STATE SOCIEDADES Decree 1591/89 Dispose partial privatization, with non-state majority participation, of Argentine Airlines.

Bs. As., 27/12/89

VISTO Law No. 23696 and Decree No. 1105 of 20 October 1989; and

CONSIDERING:

That it is necessary to jointly dictate the regulations to which the privatization of ARGENTIN AEROLINES SOCIEDAD OF THE STATE will be adjusted and its share in BUENOS AIRES CATERING SOCIEDAD ANONIMA and in the MAYORIST EMPRESS OF TURISTIC SERVICES SOCIEDAD OF THE STATE, ordered by article 9 of the aforementioned Act, in accordance with its inclusion in Annex I.

In order to ensure transparency in procedures, privatization shall be carried out through an international public tender, on the basis of article 18, paragraph 1 of Act No. 23,696 and its Rules, adopted by Decree No. 1105 of 20 October 1989.

That given the importance that the activity of ARGENTIN AEROLINEAS SOCIEDAD OF THE STATE has in the process of integration of the national territory and in the linking of national interests in the international order, as well as eventually in the national defense, it will be necessary that the majority of the social capital that ensures the control and direction of the Company be in the hands of the State and Argentinian persons, that comply with the requirements set forth in Article 99 of the Aeronautical Code.

It must ensure a state participation in the social capital of the new society that allows it to efficiently represent in the governing bodies of the same the public interests at stake, contemplating the powers reserved by the State in the statutes of the society to preserve them.

In particular, the Participated Property Programme should be made available to enable the intervention of the Company ' s staff in its administration to benefit from its results (articles 21 to 40 of Act No. 23.696).

Particular consideration will be given to offers that, among other characteristics, better contribute to the complementation of regional and intercontinental aircraft.

That, in order to ensure the necessary efficiency in the activity of the new society, as well as the proper development of the services to be provided in the domestic and international order, particular importance will be attached to the plans of action that the offerors present and to the constitution of the managerial leadership proposed is proposed according to the legislation in force, with Argentine specialists, without prejudice to the eventual participation of foreign partners.

That the privatization of the Company should not affect the collective labour agreements in force in ARGENTIN AEROLINEAS SOCIEDAD DEL ESTADO nor the union framework and the rights in the field of provisional and social work should be avoided negative effects on the employment or loss of jobs, in the framework of an efficient productive function.

In accordance with article 10 of Act No. 23,696, the national trade air transport policy must be ratified by excluding rules that prevent effective demonopolization and a reasonable deregulation of the activity.

That in order to guide the preparation of the solicitation documents, it is necessary to determine in this Decree the modalities that the offerers may use for the purchase of the actions.

That prior to the public tender to be made, the legal character of the current ones must be transformed TURISTIC SERVICES SOCIEDAD OF THE STATE AND COMPANY MAYORIST OF TURISTIC SERVICES SOCIEDAD OF THE STATE, in accordance with the present decree, to resolve the modalities with which this transformation will be carried out.

That for clear reasons of economy and speed, the assessment of ARGENTIN AEROLINES SOCIEDAD OF THE STATE that took place in 1987 should be considered.

That the present measure is in exercise of the powers that the NATIONAL EXECUTIVE POWER is governed by articles 6, 11 and 67 of Law No. 23,696.

Therefore,

THE PRESIDENT OF THE ARGENTINA NATION

RIGHT:

Article 1 . PRIVATIZATION. Dispose the partial privatization - with non-state majority participation - of ARGENTIN AEROLINES SOCIEDAD OF THE STATE. The same will understand the rights over the totality of the social capital of the MAYORIST OF TURISTIC SERVICES SOCIEDAD OF THE STATE and the participation on the CINCUENTA and CINCO per cent (55%) of the social capital of BUENOS AIRES CATERING SOCIEDAD ANONIMA.

