The Spanish Government has approved the rescue of the regional airline Air Nostrum, an Iberia branch. It will provide the carrier with €111 million from a special fund destined for companies impacted 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 the Treasury) approved Air Nostrum's rescue.

Air Nostrum launched operations in 1994. It is a regional airline based in the Valencian Community. In 2020 experienced a 40% drop in its sales and losses of €144 million due to the impact of the COVID-19 pandemic worldwide.

The regional carrier belongs to the Iberia Group and has a fleet composed of CRJ and ATR aircraft. According to data by ch-aviation, Air Nostrum possesses 48 planes, including 11 ATR 72-600 and 37 CRJ aircraft (submodels -1000ER and -200).

The year prior to the pandemic, Air Nostrum had a revenue worth €539 million and employed over 3,500 people (1,400 directly and 2,100 indirectly).

Why rescue Air Nostrum?

SEPI's management board agreed to aid Air Nostrum and will fund the troubled airline through a participative loan.

The decision to help Air Nostrum was taken after an "exhaustive and rigorous" process of analysis of the company's economic and legal situation, the impact which it has suffered as a result of the 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 approximately 180 daily flights on 65 routes across Spain and Europe, according to data provided by Cirium. Some of the routes it flies are classified as Public Service Obligations.

Besides commercial flights, Air Nostrum has four other lines of business: management support services and consulting, aircraft maintenance, aeronautical training, and integrated crew management and scheduling.

Not the first Spanish airline rescued by SEPI

The COVID-19 pandemic hit the Spanish airline industry particularly hard. SEPI has already released a millionaire fund to save another Spanish airline, Air Europa.

According to the Spanish news agency EFE, Air Nostrum's loan is the 22nd of those approved by the Government with a charge to the SEPI Fund, in which loans have been granted for a total amount of €2.3 billion. The Fund has 10,000 million euros at its disposal, and its term expires on June 30.

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SEPI has mostly helped the tourism and transport segments, both in terms of the number of companies and volume. Thirteen companies in these sectors have received €1.5 billion.

The largest aid of all those granted by the Fund was received by the airline Air Europa (475 million euros) in November 2020.

In November 2019, prior to the COVID-19 pandemic, the International Airlines Group (IAG) and Globalia signed an agreement to acquire Air Europa. Nonetheless, the crisis heavily impacted the purchase procedures, and two years and a half after the announcement, IAG is still waiting for approval from several European governments.

The Spanish Government had to cash out €475 million to keep the airline alive. Currently, Iberia is waiting on the Spanish approval to raise €100 million (or about 20% of Air Europa's ownership) in fresh funds for the troubled carrier.

What do you think about Spain's rescue of both Air Nostrum and Air Europa? Let us know in the comments below.

Source: EFE, Cirium.