Carlos Bertomeu (València, 1963) has become a prophet of intermodality and leads by example. He chairs the regional airline Air Nostrum and Ilsa, the promoter consortium of the third operator of the AVE in Spain, which will soon begin operating under the iryo brand.
What does the nose tell a passenger transport entrepreneur: is there a recession in sight or not?
Unfortunately, yes, but it should not be over-staged. As the previous crisis showed, there is no economic policy that can deal with all consumers thinking that it is going to go wrong. This is going to be a crisis in which people are going to have less money in their pockets. Therefore, a recession is coming that, if we do not magnify it so that it does not affect consumer perception, maybe it is a crisis, which, due to the causes that originate it, such as inflation or the war in Ukraine, will be measurable. I hope it’s short.
The summer has been quite good for tour operators, with balances already very similar to those prior to covid. What will happen in the sector in the coming months? Will the trend continue or will it go backwards?
The summer has been spectacular in income because there was contained demand. Is that income going to translate into better results for companies? Unfortunately, no. In the case of the airlines -in the ship and the train, less, and in the hoteliers, also a lot-, the rise in costs caused by the war has eaten everything. Fuel is worth twice and a half and is the second largest expense item for an airline. How long is it going to last? One part responds to the attitude of the consumer, to say that ‘for what I have suffered, take my dance away’, it also responds to a contained saving not spent in the pandemic. That saving, however, is finite, especially when people have to spend more because prices go up. That would not substantiate it. The other, the explosive effect of the covid, I don’t know how to measure it. September has been just as strong in demand, similar to 2019. About October I have no idea. It may be that we end the year with strong demand.
Did you see Air Nostrum in danger in the worst of the pandemic?
Absolutely. I saw Air Nostrum, Air France, American Airlines in danger. An airline with no revenue is surely one of the most efficient cash-eating machines. We spent months without income. We are a company of 50 million expenses per month. If I have no income… We were healthy, we had fifty-odd million in cash and no cancer. We were a financially healthy company and in the first month we ate the entire box. And no income.
The 111 million SEPI aid arrived in May 2022, when the tourism market had been fully reactivated. You arrived late? Have you used them to capitalize the company?
The ERTEs were good, they kept the talent; In the United Kingdom, when they went to reopen, they did not have porters or hostesses, and the ICO credits were guaranteed by the State. We asked for 130 million and in the year we had eaten them. When it is seen that it does not last a year, but more, a second measure comes out, which is already more structural than the guarantee and which were the European financing funds for companies of last resort. This from SEPI, in my case at least, took a long time from the time we requested it until they gave it to us. And we were the paradigm of the strategic companies for which that fund was created. It took fifteen months. That’s where I got very nervous. I couldn’t pay. In the financial world, credibility is a degree. As much as people say that money has no face or eyes, it is not true. Here, the exception caused me to do things I shouldn’t have done, which take their toll and eat away at one’s credibility. In the end, they gave it to me. Was necessary. There, my only criticism, which is not linked to the diligence of the SEPI structure, but to the context, was the time. But, well, the money arrived and I told people, I’ll pay you 50% and with the rest we’ll clear things up. And after cleaning that up, renewing guarantees and credits, in the end, of course, I recapitalized. I asked that the entire loan be participative, because, for accounting purposes, it counts as your own resources. If I do not strengthen myself in my own resources, I would be in cause of dissolution.
A year ago, he reshuffled the council. The founders of the Valencian Infertility Institute (IVI), José Remohí and Antonio Pellicer, left, and the former CEO of Barceló Hotels, Javier Abadía, entered. Are there any more changes planned?
Not for the part that touches me, but SEPI, which is a great actor at risk, and is already a highly relevant shareholder, can appoint directors. It is not yet defined how that ends and for now what they have said is that the management understands it as immaculate. If in the end a director from SEPI forms part of the council, then he is welcome.
There has hardly been a concentration of airlines despite how badly all the companies have had it. Why?
