Thursday, 5 November 2020

Spanish government approves massive €475 million aid package for Air Europa

On Tuesday of this week, the Spanish government approved a massive €475 million / £427 million bailout aid package for struggling airline Air Europa 

This aid package includes a regular loan of €235 million and an equity-backed loan of some  €240 million according to a news report from Reuters, following a government press briefing. The airline would then have up to six years to pay back the loans in full. 

As a result of this deal,  the Spanish authorities will now have a say on the proposed sale of Air Europa to International Airlines Group,  which already owns the Spanish airlines Iberia, Vueling, and Air Nostrum.  How the government would be involved in that deal has not yet been explained, however, spokesperson Maria Jesus Montero said the government "reserved the right to give an opinion and decide criteria" over the deal.  

It is understood that IAG wants to drastically reduce the €1 billion price tag for Air Europa it agreed to pay last November when the takeover deal was first orchestrated, prior to the global pandemic that has shrunk ait travel demand by over 80%.

Montero also said the government would have input on staff redundancies and senior management's remuneration. "In the case of Air Europa, the impact of the pandemic ... is evident, due to the drastic reduction in air traffic caused by reduced mobility and fewer tourist arrivals,"

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