Madrid to explore options to ensure Air Europa’s continuity
The Spanish government will “analyze various options” that have opened up following the announcement this week from IAG International Airlines Group that it was in advanced talks to suspend the proposed acquisition of Air Europa (UX, Palma de Mallorca), a representative of Deputy Prime Minister Nadia Calviño’s office told local media. This is all the more the case given the state loans already granted to the besieged long-haul specialist.
IAG and Air Europa’s parent company, Globalia, issued a joint statement on December 16 following the group’s announcement the day before, confirming that they had terminated their previous agreements and that the group will pay Globalia $ 75 million. euros ($ 85 million) as severance pay and compensation. However, IAG “has also reached an agreement with Globalia to assess, before the end of January 2022, alternative structures which could interest the two companies and offer significant advantages for their shareholders, customers and employees”. Both parties have agreed that the amount paid will be subtracted from any future purchase price.
The Spanish government, meanwhile, is studying an emergency plan for the carrier and will do whatever is necessary to ensure its survival, its spokesperson said. The Ministry of the Economy previously considered Air Europa “strategic for Spain due to its importance for the aviation and tourism sectors”.
As merger talks with Iberia are now frozen and the future uncertain, Madrid “wants to send a message of comfort to Air Europa employees, customers and suppliers. The government will analyze the different options available in this situation, with the aim of guaranteeing the continuity of activities and operations, ”said the Calviño office, quoted by the digital newspaper El Confidencial.
“The executive made its intentions clear from the first moment by providing support. Through SEPI and the ICO we have made a significant amount of financial resources available to the company, more than 600 million euros [USD679 million]”, the statement continued.
In November 2020, the Spanish sovereign wealth fund (Sociedad Estatal de Participaciones Industriales – SEPI) granted 475 million euros (US $ 537 million) to the ailing carrier, while at the start of the pandemic, the state bank Instituto de Credito Oficial (ICO) provided Globalia with a loan of around 140 million euros ($ 158 million). Globalia also currently owes around 800 million euros (US $ 905 million) to banks and suppliers.
“In this difficult environment for the air transport sector, the government will continue to work to strengthen the solvency of its companies, protecting adequate competition for the benefit of travelers and ensuring the proper use of public resources at all times,” concludes the communicated. “The government is constantly monitoring developments in the air transport sector to ensure the proper functioning of its services and operations and to facilitate the adaptation of airlines to the conditions created by the pandemic.”
Xavier Ramis, Director General of Ports and Airports of the Government of the Balearic Islands, told the Majorca Daily Bulletin that the State “will help the company as much as it can to ensure its continuity, because Air Europa is a company based in Mallorca. . which has always been committed to inter-island connectivity and links with the mainland and the European market.
For the government of the Balearic Islands, the airline is viable and the objective is to help it and thus maintain thousands of jobs at Globalia’s headquarters located in Llucmajor, he said, stressing: “We are a tourist destination and air connectivity is essential, so we will support Air Europa to restart its line of work in the current situation.
The Association of Travel Agencies of the Balearic Islands also stated that it was vital that “Air Europa does not disappear, therefore the competent authorities must do everything possible to maintain its activities, especially since it is acts of a strategic and fundamental airline for the Balearic Islands “.
Meanwhile, the European Commission issued its own statement on the matter on December 16, saying it “confirms that discussions with business and the corrective action plan proposed so far have not been able to resolve. respond adequately to the competition concerns identified by the committee “.
Executive Vice President Margrethe Vestager said her investigation “indicated that the merger would have had a negative impact on competition on certain domestic short and long routes within, to and from Spain. […] The remedies submitted did not fully address our competition concerns. Competitive transport markets provide connectivity with a wide range of affordable flights. This should be preserved when demand fully returns and travel resumes. “
Editorial comment: European Commission comment added – 12.17.2021 – 07:59 UTC