Because it’s very difficult. In a merger there has to be someone who buys you or an exchange equation. In the latter case, the example is IAG, where there is a newly created company above, which receives British and Iberia. It is not a merger, each one has its license and its business. The concentration has to follow that line more than for purchases, because for that you have to have money to buy and we have remained stiff, we all owe an animal. Also, the only reason they haven’t closed [muchas aerolíneas] It is because SEPI and ICO have arrived from each country and those European funds explicitly prohibit you from using the money for companies outside the perimeter. If they have to be done, it is through corporate operations to join from above, but making an exchange equation between two companies with negative own resources is very complicated.
How is the operation with CityJet going?
Very well. It was done and it was imminent. When the covid crisis arrives, everyone goes home. It was not a purchase, but an IAG from another dimension. I have been working intensely for four months. We continue to think that this sector, that of the regional airlines, which has not yet been concentrated, has to be concentrated in the same way that the large airlines have been, so that we can continue living through economies of scale. Now, we already have an understanding that I hope will materialize in the coming months.
Air Nostrum’s subsidiary, Plysa, specializes in putting out fires. Have you had a lot of work this summer?
Yes, a lot, unfortunately. The company was born to extinguish fires by aerial means, which is where I was strong, and now, [vamos a] everything around. There is a lot to be done if we could consolidate things like drums that make chains of fire retardant or drones that can monitor and help forest rangers prevent fires. Unfortunately, the firefighting sector is not going to stop growing.
What is Air Nostrum doing for sustainability, now that the sector is accused of being a major polluter?
All we can. Since we were born we have replanted trees at our expense. We act to reduce paper consumption. When biofuel technology arrived, we got into it. Airlines have reduced consumption per passenger by 80%. Mainly, we require manufacturers that the engines reduce consumption. What happens is that the business has increased a lot and aviation has become mass transport. Although the consumption per kilometer has been reduced, as there are many more passengers and kilometers, the total volume has increased. Even so, we are 2% of the production of greenhouse gases and cars, 25%.
Isn’t going into high speed competing with Air Nostrum?
No. I get into the AVE, not because I’m going to compete with myself, but because I think it’s great to make the mobility cake bigger. In addition, collective transport is truly ecological, because it removes demand from the car, which is the one that pollutes. And there is room for everyone. High speed has meant growth for Air Nostrum, because many high-density routes and, therefore, large aircraft, have been regionalized. Before the AVE, on the Valencia-Madrid route there were Ryanair, Iberia, Air Europa, Air Nostrum. After the AVE, a route of 1.3 million passengers becomes another of 300,000, the big ones leave and we stay, with more business. And 300,000 have stayed because the AVE terminal in Barajas has not been built. When it is, in Spain we will be pioneers in intermodal transport.
Will the Valencia-Madrid flights disappear with this terminal?
If we do it right, yes.
In November, Iryo begins to operate the Barcelona-Madrid route and in December, the one that connects the capital with Valencia. What other connections do they project?
All of the AVE network. The three great corridors, the one from Catalonia, the one from Levante and those from the south and hopefully there will be more. We will be very attentive to the northern and Extremadura corridors.
How can it be that the second (Barcelona) and the third (València) cities in Spain are still not connected by AVE?
It’s inexplicable. Not because the others are left over, but because this one is missing.
After breaking its agreement with Acciona in 2019, it has recently sold 24% of the capital to Globalvía. Why?
Because that was the design. It’s what I always do. We have been 100% of Ilsa until we have had the license and, at that moment, you search. Remember Air Nostrum, we brought in the strategic partner, which was Iberia, and then you look for the financier to give muscle in the next phase. In its day it was Caja Duero. In this case, Globalvía is the financial and strategic Trenitalia, which is the best in Europe. And Globalvía is the most solvent company in Spain. The train, which has not yet had the effect of popularity that we have had in the air, will become, because there will be product and price, in a mass transport that will increase the cake of mobility.
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What do you think about the rich having to pay more taxes at this juncture?
Good, because I am a defender of income tax progression, but bad if it confiscates goods that have been bought with money already taxed. If we are in a hurry and we have to collect more, let them put two more sections of transitory personal income tax. I am willing, as life has gone well for me, to pay more of the income I generate to contribute to the country. That is real wealth redistribution. Now, the Heritage tax is to pay whether or not you have produced money.