Uruguay Sets New Round of Bidding for Privatization of State Airline LADB Staff

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2-24-1994 Uruguay Sets New Round of Bidding for Privatization of State Airline LADB Staff

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Recommended Citation LADB Staff. "Uruguay Sets New Round of Bidding for Privatization of State Airline." (1994). https://digitalrepository.unm.edu/ notisur/11370

This Article is brought to you for free and open access by the Latin America Digital Beat (LADB) at UNM Digital Repository. It has been accepted for inclusion in NotiSur by an authorized administrator of UNM Digital Repository. For more information, please contact [email protected]. LADB Article Id: 56978 ISSN: 1060-4189 Uruguay Sets New Round of Bidding for Privatization of State Airline by LADB Staff Category/Department: Uruguay Published: 1994-02-24

According to spokespersons from Uruguay's state aviation company PLUNA (Primeras Lineas de Navegacion Aerea), since the government's announcement in January that a new round of bidding for the airline would be held in March, a total of eight foreign companies have expressed interest in participating in the auction. The government unsuccessfully attempted to sell PLUNA in September of last year. At that time, four foreign companies expressed interest: American Airlines, Spain's Iberia, Aerolineas Argentinas, and the Brazilian company VASP (Viacao Aerea Sao Paulo). But when the bidding actually opened, only VASP submitted an offer to the government, which was later rejected due to VASP's financial instability.

To attract more bidders for the auction in March, the government eased the terms of PLUNA's sale. In September, notwithstanding VASP's offer, the other three interested companies had specifically objected to clauses in the proposed privatization contract that would in effect give government representatives on PLUNA's board of directors virtual veto power over all decisions regarding the airline, even after the sale of shares to private holders.

The government is only selling off a minority of shares in PLUNA, with 51% of the company's stock to remain in state hands. Under the new contract proposal, however, those clauses would be completely eliminated, which should give the winning bidder greater control over decisions despite the government's position as majority shareholder. As a result, all three companies that expressed interest in September are expected to participate in the March auction. In addition, five other foreign firms will likely bid on PLUNA: Spain's Spanair, AeroMexico, Chile's LADECO, the Argentine firm LAPA, Brazil's VARIG. LADECO is especially interested, since that firm is aggressively expanding its operations throughout Latin America. A team of LADECO representatives visited Uruguay for a round of talks with PLUNA officials in February, and the firm is reportedly preparing a particularly generous offer to outbid its competitors. \

Once sold, PLUNA will be the first state company privatized under President Luis Lacalle's administration, since a national plebiscite in December 1992 effectively blocked the government's plans to rapidly sell off most state firms. In the plebiscite, Uruguayan voters had demanded that the government's privatization law approved by the Lacalle administration in September 1991 be overhauled to prohibit all state monopolies from being sold, and to force the executive to seek legislative approval for the sale of all non-monopoly businesses.

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