Art. 2o . INTERNATIONAL PUBLIC LICITATION. Order the selection of the acquirers of private participation in the social capital of the future anonymous company "AEROLINEAS ARGENTINAS S.A." through the international public tendering procedure.

Within the TREINTA (30) days after the validity of this Decree, the MINISTERY OF ARTWORKS AND PUBLIC SERVICES shall make the folds of bases and conditions, in accordance with the guidelines set out in Law No. 23,696, its Regulation and this Decree. This ministry will call for tender within the TEN (10) days after the approval of the folds. The award and transfer of the future anonymous company to the purchasers shall be made within the time limit of NOVENTA (90) days from the date of the invitation to bid.

The tendering procedure shall deal with the Ministry until the pre-adjudication, and the award by decree of the NATIONAL EXECUTIVE POWER shall be resolved.

Art. 3o o EXECUTION. Instruct the MINISTERY of PUBLIC WORKS AND SERVICES to provide for the realization and/or preparation of the following measures, based on their own powers and those delegated by this act in accordance with article 67 of Law No. 23,696:

1o) Transforming ARTGENTIN AEROLINES SOCIEDAD OF THE STATE and MAYORIST EMPRESS OF TURISTIC SERVICES SOCIEDAD OF THE STATE, into anonymous societies to be called ARTISTIC AEROLINES SOCIEDAD ANONIMA and OPERADA MAYORISTA OF TURISTIC SERVICES SOCIED ANONIMA, respectively, which shall be governed by the provisions of Chapter II, Section V, articles 163 to 307 of Law 19.550 (T. 1984) and amendments.

The contract of the new companies will begin to govern with respect to third parties since their registration, after the approval of their social statutes, once the international public tender is adjudged.

The statutes of ARGENTIN AEROLINES SOCIEDAD OF THE STATE shall be proposed by the offenders, the State, in the solicitation documents, reserves the power to propose to the pre-adjudicators the clauses of the same that may affect the public interests at stake, as well as to approve their subsequent modifications by Decree of the NACIONAL EXECUTIVE PODER.

2nd) Transfer to AEROLINEAS ARGENTINAS SOCIEDAD ANONIMA the rights and obligations of ARGENTIN AEROLINES SOCIEDAD OF THE STATE, derived from its designation as a Flag Airlines - pursuant to Article 8 (3) of the present- and the concessions, authorizations and other licenses concerning its activity.

With regard to the other obligations and rights that the present State Society may acquire, until the time of its transfer, the fold of bases and conditions shall determine which of them and under what conditions they shall go to the new society.

3rd) Establish in the bases of the tender the amount and conditions of the external indebtedness contracted by AEROLINEAS ARGENTINS SOCIEDAD OF THE STATE, which will be assumed by the State without prejudice to the alternative solutions that the offerers might propose, consisting of the total or partial absorption of such indebtedness.

4th) Consider the valuation of ARGENTIN AEROLINES SOCIEDAD OF THE STATE that was carried out in 1987, for reasons of economy and speed. MINISTERY OF ARTWORKS AND SERVICES PUBLICS shall subject the above-mentioned taxation to the analysis of the NATIONAL BANK FOR DEVELOPMENT, in order to verify whether the provisions contained in Act No. 23,696 have been met.

5th) Establish for the Participated Property Programme to be proposed by the offerors, the following requirements and procedures:

(a) The participating employee ' s status shall be recognized to any person linked to the society by a labour contract concluded under the Labour Contract Act, which is covered by a collective agreement and which has job stability.

(b) The individual adherence of each employee to the program will be expressed within the period of NOVENTA (90) days from the registration of the company and, subsequently, at the time each employee acquires job stability.

(c) When the employment relationship ceases for any reason, the share of shares shall be transferred to the rest of the participants in the manner established by the General Transfer Agreement provided for in article 37 of Law No. 23,696.

