payed staff."

As data highlights that "the liquidation of assets spreadsheet contains 760 items where the different bonuses, upgrades and modifications of the staff’s salary are recorded."

The Fleet

During the audited period the company carried out a restructuring of the fleet which resulted in "virtually the same number of planes even smaller, i.e., with less available seats." However, the auditors recognize that "the modernization of aircraft improves the image of the company."

On this point the AGN noted that "in the Business Plan there is no impact assessment of the renovation costs nor is it reported what the source of funding will be.”

Aerolineas Argentinas to the first half of 2012 had 31 operational aircrafts that increased availability of seats by 6%. But they had "26 deprogrammed planes.”

Of the 57 planes they had, 21 were owned by the company and 36 were under operating leases, something like a rent. Of these, 11 were decommissioned and for them a monthly fee of nearly $2 million dollars was paid. During the audit period incorporated the Airline incorporated 12 aircrafts.

For its part, Austral had 20 airplanes and reduced availability of seats by 28%. Ten were machines that were deprogrammed and of which 3 were in operational leasing for which a fee of nearly $200,000 was paid. The incorporation for this company was of 11 aircrafts.

On leasing the AGN added that "breached on several occasions the repayment terms contracts had to be extended generating more costs." As an example we can mention the case of the aircraft with registration LV-LV-ZEC ZZI that was returned 29 months later than planned.