The Spanish government has approved the rescue of the regional airline Air Nostrum, a subsidiary of Iberia. It will provide the carrier with 111 million euros from a special fund for companies affected by the COVID-19 pandemic.
Air Nostrum rescued
Last week, the Sociedad Estatal de Participaciones Industriales (SEPI) (a Spanish state holding company characterized as a sovereign wealth fund controlled by the Ministry of Treasury) approved the bailout of Air Nostrum.
Air Nostrum started operations in 1994. It is a regional airline based in the Valencian Community. In 2020, it experienced a 40% drop in sales and losses of 144 million euros due to the impact of the COVID-19 pandemic around the world.
The regional carrier belongs to the Iberia group and has a fleet of CRJ and ATR aircraft. According to ch-aviation data, Air Nostrum has 48 aircraft, including 11 ATR 72-600s and 37 CRJs (-1000ER and -200 sub-models).
The year before the pandemic, Air Nostrum had achieved a turnover of 539 million euros and employed more than 3,500 people (1,400 directly and 2,100 indirectly).
The Spanish government will provide Air Nostrum with €111 million from a special fund. Photo: Air Nostrum.
Why save Air Nostrum?
SEPI’s board of directors has agreed to help Air Nostrum and will finance the struggling airline through an equity loan.
The decision to help Air Nostrum was taken after an “exhaustive and rigorous” process of analyzing the company’s economic and legal situation, the impact it has suffered as a result of COVID-19, and the viability plan presented by the regional carrier.
Air Nostrum is also a key player in keeping the Valencian Community well connected. It operates around 180 daily flights on 65 routes across Spain and Europe, according to data provided by Cirium. Some of the routes it serves are classified as public service obligations.
In addition to commercial flights, Air Nostrum has four other business segments: management support and consulting services, aircraft maintenance, aviation training, and integrated crew management and planning.
The Spanish government has also rescued another Spanish carrier in the recent past, Air Europa. Photo: Getty Images.
Not the first Spanish airline saved by SEPI
The COVID-19 pandemic has particularly affected the Spanish airline industry.
SEPI has already released a millionaire fund to save another Spanish airline, Air Europa.
According to the Spanish news agency EFE, the Air Nostrum loan is the 22nd of those approved by the government from the SEPI fund, in which loans have been granted for a total amount of 2.3 billion euros. The Fund has 10,000 million euros and its mandate expires on June 30.
Discover more aviation news here.
SEPI mainly helped the tourism and transport segments, both in terms of number of companies and volume. Thirteen companies in these sectors received 1.5 billion euros.
The most significant aid of all those granted by the Fund was received by the airline Air Europa (475 million euros) in November 2020.
In November 2019, before the COVID-19 pandemic, International Airlines Group (IAG) and Globalia signed an agreement to acquire Air Europa.
Nevertheless, the crisis has heavily impacted procurement procedures, and two and a half years after the announcement, IAG is still awaiting approval from several European governments.
The Spanish government had to cash in 475 million euros to keep the airline alive.
Currently, Iberia is awaiting Spanish approval to raise 100 million euros (about 20% of Air Europa’s ownership) in new funds for the struggling carrier.
What do you think of Spain’s rescue of Air Nostrum and Air Europa? Let us know in the comments below.
Qatar Airways and Airbus remain at odds over the A350 case