BUENOS AIRES, FEB. 9 -- Argentina has announced that Scandinavian Airlines System (SAS) will buy 40 percent of the money-losing Argentine state carrier, Aerolineas Argentinas, for an undisclosed amount of cash.
The announcement Monday was the first step by Argentina to sell off parts of its portfolio of state-owned companies to private investors, a process sought by the nation's foreign creditors and consumers.
While only marginally profitable or even money-losing, the state companies control key sectors of Argentina's $71 billion economy, such as transportation and communications.
Argentine President Raul Alfonsin hopes an infusion of private capital and technology will make the economy more efficient while responding to demands by creditors for a reduction of subsidies.
The World Bank will determine the value of the airline deal -- to be concluded on May 15 -- after analyzing the carrier's balance sheet and operations, Argentine Public Works Minister Rodolfo Terragno said.
Another 9 percent stake in the airline will be sold to employees, leaving the Argentine government with a 51 percent holding.
The airline is the 40th largest in the world ranked by passengers carried, according to government data. Terragno had no comment on whether SAS will assume any of the ailing carrier's $1.477 billion of debt.
Also unclear is what control SAS will have over the company's other assets, which include valuable real estate holdings in Buenos Aires.
Anticipating domestic criticism of the deal from nationalists, including the armed forces, Terragno said the Argentine airline "will remain in our hands."
With SAS as a partner, Terragno said, the local carrier will have the resources to modernize its aging fleet of 33 aircraft. SAS also provides marketing muscle to grab market share from smaller rivals and new technology to cut operating costs, Terragno said.
The Argentine airline also can now exploit markets in Africa and Asia served by SAS, Terragno said.
SAS, in turn, gains access to markets throughout South America, where it is a minor player. SAS also is expected to benefit from increased traffic flow from its Argentine partner to the company's main hubs in Europe.
The December decision by European Community transport ministers to deregulate air routes has prompted SAS to seek strategic alliances with other carriers to survive an expected market shakeout.
The government hopes that the sale of a 9 percent interest in the airline to its 10,000 workers will help restore the carrier to profitability.
Foreign bankers agree. With most airlines of developing countries fully under state control for strategic and prestige reasons, "it's a gutsy way for Alfonsin to begin a public asset selloff," one foreign banker said.
More important, local investors said, is that Alfonsin appears willing to moderate his lifelong belief in the wisdom of economic nationalism.
They see the airline deal as the first sign that Alfonsin may abandon the politically sacred Argentine tenet that only the state can promote economic power and well-being.
Opinion polls show that thinking is shared by a majority who are fed up with government interference in the economy.
"The state has been nursing us all for a long time," a travel agency executive said. "It's time we left the bottle."