The coronavirus crisis has forced countries all over the world to inject large amounts of money into strategic sectors that have found themselves on the verge of collapse.
One of those sectors is the airline industry. Spanish carrier Plus Ultra Líneas Aéreas has obtained a €53 million package from SEPI, a state-owned industrial holding that acts as a sovereign wealth fund.
The Madrid-based company has now become the second national airline to receive public help after Air Europa secured €475 million last November to prevent it from bankruptcy. However, Plus Ultra’s case has been widely doubted by many experts as the unprofitable airline represents just a tiny portion of the state’s air connectivity – less than 1% in 2019 according to AENA, the Spanish airport operator.
Plus Ultra was founded back in 2011 by Fernando González Enfedaque and Julio Miguel Martínez Sola, former owners of defunct Air Madrid that collapsed in 2006. Although it took the airline 5 years to get its Air Operator’s Certificate (AOC), its debts already amounted to €3.5 million before it even started to fly its first 2 Airbus A340-300’s (previously with Air France).
As the name itself suggests, the aim of the company was to connect Spain with the land “beyond” the ocean, making reference to the American continent and more particularly to Latin America.
Plane tickets were then sold at very competitive prices to Peru, Ecuador and Venezuela, while 25% of its flights were destined for charter operations. This model prompted the purchase of 2 Airbus A340-600s in November 2019 (previously owned by Etihad Airways) as passenger numbers significantly increased over the years. In 2019 the airline carried a total 156,139 travelers, comparing to just 99,885 in the previous year.
47.2% of the company belongs to Venezuelan businessman Rodolfo José Reyes Rojas, a factor that majorly contributed to the airline’s operations as it focused on routes to Caracas from Spain’s capital Madrid and Tenerife North Airport, in the Canary Islands.
In this sense, such participation provoked some criticism when the rescue program was announced as strong allegations suggested an indirect influence of Nicolas Maduro’s government in the airline, a regime that is continuously rejected by the conservative opposition in the Spanish house of representatives.
Truth is, Plus Ultra’s figures do not entirely justify the cash injection as it does not really play a crucial role in the national aviation sector.
Its fleet consisting of 4 Airbus A340’s cannot really compete with Iberia’s 127 and Air Europa’s 42 aircraft – let’s not forget the latter’s recent acquisition by Iberia at a discounted €500 million – airlines that combined could cover the routes served by Plus Ultra.
In addition, the 345 workforce – 65% of which are still in temporary labor regulation program – wouldn’t either represent a major hit for the economy, and although the company experienced a substantial growth in the previous years to the pandemic, it didn’t really obtain any profit since its birth in 2011, recording an accumulated net debt of €10 million.
Break-even point was expected to be surpassed for the first time in fiscal year 2019- 2020, the company had noted.
Plus Ultra’s President, Fernando Garcia Manso, has responded, as quoted by “elmundo.es” to the accusations regarding the airline’s ambiguous viability. He stated: “The fact that we are a small airline does not mean that we are not worthy of such aid”. He has also avoided any comparison with Air Europa’s €475 millions and defended its “strategic value as part of the touristic sector”.
As such, María Jesús Montero, the current Treasury Minister has also stressed the strategic relevance of the company as part of the aviation industry that greatly contributes to the tourism and, therefore, to the overall economy.
As a result of the signed conditions, Plus Ultra will now have 7 years to return the totaling €53 millions which could be only destined to cover the losses originated by the pandemic, and not those previously accounted.
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Source: https://aeronewsx.com/plus-ultra-to-receive-e53-million-from-spanish-government/?utm_source=rss&utm_medium=rss&utm_campaign=plus-ultra-to-receive-e53-million-from-spanish-government
