UNCLAS BUENOS AIRES 001130

SIPDIS

SIPDIS

WHA/EPSC FOR ROBERT SCHWARTZ
EB/TRA FOR JEFF HORWITZ
EB/TRA/OTP FOR BIRD MATTINGLEY
FAA FOR CECELIA CAPESTANY

E.O. 12958: N/A
TAGS: EAIR ELAB ECON AR
SUBJECT: AEROLINEAS ARGENTINAS, UNIONS SIGN SALARY AGREEMENT

REF: BUENOS AIRES 470


1. Senior managers of Spanish-owned Aerolineas Argentinas
and leaders of the unions representing the airline's pilots
(APLA) and mechanics (APTA) signed an agreement on pay
increases on May 15. Representatives of the airline have
agreed: to increase pilots' and mechanics' base salary by 19
percent; to maintain the so-called non-remunerative amounts
(i.e., compensation not subject to income and social taxes)
which the airline began to pay at the conclusion of the
December 2005 strike; and to provide a 1 or 2 percent
differential for seniority. The 19 percent salary increase
will also be extended to the unions representing the
airline's co-pilots, navigators, and crews. The agreement
also includes a requirement that APLA and APTA pay ARP 10.5
million in fines that the Ministry of Labor imposed for not
providing the minimum required service during the November
2005 strike (see reftel). The pilots' and mechanics' unions
also agreed to maintain "social peace" (i.e., no further work
stoppages) until March 2007.


2. Members of APLA and APTA had demanded 45 and 75 percent
salary increases, respectively, throughout the negotiating
period. Aerolineas Argentinas Director for Corporate
Planning Daniel Burlas told Econoff that the airline's
negotiating team walked away from the salary discussions two
weeks earlier when "it became evident the unions had no
genuine interest in reaching a mutually acceptable
conclusion." Press reports on May 16 indicate that President
Krchner had ordered Labor Ministry officials mediating the
negotiations "to protect the airline's employees." Kirchner
also ordered that the final settlement "allow the airline to
fulfill its service obligations to avoid damages to the
thousands of people who use the service to travel within and
outside the country."

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Comment
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3. President Kirchner may have authorized Labor to implement
the fines totaling ARP 10.5 million on APLA and APTA as a
disciplinary measure to discourage these unions from
initiating work stoppages that might strand thousands of
passengers as they did in December 2005. The agreement
formalizes the fines which had been discussed but not imposed
during salary negotiations reported in reftel. End Comment.


4. To see more Buenos Aires reporting, visit our classified
website at: http://www.state.sgov.gov/p/wha/buenosaires.< /a>
GUTIERREZ