Abrupt Collapse of Spanair: Spain’s Fourth-Largest Airline’s Surprising Shutdown Left 23,000 People Stranded Across Europe & Africa
Posted By Vicki McClure Davidson on January 30, 2012
The sudden collapse of Spain's Spanair Airline came without warning
The financial meltdowns and catastrophes in Europe continue to mount. This past Friday, Spanair, Spain’s fourth-largest airline, collapsed without warning.
An estimated 23,000 people were left stranded in various parts of the world after at least 200 Spanair flights were cancelled.
The Spanish government is reportedly going to take legal action against the airline for not giving proper warning about the imminent collapse.
The Catalan government holds a controlling stake in Spanair… imagine that.
Reported by Reuters, Spanair ceases operations, cites financial woes:
Loss-making Spanish airline Spanair ceased operations on Friday night, grounding all its airplanes after its owner, citing the country’s economic crisis, said it would not sink any more money into the company.
Earlier in the day a potential rescue plan for Spanair fell apart when Qatar Airways pulled out of talks to buy a stake in the airline, according to the Catalan regional government.
“It’s impossible for the Catalan government to provide new capital, that is what we have communicated to the company,” the Catalan government said in a news release, citing the economic downturn that has hit Spain, as well as the failed talks with Qatar Airways.
The Catalan government holds a controlling stake in Spanair along with private investors through the IEASA holding. The airline flies in Spain and elsewhere in Europe.
The Catalan and other regional Spanish governments are under enormous pressure to cut costs to help the central government reach ambitious deficit-cutting targets this year as the euro zone debt crisis looms over the country.
Spanair, Spain’s No. 4 airline, has struggled for some years to compete with the rising number of low-cost carriers operating in the country.
From Bloomberg, Spanair Collapse Puts Europe’s ‘Zombie’ Airlines on Alert:
Spanair SA’s collapse over the weekend after the withdrawal of state funding suggests Europe’s debt crisis may spur airlines from the Mediterranean to the Baltic to consider mergers or risk failure.
The first collapse of a scheduled European airline since the last recession comes as cash-strapped governments mull disposing of at least half a dozen other carriers in auctions pitting Qatar Airways Ltd., which had been in talks with Spainair, and other emerging-market bidders against Air France- KLM Group, Deutsche Lufthansa AG and British Airways parent IAG.
Governments are becoming reluctant to save ailing airlines as the debt crisis forces austerity programs in other parts of the economy. State investors in Stockholm-based SAS AB, Aer Lingus Group Plc of Ireland, Portugal’s TAP and the flag carriers of Poland, Hungary and the Czech Republic have all signaled plans to reduce direct support and seek new investors.
“Governments don’t have the financial wherewithal to support airlines in the same way as in the past,” said John Strickland, an aviation analyst at JLS Consulting in London. “Regulations requiring a level playing field have also made it tougher. It could put other carriers in a similar position.”
From BBC News, Spanair collapses, stranding 20,000 people:
Spain’s fourth-largest airline Spanair has collapsed, leaving more than 20,000 passengers stranded across Europe and Africa.
The Barcelona-based firm stopped operating on Friday and more than 200 flights were abruptly cancelled.
The Spanish government is taking legal action and said Spanair could be fined 9m euros (£7.6m; $11.9m) over the collapse.
In 2010, Spanair reported an operating loss of 115m euros.
The collapse comes after Qatar Airways stopped takeover talks, ending the prospect of further financing, and also reflects weak demand for air travel in Spain.
From NY Times, Spain Threatens Fine After Airline’s Quick Close:
MADRID — The Spanish government is set to take legal action against Spanair, a collapsed airline, for suspending its operations without proper warning, leaving about 23,000 passengers stranded or scrambling to reschedule weekend flights.
Ana Pastor, the Spanish development minister, said Saturday that the airline could be fined €9 million, or $12 million, for its abrupt decision to land its final flight on Friday.
While providing further evidence of the impact of the financial crisis on Spain and other ailing euro zone economies, Spanair’s collapse is also politically charged because the Barcelona-based airline was a flagship venture for the northeastern region of Catalonia, which has been seeking greater independence from Madrid. Since 2009, Spanair had stayed afloat with some €150 million of subsidies from the Catalan authorities.
Spanair’s closure came after it failed to convince Qatar Airways to form a tie-up that would have eased its funding shortage, according to the Catalan government. However, Spanair’s future was also under threat because of a pending antitrust decision by the European Commission, following a complaint by low-cost rivals seeking to declare the Catalan subsidies illegal.
Spanair was set up by the Scandinavian carrier SAS in 1986 as a charter airline offering connections via mainland Spain to the Balearic islands. In the 1990s, it tried to expand its route network to include trans-Atlantic services to the United States and Mexico, but the venture was never profitable.
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