Buenos Aires  - Argentina's Senate Wednesday voted 42 to 21 to approve the nationalization of the financially troubled airline Aerolineas Argentinas and its regional subsidiary Austral, taking another step in a project that has been under discussion for months.

The vote follows similar approval by the lower Chamber of Deputies on December 3.

Both airlines are owned by the Spanish travel conglomerate Grupo Marsans, which has already signalled its intention to fight the takeover in court.

At issue was not the return of the airlines to national ownership, which was basically approved in September, but rather the price to be paid.

The State Secretary for Transportation, Ricardo Jaime, put a value of only one peso on the two airlines, saying Aerolineas alone has debts of 890 million dollars. The National Court of Appraisal has given the company a negative value of 622 million dollars.

Marsans is demanding 450 million dollars.

Aerolineas was owned by the Argentine government 18 years ago before being privatized, but years of financial crisis have grounded nearly 50 per cent of its fleet for lack of maintenance.

Since July, the government has been financing both airlines, which provided money for spare parts and reduced the number of late departures due to aircraft maintenance.

Aerolineas and Austral control 80 per cent of the domestic market. Aerolineas was founded in 1950 by the state and remained a state property until 1990, when former president Carlos Menem sold it to the Spanish airlines Iberia. Many Argentinians blame the Spanish company for ruining the company on purpose.

Despite improvements in service since July, many travellers try to avoid flying the two airlines if at all possible.

The move to re-nationalize Aerolineas follows an effort earlier this year by the government to takeover 23 billion dollars in private pension funds. Part of the money will be used in a construction stimulus programme to help fight the economic downturn. (dpa)