The Sepi will have to authorize the possible purchase of the airline by Iberia and may “agree” on the appointment of the top executive
The Council of Ministers approved this Tuesday the rescue of Air Europa with the injection of 475 million euros of public money on account of the new solvency fund intended to support strategic companies that have been impacted by the COVID-19 pandemic. 19. The operation will be carried out by granting a participative loan of 240 million euros and another ordinary of 235 million, two instruments included in the regulation of the solvency fund.
“This is the first temporary backup operation” approved on account of this instrument, said the Minister of Finance and spokesperson for the Executive, María Jesús Montero, at the end of the Council of Ministers that approved the measure.
Like the rest of the companies that take advantage of this temporary public support, Air Europa will have six months to execute the two loans and a maximum term of six years to fully repay the funds it receives. Although the Ministry of Finance has not made public in its note the conditions to which the injection of public money is subject or the viability plan presented by the company, the Minister of Finance clarified, at the request of journalists, that the Government reserves the possibility of authorizing purchase and sale operations or possible alliances that Air Europa may develop “in this new configuration framework for aviation companies after the pandemic”.
A fundamental condition since Air Europa is awaiting its purchase by Iberia, an operation announced a year ago for 1,000 million euros, which has been postponed due to the pandemic while waiting to redefine its conditions, which include a significant reduction in the agreed price originally. Likewise, the Executive may appoint two directors to the Board of Directors of Air Europa and to “agree” on the appointment of the CEO.
The airline owned by the Hidalgo family is part of the Globalia group and in its best year, in 2018, it achieved a net profit of 50 million euros. In the current one, he predicts losses of more than 400 million due to the pandemic. With these figures, it is practically impossible for the airline to return public aid in 2027 on its own, and it must have the support of the IAG group, Iberia’s parent company, if it finally confirms its purchase, especially when air traffic is not expected to recovers until 2023 or 2024, according to IATA (International Air Transport Association) forecasts.
In this sense, Montero has limited himself to asserting that Air Europa meets all the requirements to receive the approved aid, since the crisis has caused an undoubted “impact” on the company, which has suffered important “negative results” that hinder its work “Strategic” and the provision of “an essential service to ensure connectivity in Spain” and give access to its tourist spots.
The Ministry of Finance explains that it has agreed to rescue Air Europa because it is a strategic company for Spain. “This airline provides an essential service to ensure adequate connectivity in Spain, both on domestic and international flights, by maintaining routes where its presence contributes decisively to guaranteeing an adequate supply, thus favoring users”, he assured in a press release.
The fund to support the solvency of strategic companies is endowed with 10,000 million euros, depends on the Ministry of Finance and is managed through a management council by the Sociedad Estatal de Participaciones Industriales (SEPI).