Air Transport World

Prospering under privatization. (airlines industry) (Company Profile)

SANTIAGO-Two years after being transferred to new owners, LanChile used September, 1991 as the landmark to celebrate victory in its first big battle for survival as an independent company. Between January and September, the carrier-privatization pioneer in Latin America-posted a $6.9 million operating profit.

The result was the best for an equivalent period in the airline's 62-year existence. Even more important was that during the same period of 1990, just months into private fife, the carrier lost $7.6 million. Accumulated loss for the year was more than $ 10 million. Bankruptcy was looming.

The things contributed mainly to the 1990 situation. One was in-house, a conflict among the airline's partners. The other was external-oil prices rapidly escalated with the Persian Gulf crisis, starting in August. "We usually paid 3.5 million in fuel bills monthly and then, during the Gulf crisis, there were times when we paid $5.5 minion," recalls finance submanager Alejandro Jerez.

The dream of aviation liberalization in Latin America was at risk. Chile had been the first country in the region to adopt an open-skies policy.

In September, 1989, Corfo-the Chilean entity in charge of state-owned companies-transferred LanChile to Icarosan, a local group backed by SAS, which won the bid for 51% of the airline's shares at $42.3 million. Latter, 30% of all shares were transferred to SAS through Icarosan in the name of Inversiones SAS Chile, a company incorporated for the occasion. …

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