What in its day was a saving parachute for Air Europa it is turning to stone on its wings. The €475 million with which the Government saved the airline from the Hidalgos going bankrupt by granting two loans in November 2020 are now being a stone in the wheels because, due to the rise in interest rates, the subsidiary of Globalia start paying interest up to 10% to the State Company of Industrial Participations (SEPI).
According to financial sources, Air Europa has already communicated to the body dependent on the Treasury the need to renegotiate the conditions of the two credits for 240 and 235 million euros that he perceived when the pandemic grounded most of his planes. The first, with a participatory nature and convertible into shares, has a growing interest rate, which this year will reach 10% and in 2024 it will be even higher. The second, ordinary, is fixed, with a 2.5% cost plus the Euribor, so it is also close to 6%. A financing first comfortablesince the principal does not have to return it until end of 2026but with interest rates that are currently around 9% in the case of the participative and that will exceed 10% at the end of the current year.
The Hidalgos want to renegotiate with the Government the interest rate of both loans
This cost makes it even more difficult for Air Europa to take off, which last year achieved record revenue with the same number of aircraft as before the pandemic, but again suffered slight operating losses. He high price of kerosenewhich came to exceed 120 dollars, and the payment of the rents of the aircraft, to whose “lesores” he owed about 300 millionprevented the Mallorcan group from returning definitively to the benefits.
The company daily invoice between 10 and 12 million, a historical figure, due to the strong demand for destinations on the other side of the Atlantic. The group has experienced the best January in its history, a traditionally bad month for the sector because it is after the Christmas holidays and it is very cold. already have one 400 million box, as assured by its president, Juan José Hidalgo. But their financial obligations they are still demanding. For this reason, the Hidalgos want to renegotiate with the Government the interest rate of both loans, considering that the improvement of their economic situation it would allow them to get loans at a lower price today.
The situation is striking, since on the board of directors of Air Europa, in addition to Juan José Hidalgo and Miguel Ángel Sánchez, a man he trusted, is made up of three executives appointed at the proposal of SEPI. Is about Jesus Nuno de la RosaCEO since last summer; José Angel Partearroyo, and Juan Manuel Bujía. According to other sources, the request to the Government is fully supported by De la Rosa, the former president of El Corte Inglés and head of the travel division of the holdingwhich was named precisely by SEPI.
midair fusion
The need to renegotiate with the State the conditions of the participatory loan is evident because, despite this good start to 2023in the sector it is discounted that the paralysis of the economy It will end up affecting tourism. And Air Europa is also highly conditioned by the evolution of oil prices, as it still does not have guarantees to provide coverage and ensure a minimum fuel price. A situation that is similar for other competing companies, such as Volotea and Air Nostrum, which also received bailouts from the State.
The next agreement between the Hidalgos and International Airlines Group (IAG) to merge Air Europa as Iberia It would not solve any problem in the short term, since the closing of the operation will take at least one year until the European Commission determines whether to approve the integration in the event that it does not observe competition problems. In December, Brussels botched the transaction estimating that it would be detrimental to users despite the concessions o remedies proposed by IAG regarding the assignment of routes to third parties.
Sources close to the negotiations indicate that, if at that time, with the planes on the ground due to the covid, Europe did not authorize the integrationNow, with the sector in full swing, Iberia should be very generous to get the government approval.
What in its day was a saving parachute for Air Europa it is turning to stone on its wings. The €475 million with which the Government saved the airline from the Hidalgos going bankrupt by granting two loans in November 2020 are now being a stone in the wheels because, due to the rise in interest rates, the subsidiary of Globalia start paying interest up to 10% to the State Company of Industrial Participations (SEPI).