Spanair calls for voluntary bankruptcy and prepares the mass layoff of its 2,065 workers

The Catalan airline has a debt of €474 million; €260 million of which is with its shareholders and the remaining €214 millions with providers, airports and social security. The Catalan Government has invested €140 million in the airline, split in loans given to the company and in Spanair’s capital. Spanair stopped all its activity on Friday evening because it could not find any additional funding. All the more than 12,000 Spanair passengers passing through Catalonia over the weekend found an alternative flight using other airlines.


January 30, 2012 10:39 PM

Barcelona (ACN).- Spanair has called for voluntary bankruptcy in court on Monday. The Catalan airline has declared a debt of €474 million. The debt corresponds to €260 million owed to the company’s shareholders and €214 million owed to providers, airports and Spain’s Social Security. The Catalan Government, which partially owns the airline together with an association of Catalan business members, has invested €140 million in Spanair’s capital and in providing the company with low-interest loans. The Catalan Finance Minister recognised that some of this money might be lost, although he hopes that not the money related to the loans.  Furthermore, the airline has announced a mass layoff affecting all the 2,065 workers of the company. The company’s board took the decision over the weekend, after flights were halted on Friday evening. That day, it was known that negotiations with Qatar Airways, which might have bought 49% of the Catalan airline, had definitely broken down. In addition, the Catalan Government refused to invest more money in Spanair. Facing the impossibility of finding additional funds, the company’s board did not see “any financial viability” for the coming months and took the decision to stop all the company’s activity that same evening, which meant the cancellation of all its flights from Friday at 22h (CET). Almost 23,000 passengers were affected over the weekend. Many found alternatives on other flights from other companies, which offered “rescue” rates. The more than 12,000 passengers passing through Catalonia have “all” been relocated, according to the Spanish Government’s Delegation.

Spanair’s board has started the judicial process of requesting a voluntary bankruptcy. They have done so quickly in order to avoid a necessary bankruptcy requested by one of the company’s debt holders, in which case Spanair’s board’s freedom to make decisions would be limited. However, the company’s pilots have already requested a necessary bankruptcy.

The pilots accuse the board of bad management

Meanwhile, Spanair’s pilots have requested the court their own bankruptcy file, in order to have the company’s current board taken out of the process. The Catalan airline’s pilots offered a press conference in Madrid and accused the company’s board of bad management. In addition, the pilots also stated that Friday’s chaos could have been avoided. However, the board had previously justified the decision to immediately stop flying after the first indications of bankruptcy because of “precautionary and safety measures”, as some employees had already started to abandon their positions on Friday evening, according to Spanair’s board. Nonetheless, the pilots accuse the company of “harming passengers, workers and providers” with the abrupt cancellation of all its flights.

The rest of Spanair’s workers, represented by their main unions announced they will organise demonstrations. They asked all workers to go to the company’s headquarters –located in L’Hospitalet del Llobregat, in Greater Barcelona– on Wednesday February 1st. That day the company will meet with workers’ representatives to start negotiating the conditions of the mass layoff.

The pilots have been the first to file a request for bankruptcy

The pilot’s union delegate in Spanair, Jaume Vicens, explained that the pilot’s request for bankruptcy has been filed prior to the company. Therefore, the pilot’s request should be considered first by the judge. In addition, four providers joined the pilot’s request on Monday. Among other complaints, 386 pilots have denounced that they have neither received January’s salary payment nor their bonuses from December and January.

All passengers in Catalonia have been placed on another flight

The Spanish Government’s Delegation in Catalonia has ensured on Monday through a press release that “all passengers” have been relocated on other flights and the situation is that of “total normality”. According to the press release, from Friday evening, the more than 12,000 Spanair’s passengers passing through Catalonia over the weekend have found an alternative flight using other airlines. 4,145 through Vueling, 5,000 through Iberia, 2,600 though Air Europa and 500 through Lufthansa, which like Spanair is also a member of the Star Alliance.

Spanair, Catalonia’s airline

Spanair was bought in 2009 by an association of Catalan private and public sector actors, to have a flagship airline based at Barcelona El Prat Airport and transform it into an intercontinental hub. That decision came after the Spanish Government, through the Spanish Airport Authority (AENA) and the partially-owned Iberia, had been prioritising Madrid Barajas over Barcelona El Prat for the previous 20 years, relegating the Catalan airport to a secondary position. There are two clear examples of this. Firstly Iberia concentrated all its intercontinental flights in Madrid, and it even closed most of its international routes from Barcelona, removing most of its planes from the Catalan airport and replacing them with a low-cost company called ‘Clickair’. Secondly, investments made at Madrid Barajas over the last decade tripled those made at Barcelona El Prat. Many actors in Catalonia, including the main economic and business powers, thought that the quickest and perhaps the only way to have intercontinental flights in Barcelona was to buy an airline and base it at Barcelona. Spanair was a cheap option, as it was in a difficult financial situation (SAS owned most of it and wanted to sell it) and it had a terrible accident at Madrid Barajas. In 2009, the operation was made. Currently, 84.69% of Spanair’s shares are owned by ‘Iniciatives Empresarials Aeronàutiques’, an association including the Catalan Government, Barcelona’s City Council and some other Catalan public and private sector actors. The Scandinavian SAS continues to own 11.6% of the airline and Spanair workers own the remainder of the shares.