Art. 4o — STATUS. Offerers shall propose the statutes of the new society, with all the particular clauses necessary for their administration, including:

1o) The division of social capital into classes of actions, one of which shall belong exclusively to the State and another to the participants in the Participated Property Programme.

2nd) The structure of the Participated Property Programme that is proposed, with an indication of the amount of shares and/or participation bonds that are expected to be delivered to the employees of society under article 230 of Law No. 19.550 (t. 1984) and its amendments.

3rd) The special majority that, if any, are required for certain decisions of the assembly and the directory, aimed at providing adequate protection to the interests of the various kinds of shareholders.

4th) The rules that ensure participation in the directory of private shareholders, the State and those representing the participants of the Participated Property Programme, by choosing directors by categories of shares.

5o) The powers of State representatives to protect the public interests at stake, which should be determined in a restrictive and limited manner to essential aspects, in order not to affect the freedom of administration and direction of the new society.

(6) The other conditions relating to the protection of the public interest included in the solicitation documents.

All these clauses shall be subject to the modifications proposed by the State to the pre-adjudicators, in exercise of the authority assigned to it by article 3, paragraph 1, last paragraph, of this Decree.

Art. 5o . PLAN de ACCION. The offerors shall submit a five-year plan of action, divided into annual plans, which shall include the internal and international air transport services to be carried out by the Company during that period and the related activities, as well as their possible financial and financial results, including the investment plan, especially those related to the expansion of the operational capacity of the company.

Art. 6th . EVALUATION. The evaluation of such a plan, the specialization and experience demonstrated in the activity, in the country or abroad, by the staff who will integrate the top management of the Company, will be taken into account in order to select the most suitable offer, as provided for in article 18 of Law No. 23,696.

Special emphasis will also be placed on this assessment on the forecasts made by the offenders in the respective schemes regarding the effects on jobs and jobs, within the framework of an efficient productive function, as required by article 41 of Act No. 23,696.

The plans proposed, as far as the administration of staff is concerned, may not affect labour agreements, the union of workers, or the rights in the field of forecasting and social work (articles 42, 43 and 44 of Act No. 23.696).

Art. 7o . ADJUDICATION. For the purpose of selecting the most desirable offer, in accordance with article 18 of Act No. 23,696, it should be considered the best to ensure:

1o) The Company ' s participation in the process of integration of national territory and the linking of national interests in international order.

2nd) The complementation of the regional and intercontinental aircraft.

3rd) Their eventual use for the purposes of national defence.

4th) The demonopolization of internal air transport services.

5o) The availability of the necessary technological knowledge for the most efficient management of the company.

These variables will not be exclusive of offers that do not contain them and should only be taken into account in the evaluation, when analysing the benefits that each offer can generate for public interests.

Art. 8o . DESMONOPOLIZATION AND DISREGULATION. For the purposes provided for in article 10 of Act No. 23,696 and its regulations adopted by Decree No. 1105 of 20 October 1989, amend the rules of Act No. 19,030 regulating the activity of aerocommercial transport, both in relation to international and internal services, except as provided for in the following paragraphs:

1o) Exclude the supply reservation that, in favor of ARGENTIN AEROLINES SOCIEDAD OF THE STATE, establishes article 32, subparagraph (b), of Law No. 19.030.

2nd) Exclude national air carriers performing first-level internal transport services and international services from the assistance measures specified in section 5 (d) of Act No. 19.030. Consequently, the transporters of this level, including the society whose privatization is provided for in this Decree, shall not receive guarantees or other financial guarantees from the State.

3rd) The folds will establish the terms and conditions relating to the rights derived from the designation of ANONIMA ARGENTIN AEROLINES as a Flag Airlines.

Art. 9th . Contact the Bicameral Commission established by article 14 of Law No. 23.696.

Art. 10th . Communicate, publish, give to the National Directorate of the Official Register and archvese. . MENEM. . Julio I. Mera Figueroa. . José R. Dromi. . Antonio E. González.