- By Region
Catalonia’s dreams of running its own airline crashed over the weekend after the indebted Spanish region was forced to cut loose Spanair, its loss making domestic carrier, leaving thousands stranded in airports across the country.
Spanair, Spain’s fifth-largest carrier by passengers, will this week file for bankruptcy protection after grounding flights on Friday as a last-ditch attempt by the Catalan government to secure investment from Qatar failed.
An estimated 22,000 passengers have been affected by the collapse, and more than 2,000 employees will lose their jobs at a time when the country’s jobless rate last week rose to 5.27m, or almost 23 per cent.
Spanair, created in mid-1980s by SAS, the Scandinavian airline, was taken over by the Catalan state in 2009 as part of a drive by the region’s government at the time to secure the Barcelona El Prat airport’s status as an aviation hub to rival Madrid’s Barajas.
Spanair, which faced competition from pan-European low-cost airlines such as Ryanair, as well as Vueling, Iberia’s medium-haul subsidiary, racked up large losses and was dependent on vast cash injections from the Generalitat to stay afloat.
Catalonia, chafing under outstanding debts of €38.2bn, the highest of any of the country’s 17 autonomous areas according to the Bank of Spain, has been forced to implement austerity measures, and clashed with a central government threatening to impose harsh sanctions on overspending regional governments.
The collapse of Spanair, which lost €115m in 2010, had received €150m in funds from the Catalan government and the city of Barcelona since 2009, is likely to leave both institutions facing large losses.
Artur Mas, president of the Catalonian government, said that every effort had been made to save the airline, including the failed overtures to Qatar.
The airline had been in “a very advanced process of finding a financial partner,” Ferran Soriano, Spanair chairman, told Spanish state television, “but we were told by the regional government that it could not finance our operations any more, and that Qatar would not invest”.
SAS, which retains a 10.9 per cent stake in Spanair, on Friday night issued a profits warning, reporting that it had remaining exposure to Spanair of SKr1.8bn ($266m), and would write down outstanding debts of €165m related to the company.
In 2008 a Spanair flight crashed during take-off in Madrid, killing 153 passengers on board, and dealing a further blow to the loss making airlines fortunes.
Spain’s ruling Popular Party supported the decision to pull the plug on Spanair, arguing that the company had struggled on during the financial crisis while other sectors had suffered due to its public sector support.
Spain’s ministry responsible for transport said that it would consider taking legal action against Spanair which could result in fines of up to €9m for breaching its obligations to passengers.